Meb Faber doesn’t mince words on the push to expand access to private markets: “Every time I hear the word democratize, I hear someone’s about to charge me a lot of fees.”
And when we asked him about the blurring of investing and gambling, he described “a spaghetti cannon of nonsense.”
With any investment product, Faber wants investors to ask: Does this serve me or the seller?
Faber is the chief investment officer of Cambria Asset Management and the author of Investing in America: The Rise of a 250-Year Bull Market. We had a lively conversation with him recently on The Long View podcast.
Here’s an excerpt from that episode.
Do Private Markets Belong in Portfolios?
Amy Arnott: Over the past few years, we’ve been hearing a lot of buzz around private markets, and a lot of asset managers have been trying to democratize access to private equity and private debt. How do you think about asset classes like that—private equity, private debt, venture capital, farmland, et cetera? Do you think those types of assets should play a role in investors’ portfolios?
Meb Faber: Every time I hear the word democratize, I hear someone’s about to charge me a lot of fees. We make the joke all the time. I learned our buddy, good buddy Eric Balchunas, the other day said when Vanguard launched their index fund in the ’70s, it was like 45 basis points, which today sounds high relative to their 5 basis points, and that it has been used to always do this kind of lowest-cost portfolio in the world. It’s essentially free to invest today. The table stakes: You could buy a portfolio of ETFs, and it’s essentially zero. After short lending, it has a negative expense ratio. I mean, you’re getting paid to invest. Best time ever to be an investor. However, you can’t be like the puppy who’s just going to sit there and look at a squirrel every time something new and shiny comes, because it’s always weird that the people democratizing with financial assets—why aren’t they charging 25 basis points? Why is it always 4% or something totally insane?
I think for all of us, 99% of the time we should say no. Say, set my foundation: Here’s my global portfolio; I’m going to buy and hold; I’m going to rebalance it once a year. We have four asset-allocation ETFs that do this for you. One of them is the single cheapest fund in the entire category. The point being is that you don’t need something super complicated.
However, I grew up in a farming family in Kansas and Nebraska. I love farmland as an investment. I hate running a farm. Oh my God, it’s so much work. I mean, you go back to the early 1900s, we were all farmers. I love to joke with people when they were talking about AI being a huge part of the economy today. I was like, bro, firewood used to be 25% of the US economy.
Things change. Don’t worry about it. But looking at the portfolio, farmland, a fantastic asset class, it’s pretty hard to allocate to in public markets. There are some solutions maybe coming online that I think might be pretty interesting in the coming years, and you’re starting to see some fractionalization. It’s probably the biggest missing piece of the global market portfolio, along with single-family housing ex-US, to be able to get access to, but you don’t need it. And then if you look at things like private and private credit, again, I think you don’t need it.
I do a lot of angel investing, but for a whole host of other reasons, if we have another hour, we could get into it. One, it’s super optimistic for me. I’ve invested in over 400 startups. The geopolitical deluge of public markets is always negative. It’s so depressing. But private markets, as startups, they’re trying to save the world and improve the world.
It’s a lot of fun. But more importantly, as we go down this giant tax alpha, I think tax alpha is 10 times more important than investing alpha. And you look at the QSBS [qualified small business stock] rules that listeners can go look into; when you look into things like ETFs, then ETFs that don’t pay dividends or income, you look at things like 351 [conversions]. These are all Googleable later. We can’t spend all day on these. The point of all these ideas is to set your base portfolio, and if you want to veer elsewhere, go for it.
But the default answer should be no in almost all these cases. And then ask, does it actually do anything? Am I actually benefiting this portfolio by adding these, or am I just getting sold?
There’s this great quote from Charlie Munger, the late great Munger; he’s talking about fishing. He said a guy goes into a fishing store, and he’s chatting with an old crusty fisherman behind the counter, and he’s looking at these lures, and he’s like, “This one’s purple with shiny feathers and sparkles.” He goes, “The fish really bite this?” The fisherman looks at him and smiles and says, “Son, I’m not selling to the fish.” The concept being, anytime you hear these fancy investing strategies and presentations that are always expensive, they’re never cheap for some reason, ask yourself, “Am I the fish or am I the fisherman?”
