meb faber at quantcon 2016

Investment Management for High Net Worth

Individuals and Institutions

• QUANTCON APRIL, 2016

Disclaimer

This presentation is for informational purposes and is not an offer to sell. Any investment involves significant risks, and past market conditions may not resemble future market conditions. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT, DO NOT INVOLVE FINANCIAL RISK OR REFLECT ACTUAL TRADING BY ANY ACCOUNT UNDER ACTUAL MARKET CONDITIONS AND THEREFORE DO NOT REFLECT THE IMPACT THAT ECONOMIC AND MARKET FACTORS MAY HAVE HAD ON THE ADVISOR’S INVESTMENT DECISIONS FOR THAT ACCOUNT. NO REPRESENTATION IS MADE THAT CIMI'S PERFORMANCE WOULD HAVE BEEN THE SAME AS SUCH SIMULATED HAD CIMI BEEN IN EXISTENCE DURING SUCH TIME. ANOTHER LIMITATION IS THAT INVESTMENT DECISIONS REFLECTED IN THE SIMULATED RESULTS CANNOT COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK ON THE MANNER IN WHICH AN ACCOUNT WOULD HAVE BEEN MANAGED. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO AFFECT ACTUAL TRADING RESULTS. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL RESULTS AND THE ACTUAL RECORD SUBSEQUENTLY ACHIEVED. THE SIMULATED RESULTS DO NOT TAKE INTO ACCOUNT ENHANCEMENTS THAT MAY BE MADE TO THE PROPRIETARY COMPUTER MODELS OVER TIME. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKET IN GENERAL, OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY BE ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL SIMULATED PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. ALL RESULTS ARE GROSS OF ALL TRADING AND MANAGEMENT FEES

About Cambria

3

•  SEC RIA founded 2006

•  Active and Passive ETFs • Digital advisory coming soon!

•  Disrupt traditional high fee investing

Market Research

4

Blog: MebFaber.com

Work: CambriaFunds.com

Ideas: TheIdeaFarm.com

Twitter: @MebFaber

Freebook.mebfaber.com

TODAY 1.  QuantCon 2015

2.  Asset Allocation

3.  Yield in a 2% World

4.  Omaha!

Global Valuations 1.  US 25

2.  Developed 17

3.  Emerging 15

4.  Cheap 25% 9

© Copyright 2016 Ned Davis Research, Inc. Further distribution prohibited without prior permission. All Rights Reserved.See NDR Disclaimer at www.ndr.com/copyright.html For data vendor disclaimers refer to www.ndr.com/vendorinfo/

D A VIS208

Standard & Poor's 500 Index Monthly Data 1964-03-31 to 2016-03-31 (Log Scale)


D A VIS208

Standard & Poor's 500 Index Monthly Data 1964-03-31 to 2016-03-31 (Log Scale)

1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

79

100

126

158

200

251

316

398

501

631

794

1,000

1,259

1,585

1,995

79

100

126

158

200

251

316

398

501

631

794

1,000

1,259

1,585

1,995

Source: S&P Dow Jones Indices

S&P 500 Gain/Annum When

S&P 500 Median P/S is:% Gain/ Annum

% of Time

* Above 1.53 0.34 20.19

Between 0.7 and 1.53 6.60 46.81

Below 0.7 10.22 33.00

S&P 500 Median Price/Sales Ratio

0.30.40.50.60.70.80.91.01.11.21.31.41.51.61.71.81.92.02.1

0.30.40.50.60.70.80.91.01.11.21.31.41.51.61.71.81.92.02.1

Median = 0.90

+1 SD = 1.40

+2 SD = 1.89

-1 SD = 0.41

2016-03-31 = 2.16Source: S&P Capital IQ Compustat

…But you would be out of stocks since the 1990s!


D A VIS219

Household Equity Percentage vs Subsequent Rolling 10-Year S&P 500 Index Total ReturnQuarterly Data 1951-12-31 to 2015-12-31


D A VIS219

Household Equity Percentage vs Subsequent Rolling 10-Year S&P 500 Index Total ReturnQuarterly Data 1951-12-31 to 2015-12-31

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

26272829303132333435363738394041424344454647484950515253545556575859606162636465

-4

-3

-2

-1

0

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

Correlation Coefficient since 1951-12-31 = 0.93

Concept Courtesy of Philosophical Economics

Equity as a Percentage of Household Financial Assets (Scale Left, Includes Mutual Funds and Pensions) 2015-12-31 = 51.8%Subsequent Rolling 10-Year S&P 500 Index Total Return (Scale Right, Inverted) 2005-12-31 = 7.2%

Source: Federal Reserve Board, Mutual Fund Source: Investment Company Institute, www.ici.org, S&P Dow Jones Indices




4.  Omaha!

Guru Allocations

Asset Allocations Stocks Bonds Real Assets

60 / 40 60 40

All Seasons 30 55 15

Permanent 25 50 25

GAA 46 38 16

Arnott 30 40 30

Marc Faber 25 25 50

El-Erian 51 17 32

Risk and Returns – 1973 -2013

Emotional Investing




4.  Omaha!

Global Yields

US 1.6% Developed 1.2% Emerging 5.9% World 3.5% High Yield 7.5% (1-6% normal spread)




4.  Omaha!

TODAY

1.  Asset Allocation Models

2.  Global Market Valuations

3.  Omaha!

Bonus Idea

CONTACT

WEBSITE www.cambriafunds.com

PHONE (310) 606-5555

BLOG www.mebfaber.com

EMAIL [email protected]

meb faber at quantcon 2016

Economy & Finance