A few favorite charts from @jpmorgan ....

US as a % of world market cap ... Shareholder Yield

A few Sunday football charts...

Profits vs. Market Cap as % of global stocks...

@SocieteGenerale SP EW vs Market Cap valuations

What's the best performing stock of all time?

We're talking about a total percentage gain of 265,528,901%.

$1,000 invested in this stock would be worth over $2.5 billion today.

To answer this question, we turned to Hank Bessembinder, who authored the famous academic paper "Do Stocks Outperform Treasury Bills?"

80 stocks have returns of over 500,000% in their lifetime.

Some guessed Berkshire (BRK), but that was only a 792,053% return. Microsoft (MSFT)? A paltry 622,498%.

The winner was Altria (MO)!

mebfaber.com/2024/05/03/hen… Most people probably assume that the best performing stock returned something like 30% or 50% per year.

Only six stocks out of the top 100 had returns of over 20% per annum.

Most of the best performing stocks had returns in the mid teens, not shabby of course and better than the broad index, but not the eye popping returns you see being advertised on Instagram...

The key is just that they did it for a very long time.

The Bear Market in Diversification

(Email we recently sent to clients - sign up for updates at the end)

“Investing goes off track when you believe you are entitled to high returns because you did all the right things.” - @AswathDamodaran

First, a warning.

If you’re an investor or, even worse a financial advisor, with a globally diversified portfolio, you may want to stop reading now.

Continuing may just be too painful.

We should probably form a support group for those investors who built low-cost, tax-efficient, globally diversified portfolios across stocks, bonds, and real assets. They rebalanced the portfolio and didn’t waver when it hit the fan during COVID.

Despite all that well-researched and thoughtful implementation, they were absolutely steamrolled by the S&P 500.

The following phrases may bring out some PTSD. (Maybe a better acronym would be GAASD for Global Asset Allocation Stress Disorder.) Raise your hand if you muttered any of the following phrases to yourself. For the financial advisors out there, this list is probably just the beginning…

• “Can you explain why we own foreign stocks? All they do is underperform. China is down 60%!”
• “Why do we hold Gold? Ok, Boomer…”
• “Everyone knew investing in bonds at 1% was a dumb idea, why didn’t you?
• “I read recently that GDP was going to accelerate to 50% a year due to AI. Can we just sell all these underperforming value funds and buy QQQ and NVDA?”
•  “This portfolio is much more volatile than my neighbor’s – he’s in private equity and real estate and it moves WAY less…” 

I could go on, but it would just be cruel.

You know all this because you lived through “The Bear Market in Diversification”.

What exactly do we mean by that?

Two fun Simons stories...

Once, a really long time ago, I interviewed with his family office. They asked me a poker question on pot odds (I got it wrong), and at the end of the interview, said, "It seems like you really want to be a portfolio manager and not an allocator." Didn't get the job, but true of course.

Years later, I was at a wedding in Long Island and randomly passed Jim on a hike in the woods. Mumbled hello I was star-struck!

My favorite quote of his was from this video and I use it all the time, you've probably heard me say it on the podcast..."I can make the cliche work either way."

1:01 mark

Go read the book



and @AcquiredFM podcast lots of fun stories

amzn.to/4afBCBq
podcasts.apple.com/us/podcast/ren…

The biggest bond crash ever?

Below are the long bond historical drawdowns for the past 100 years.

Nominal biggest ever...real getting close...

and the 10 year

I can't think of a single good reason why US investors put nearly all of their portfolio in US stocks, but they do.

Versus a global stock portfolio, US historical stock returns have been more volatile with larger drawdowns, and valuations are currently much higher than abroad. Some may cite historical US outperformance, but other countries have beaten the US - you don't put all your money in Oz or South Africa do you?!

Change "Silicon Valley Bank" to "Kansas Farmers Bank".

Replace "tech startups" with "farmers".

Replace "MBS" with "farm loans".

Do you feel different?

If you were calling for "let them fail" are you now screaming "save them?!"

Or vice versa.

Would any of the tech elite… twitter.com/i/web/status/1… this tweet was never about "techies" or "farmers", it was about bias.

which, the replies demonstrated in real-time quite clearly.

To all my tech friends dunking on the farmers, here's some farm episodes to learn:

youtube.com/playlist?list=…

To all my youtube.com/playlist?list=…… twitter.com/i/web/status/1…

Astonishing to me that the vast majority of investors have zero trend following allocation.

"But Meb, there's just not any managers with a long history..."

Here's DUNN back to 1985...printed +60% in 2022!

via @rcmAlts database Millburn to 1977! Up 15% last year.

