Most client portfolios look a lot like the client’s zip code. American investors load up on US stocks, Texans lean into energy, and Californians overweight tech. It feels safe because it’s familiar, and it’s one of the most common mistakes in investing.

In Part 2 of their conversation, Adam Koós sits back down with Meb Faber, co-founder and chief investment officer of Cambria Investment Management and host of The Meb Faber Show. Meb has spent two decades researching global asset allocation, value, and trend following, and he’s written about home country bias more than just about anyone.

Meb breaks down why home country bias costs more than people think, the three portfolio mistakes he sees from individuals and professionals alike, and why a trading system that’s right 99% of the time can still blow up. He and Adam also get into the “flood in the garage” test for legacy holdings, why “sell half” works even though clients hate hearing it, and where advisors really earn their fee now that a solid portfolio can fit on a note card.

Whether you’re building portfolios, coaching nervous clients, or trying to explain your process without the jargon, this one hands you stories you can use in your next meeting.

Episode Timestamps

00:00 Why “sell half” breaks the emotional tie

01:15 What home country bias is and why it hurts

03:30 Regional bias: energy in Texas, tech in California

05:20 US vs. international and thinking in probabilities

09:00 How long an asset can underperform

12:30 The 99% accurate trading system that still loses

14:15 Adam’s “good loss” story

15:30 The flood in the garage test

18:00 Stories beat Sharpe ratios with clients

21:00 The 3 portfolio mistakes Meb sees most

25:00 Why few investors have lived through a real crash

29:00 Where advisors really add value now

31:00 Meb’s non-consensus belief: it doesn’t have to be complex

Key Takeaways

💡 Home country bias is everywhere. Investors around the world put most of their money in their own country, and the same habit shows up by region and industry.

💡 A high win rate means nothing on its own. What matters is how big the wins are compared to the losses, and a system that’s right 99% of the time can still wipe you out.

💡 Run the flood test. If a client’s account were wiped clean tomorrow, would they buy what they own today? If not, it’s worth asking why they still hold it.

💡 Clients think in all-in or all-out. Selling half breaks the emotional tie to one outcome, even if nobody loves hearing it.

💡 The three mistakes Meb sees most are home country bias, no exposure to real assets, and no plan for big drawdowns.

💡 Asset management is table stakes. Taxes, estate planning, insurance, and behavioral coaching are where advisors make the biggest difference.

Key Quotes

🗣 “Going halfsies is pretty good advice, ’cause it breaks the emotional tie to a potential outcome.” – Meb Faber

🗣 “There is such a thing as a good loss.” – Adam Koós

🗣 “I think the tax alpha is a lot easier than the investment alpha.” – Meb Faber

Connect with Meb Faber

Cambria: https://www.cambriainvestments.com/

Blog: https://mebfaber.com/

X: https://x.com/MebFaber

LinkedIn: https://www.linkedin.com/in/mebanefaber/

YT: https://www.youtube.com/channel/UCKvWzzrVUA_DSCoKXL6GU2w?sub_confirmation=1

Podcast: www.themebfabershow.com

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Connect with Adam Koos: Adam Koos, CFP, CMT, CFTe, CEPA

LinkedIn: https://www.linkedin.com/in/adamkoos

Website: https://www.adrenalineadvisor.com