Mebisode – How I Invest 2022 | #404

Episode Summary

Executive Summary: Meb Faber explains how he allocates his own wealth in 2022, framing it as a blend of wealth creation and preservation. Most of his net worth is tied to his businesses and private startup bets, while public assets are managed largely through automated, diversified, trend- and value-oriented funds. He emphasizes skin in the game, tax efficiency, and investing as a means to support life goals rather than an end in itself.

Main Topics: Personal wealth concentration in businesses (Priority: 5/5): The largest share of Faber’s net worth is in the entrepreneurial ventures he founded, especially Cambria and The Idea Farm, which he treats as his primary get-rich assets. Real assets and the evolving farmland strategy (Priority: 5/5): Farmland is positioned as a stay-rich, low-correlation asset with emotional/family value, but he is shifting toward diversified farmland platforms rather than direct ownership. Private angel investing as high-upside tuition (Priority: 4/5): He describes 300+ startup investments as long-duration get-rich bets with powerful upside and significant uncertainty, citing exits and power-law dynamics. Autopilot public portfolio via buy-and-trend (Priority: 5/5): His public portfolio is designed to run largely without intervention, combining strategic asset allocation with trend-following to lower drawdowns and correlation. Safe money should still be invested (Priority: 4/5): He argues that cash is not truly safe after inflation and prefers broad, low-cost market exposure for most idle cash, keeping only a small liquidity reserve. Tactical allocations and small thematic sleeves (Priority: 3/5): He holds modest positions in foreign stocks, tail risk, cannabis, collectibles, crypto-related exposure, and other niche themes, primarily for diversification, optionality, or regret minimization. Money as a tool for life goals (Priority: 4/5): The episode closes by stressing that wealth exists to enable travel, family, charity, entrepreneurship, and joy—not to be accumulated for its own sake.

Key Arguments: Most of his net worth is concentrated in his own businesses, which is consistent with a founder/owner profile and fits the 'get-rich' bucket. Farmland belongs in the 'stay-rich' bucket because it is income-producing, low-correlation, and emotionally meaningful, though direct ownership is less appealing than diversified platforms. Private startup investing can generate strong returns over long periods, but outcomes are highly variable; the full-cycle results will only be clear over time. Public investing should be mostly automated, tax-efficient, and emotionally detached; he prefers funds that implement buy-and-hold plus trend rules for him. Holding cash in low-return form can be riskier than investing it because inflation erodes purchasing power. Skin in the game matters: managers should invest alongside clients, and he favors funds he personally uses. Trend-following and value investing can coexist in one portfolio, satisfying both his macro/trading instincts and his preference for cheap assets. Small thematic and collectible allocations can serve fun, diversification, or regret-minimization purposes without driving the portfolio. Investing is subordinate to life quality; the purpose of money is to fund meaningful experiences and responsibilities.

Data Points: Estimated share of net worth in entrepreneurial ventures: 50% to 99% - He says Cambria and The Idea Farm dominate his net worth. Largest non-business holdings: ~40% each - Real assets, private startup investments, and public portfolio are described as roughly similar buckets, though not exactly equal. Target balance among major non-business buckets: 33% each - He says he would prefer real assets, private investments, and public investments to be closer to equal over time. Direct farmland update: Reduced direct holdings; increasing platform-based exposure - In 2022 he shifts from direct farmland to diversified platforms like AcreTrader and Farm Together. Private investments count: 300+ deals - He summarizes his angel investing history across many vintages since 2014. Private investment exits: 26 exits - Includes bankruptcies, acquisitions, IPOs, and secondary liquidity. Bankrupt zeros: 4 - Part of the exited private investment set. Acquisitions: 13 - Part of the exited private investment set. IPOs: 2 - Part of the exited private investment set. Secondary liquidity events: 7 - Part of the exited private investment set. Average total return on exited angel deals: ~140% on dollars invested - Ballpark figure for realized private investments. Compound return on exited angel deals: ~40% annualized - He qualifies this as including time held. Largest cash return: 20-bagger+ - He cites one major win as evidence of power-law outcomes. Public portfolio split: About half buy-and-hold, about half trend-following - His Trinity strategy combines strategic allocation with trend systems. Cash allocation rule: Most cash invested; only small short-term reserve retained - He treats cash-like assets as investable rather than sitting idle. Foreign allocation: ~9% - A sleeve for tax-exempt accounts, emphasizing foreign and emerging markets. Cannabis allocation: ~8% - A thematic allocation he views positively over the next decade. Random stocks allocation: ~4% - Small sleeve within public investments. Collectibles allocation: ~3% - Rare coins, comics, art, and other collectibles. Crypto target market-cap weight: ~0.5% - He would only own crypto at approximately its global market cap weight.

Pivotal Quotes: "The ownership stakes in my companies are the largest determinants of my net worth." — Meb Faber: He explains where most of his wealth is actually concentrated. "If I don't believe in Cambria's funds enough to invest my own money here, why should anyone else?" — Meb Faber: He argues for manager alignment and skin in the game. "Money is only a means to an end." — Meb Faber: He closes by reframing wealth as a tool for life goals and happiness.

Implications: Listeners should expect a disciplined, low-touch portfolio philosophy built around diversification, automation, and alignment. The episode reinforces that wealth preservation, tax efficiency, and humility matter as much as return-seeking, and that money should ultimately serve personal purpose.