My man @rjparkerjr09 with Chesapeake back to 1988, up 19% in 2022.

EMC back to 1985, up 22% in 2022...

on and on...

Here's a few of my favorite investment video tweets of the year...

The Chapelle skit on @SpeakerPelosi insider trading via @TimRunsHisMouth...

https://twitter.com/TimRunsHisMouth/status/1550155314875564038?s=20&t=lbXCzOiZY_N5pUqdYbHtlw

VC's adding "value" to portfolio companies via @TurnerNovak

https://twitter.com/TurnerNovak/status/1547020093695135744?s=20&t=UP-89GMzDhPIFdtYFffCcw

About 95% of mutual funds and ETFs are down this year.

Let that sink in....

Instructive and useful to review what is performing well.

This may end up being one of the best periods for trend following, ever. and yet, most don't use it at all.

(these numbers will be biased UP given I'll be bleating about this for 15+ years now...)

https://twitter.com/MebFaber/status/1382039319456542720?s=20&t=cdm9s6Yo1lMMzZxJWQ0rVg

Really fun hanging with the great @AnnieDuke!

❌ Quit > grit
🪦 Benefit of kill criteria
💡 Dangers of tying ideas to our identity
✅ The right way to quit a trade

mebfaber.com/2022/10/05/e44… We're giving away a free seat to the 27th Virtual Poker Tournament and mission to empower students with #DecisionEducation!

Retweet the first tweet or post/tag on Linkedin by Oct 9th noon PT to enter.

For sponsorship and ticket information, please visit alliancefordecisioneducation.org/vpt

"According to the BIS Real Effective Exchange Rate model,the dollar looks more expensive than in all but two events in the last 51 years – the levels in 1971 that signified the end of the Bretton Woods Agreement and the mid-1980’s dollar bubble that led to the Plaza Accord" Really enjoyed this one

gmo.com/americas/resea…

I'll share my experience with the vaccineinjured as I would've loved someone to talk to when I was dealing with it.Feel free to DM me.

I got absolutely wrecked for about 6 months.

I'm not anti vax - I also know healthy young people that died from COVID too. It's heartbreaking. It's just important to be honest and transparent about the side effects.

When you give 12 billions doses even a .1% or 1% reaction is still millions of people.

Make sure you report to VAERS

vaers.hhs.gov

Today we have Bridgewater's Erin Miles with:

"Who Will Prove Most Vulnerable to the Pullback in Liquidity?"

mebfaber.com/2022/07/27/biw… Original piece (it's excellent!)

mcusercontent.com/6750faf5c6091b…

Best Investment Writing Volume 6!

Today we kick off Episode 1 with @verdadcap with "Emerging Markets Crisis Investing"

mebfaber.com/2022/07/15/biw… Today's episode is sponsored by @StreamRG - sign up to access their expert transcript library and get a 14-day free trial streamrg.co/meb

🎉Big News🎉

...we're moving The Idea Farm to free!

mebfaber.com/2022/04/29/the… You can sign up here:

theideafarm.com

Top Podcasts of the Week!

@halfkelly w/ @John_Hempton on:

• finding and exploiting an edge in the market
• the challenge of sizing bets
• how to avoid blowing up
• famous shorts like Valeant and Wirecard

podcasts.apple.com/us/podcast/zer… @AttainCap2 w/ @alanjdunne on:

• volatility in the commodity markets
• how macro traders have evolved over the years
• how trend-following performs during a 'crisis period'

podcasts.apple.com/us/podcast/com…

Top Podcasts of the Week!

@EarnYourLeisure w/ @IAmSteveHarvey on becoming a media mogul, life & business lessons, and overcoming adversity

podcasts.apple.com/us/podcast/eyl… @APompliano w/ @PeterZeihan on the political & economic ramifications of the Russia vs. Ukraine war

podcasts.apple.com/us/podcast/876…

Forgot to post this week buried under powder!

Best Podcasts of the Week!

@TWiStartups & @Jason w/ @dougleone on leading Sequoia for 4 decades podcasts.apple.com/us/podcast/dou… @tseides w/ James Aitken on the financial implications of the Russian invasion of Ukraine
podcasts.apple.com/us/podcast/jam…

Might be my favorite quote to open a book ever...

"John, venture capital, that's not a real job. It's like being a real estate agent."
@intel Andy Grove to @johndoerr

Via @scmallaby new great book The Power Law

amazon.com/Power-Law-Vent… We talk a lot about power laws in the investing world...A summary post followed by some of my favorite papers on the topic:

mebfaber.com/2020/03/03/the…