Whose Interests Do Investment Products Serve?
Ben Johnson: Meb, I think we’re sitting here in a moment where the number of shiny objects and their overall sort of level of sparkliness might be as great as ever. We started this conversation with you kind of conjuring the image of bringing in new investors through the side door to the casino. But what we’re seeing is that these lines between investing and gambling, if they’re not blurred, they’re all but disappearing like Marty’s siblings in the McFly family photo these days. We’ve got the prospect now of maybe even ’40 Act products wrapping up event contracts. I’m just curious about your take there, if there’s any place for it, if that’s all fine and good, if you can kind of keep your wits about you and have a funny money bucket, where do you stand, just directionally, on where we’re headed there?
Faber: You know what cures all the nonsense? Let’s be clear, it’s a spaghetti cannon of nonsense. I say this a lot when I talk about our fund lineup. We have 20 funds. I say we only launch funds that don’t exist, funds that have academic and practitioner research, but most importantly, funds I want to put my own money into. I put all my public assets into our strategies. The average mutual fund and ETF manager puts $0 in their own funds. And I get, in some edge cases, why you might not put all your money in a Puerto Rican muni-bond fund if you manage it. But the question that is the second-order question that is my lie detector question, and you can ask portfolio managers, say, “Do you own any of your own fund? Yes or no.” Let’s say no. Say, “OK, but would you? Would you buy this?” The vast majority of these crazy, awful, no-good strategies are predatory.
And we know that. There are two Venn diagram circles, and they don’t overlap. On one side are asset managers like Vanguard; I would like to think we’re in this category. What’s the least we can charge and keep the lights on and deliver an awesome investing product? On the other side is how much can we charge and get away with it? What can we sell that these morons will buy and hopefully make a bunch of money?
Let me give you a good example right now. This is an extremely nonconsensus comment I’m about to make. If you made it this far, I apologize because I’m about to offend you. I’m about to tell you Santa’s not real. There is a massive amount of investors today who just don’t understand the words dividends and income. We did a survey, spent many thousands of dollars on this, and asked investors, “Do you understand how dividends work?”
At the most basic high school level, what happens when a stock pays a dividend? Almost all retail investors, individuals, and the majority of professional investors thought that when a company pays a dividend, the stock doesn’t go down, meaning it’s like a bonus, it’s an allowance, it’s this free payment you’re getting. Because when people hear income, what are they thinking? The check they get from their job or this extra payment, but that’s not how it works with stocks. It’s a return of capital. If you look at, all of a sudden, look at this entire universe of income investments, you say, “Oh, wait a second, that’s just being predatory on someone’s knowledge. They don’t understand how any of this works.” If you’re a taxable investor—we wrote a paper on this probably 10, 15 years ago, a very, very unpopular paper. It says the last thing you want on the planet is high dividends and income.
That flies in the face of everything you could possibly be taught throughout investing history, but it’s true mathematically; logically, it’s true.
The last thing, and there’s one person that gets it on the planet, and that’s Warren Buffett. Berkshire Hathaway BRK.A/BRK.B has never paid a dividend. He said it paid it once in the very beginning, and he must have been in the bathroom when they declared the dividend. But guess what they have done? And he’s been writing about this since the 1980s. They buy back a bunch of stock because that’s a choice. You don’t have to sell your shares. In fact, if you want to compound and not take the dividend, pay tax, and reinvest, you can.
There’s a lot like that in this world where you slowly find out, oh geez, this belief I’d had for so long, it’s actually not true. And then you kind of see the world through a different lens again. The same thing is true with product development and all these crazy ETFs being launched. You say, oh, they’re not thinking in my best interest. They’re thinking in their own best interest. Let’s go back to the book from a very, very long time ago: Where Are the Customers’ Yachts? Still true in 2026.
Listen to the Full Episode
That’s just an excerpt from a recent episode of The Long View, but you can listen to the full conversation below (or read the transcript at this link). In the full episode, Faber explains why investing in just one country is “a terrible idea,” why a written investment plan is critical, and why he’s optimistic about investing and markets.