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The Meb Faber Show

Ready to grow your wealth through smarter investing decisions? With The Meb Faber Show, bestselling author, entrepreneur, and investment fund manager, Meb Faber, brings you insights on today’s markets and the art of investing. Featuring some of the top investment professionals in the world as his guests, Meb will help you interpret global equity, bond, and commodity markets just like the pros. Whether it’s smart beta, trend following, value investing, or any other timely market topic, each week you’ll hear real market wisdom from the smartest minds in investing today. Better investing starts here. For more information on Meb, please visit MebFaber.com. For more on Cambria Investment Management, visit CambriaInvestments.com. And to learn about Cambria’s suite of ETFs and other investment offerings, please visit CambriaFunds.com.
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Apr 12, 2017

In Episode 47, we welcome New York Times bestselling author, Ric Edelman.

We start with some quick background on Ric, but then jump into the main topic: the future of technology and how it will affect our lives.

In essence, the future is going to look far different than what we’ve known. The tendency is to believe that the future will be similar to what our parents and grandparents experienced as they aged. A linear progression – school, work, retirement, death.

Ric tells us this is going to change. The linear lifeline is going away. It will more resemble school, work, back to school, a new, different career, then a sabbatical, more school, and so on… Think of a lifeline that’s more cyclical.

What’s the reason? Well, we’re going to be living far longer. Technological and health care advances mean we’re going to be far more vibrant much later in life, so this will change everything we know about retirement and our traditional life-paths.

The guys then dig into the role that technology and robots will play in all this. Robots are going to eliminate numerous existing occupations. On the other hand, new jobs and skill sets will be created, but we’ll have to go back to school to learn them.

Meb ask Ric to dive deeper into this “loss of jobs” forecast, as it’s a common source of concern for many people.

Because of computers’ increased capacity, robots will be able to do jobs that humans do – and not just “factory line” type jobs. Any jobs that are repetitive in nature are at risk – which means white collar jobs too; for example, certain types of legal work. As another example, did you know that computers are already writing news articles? There’s a program that currently writes sports stories, and apparently, readers can’t tell the difference between a human and computer author.

Ric tells us “According to Oxford University, 47% of the occupations in America will be gone within 15 years.”

So what can you do to protect yourself from being replaced by a robot?

There are 4 skill sets that will give you an edge: thinking, managing, creating, and communicating. These four things will be the most difficult for computers to do.

The conversation bounces around a bit before the guys dig deeper into how working has changed over the years – and how it will continue to change. This leads into a conversation contrasting the “New York model” with the “Hollywood model.”

In essence, the New York model is “one job.” You do a given thing with same people for the same customers for decades. With the Hollywood model, you have a group of people who come together for one project, though they’re likely working on multiple projects at the same time. You’re using your skills in a wide variety of activities at the same time. We’re moving toward a Hollywood model.

Meb asks how this view of the future impacts asset allocation.

There are two big ways: One, we need to increase our allocation to stocks far more, and maintain it for much longer. Most peoples’ asset allocation models are flawed in this manner.

Two, we need to re-think the types of companies that are in our portfolios. Most of these businesses were likely built for the 20th century – and if so, they’re at risk of failing in the 21st century. As an example, think Kodak that went bankrupt when it couldn’t transition and monetize newer technologies. Ric mentions Tesla and AirBnB as two examples of 21st century companies.

This leads into a discussion about an ETF that targets only 21st Century companies. You’ll want to hear this topic.

There’s way more in this episode: behavioral challenges for investors and the role that an advisor should play in helping… an irrevocable trust, created by Ric, that’s helping parents save money for their children… the challenges facing Social Security given our much longer life-spans… Even why personal finance isn’t taught in schools, despite being one of the most critical skills our kids should learn.

So why isn’t it taught? Hear Ric’s thoughts in Episode 47.

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