Meb Faber's Investing in America, Out July 4th (Investing in America Series) | #636
Meb Faber discusses his new coffee table book "Investing in America: The Rise of a 250-Year Bull Market," which visualizes 225 years of U.S. stock market history through charts and analysis to demonstrate that despite periodic crises and volatility, long-term stock investing has consistently created wealth. The book aims to educate young investors with perspective on market cycles and historical context for current market concerns.
Summary
Meb Faber introduces his new coffee table book "Investing in America: The Rise of a 250-Year Bull Market," released July 4th, 2024, which compiles over 70 charts, pictures, and tables analyzing U.S. stock market performance from 1800 to present. The book's origin stems from COVID-era frustration when young retail investors entered the market through volatile conditions without proper financial education, as personal finance remains largely untaught in schools despite California making it mandatory by 2031.
The book's core thesis uses a zoom-in-zoom-out approach: it examines individual decades when events felt chaotic (wars, pandemics, market crashes), then zooms out to show 50-year and 100-year returns, demonstrating that turbulent periods were followed by wealth creation. A central statistic shows that $1 invested in U.S. stocks in 1800 grew to $4.2 million in real terms and $210 million in nominal terms—illustrating the power of 9% annual returns compounded over 225 years.
Key insights from the book include: stocks at a 20-year time horizon are actually less volatile than bonds historically, which contradicts conventional wisdom about stock volatility; creative destruction constantly changes industry leaders (railroads were the "tech" of 1900, displaced by automobiles, then tech companies); and human behavior in markets remains constant across centuries—speculation, FOMO, and insider trading recur throughout history despite changing names and contexts.
The book includes sidebars on dividends, bear markets, famous investors (particularly Hetty Green and Warren Buffett), and industry composition changes. It features extensive reading lists with over 100 financial history books, some rare and costly, acquired specifically for historical research.
Faber addresses contemporary concerns about debt-to-GDP ratios, elevated valuations (CAPE ratios near historical highs), AI disruption, and market polarization by contexualizing them within historical patterns. He argues that even investors who bought at the 1999 peak are "okay" 25 years later, suggesting that while short-term (1-10 years) valuation matters significantly, long-term (20+ years) investors historically achieved acceptable returns regardless of entry price.
The book is positioned as part one of a two-part series, with a companion global investing title potentially launching later in 2024 or 2025. Financial advisors are encouraged to use it as a client-calming tool during bear markets. Bulk discounts are available through investinginamericabook.com.
About this episode
In today's episode, Meb celebrates the release of his new book, Investing in America, a coffee table history of the 250 year bull market. He explains the magic of compounding, why every decade feels like chaos, and the surprising fact that stocks become less volatile than bonds over long horizons. To close, Meb weighs today's valuations against the long view. ----- Follow Meb on X, LinkedIn and YouTube For detailed show notes, click here To learn more about our funds and follow us, subscribe to our mailing list or visit us at cambriainvestments.com ----- Follow The Idea Farm: X | LinkedIn | Instagram | TikTok ----- Interested in sponsoring the show? Email us at [email protected] ----- Past guests include Ed Thorp, Richard Thaler, Jeremy Grantham, Joel Greenblatt, Campbell Harvey, Ivy Zelman, Kathryn Kaminski, Jason Calacanis, Whitney Baker, Aswath Damodaran, Howard Marks, Tom Barton, and many more. ----- Meb's invested in some awesome startups that have passed along discounts to our listeners. Check them out here! ----- Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com). Learn more about your ad choices. Visit megaphone.fm/adchoices
Key Insights
- Faber argues that a $1 investment in U.S. stocks in 1800 would have grown to $4.2 million in real terms by today due to 9% annual compounding over 225 years, demonstrating that even modest annual returns become extraordinary over multi-generational time horizons.
- The author claims that at a 20-year rolling return horizon, stocks have been historically less volatile than bonds and have outperformed them significantly, yet most investors focus on yearly volatility without extending their time perspective sufficiently.
- Faber observes that the composition of market-leading industries completely transforms every few decades (railroads→automobiles→tech), yet investors and speculators repeatedly make similar mistakes across centuries despite different industry names, suggesting human behavior in markets is fundamentally constant.
- The author contends that even investors who bought stocks at the absolute peak of the 1999 dot-com bubble achieved acceptable returns 25 years later, implying that valuation matters far less over long periods than most market participants believe.
- Faber notes that personal finance education remains absent from most U.S. schools (despite California's 2031 mandate), leaving young retail investors vulnerable to poor teaching and speculative behavior during volatile market periods like the COVID-era trading boom.
Topics
Transcript
Welcome to a special series of the Meb Faber show on the past, present, and future of America. I'm sitting down with some of the most notable historians, thinkers, and investors in U.S. financial history, all tied to my new coffee table book, Investing in America, The Rise of a 250-Year Bull bull market out July 4th. Meb Faber is the co-founder and chief investment officer of Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria's funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambrianvestments.com. Meb, I am super excited for…
Full transcript available for MurmurCast members
Sign Up to AccessMore from The Meb Faber Show - Better Investing
Bryan Taylor: There Is No Equity Risk Premium | #635
Dr. Bryan Taylor, founder of Global Financial Data, discusses his TWIG framework (Trade, War, Inflation, Government) for analyzing historical market returns across centuries. He argues there is no persistent equity risk premium, warns about the 2030s based on a 30-year cycle pattern, and draws on global financial history to contextualize current U.S. market conditions.
Charley Ellis on How America Actually Got Built (Investing in America Series) | #633
Meb Faber interviews Charlie Ellis, founder of Greenwich Associates and author of 'Great American Investments,' covering Ellis's career highlights including his pioneering work on share buybacks, his famous 'Loser's Game' indexing thesis, and his new book profiling 14 bold public investments that shaped America. The conversation spans topics from long-term investing principles to historical government initiatives like the Louisiana Purchase, Social Security, and the GI Bill.
William Goetzmann: From Babylon to Bubbles — A 5,000-Year History of Finance (Investing in America Series) #632
Yale finance professor William Goetzmann discusses 5,000 years of financial history with Meb Faber, tracing the origins of compound interest, corporations, bonds, and stock market bubbles from ancient Babylon to modern markets. Goetzmann argues that financial innovation has been essential to civilization's development, and draws parallels between historical speculative manias and modern phenomena like NFTs and SpaceX. He concludes with insights on behavioral finance, long-term investing, and the resilience of equity markets through historical crises.
Meb Faber: Warren Buffett Didn't Follow His Own Advice | #631
Meb Faber joins a podcast during Berkshire Week in Omaha to discuss investment philosophy, global diversification, shareholder yield, and the ETF industry. He argues that Warren Buffett's public advice to invest in the S&P 500 doesn't reflect how Buffett actually invested, and that a more sophisticated, globally diversified approach is optimal. He also covers behavioral finance pitfalls, the importance of tax efficiency, and the proliferation of ETF products.
Tom Lee: The Market Can Climb Higher—But Expect Turbulence | #630
Tom Lee, co-founder of Fundstrat Global Advisors, discusses his bullish market outlook with a S&P target of 7,700 for 2026, while warning of potential mid-year turbulence tied to a new Fed chair. He covers topics including oil market dislocations, sentiment survey distortions, crypto adoption, and the success of his Granny Shots ETF.