The Meb Faber Show - Better Investing MEBISODE: Even Berkshire Underperformed
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Mar 3, 2026 They use the Cambria Shareholder Yield ETF (SYLD) as a case study to explore when a strategy hits a rough patch. Topics include Berkshire Hathaway’s long run, why investors chase hot streaks or bail after declines, and how rolling returns reveal consistency beyond calendar-year snapshots. They also discuss valuation’s role in expected returns and when short-term underperformance might signal long-term opportunity.
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Berkshire's 1999 Underperformance Story
- Meb Faber recounts Berkshire's 1999 stretch when it underperformed the S&P by ~40 percentage points and drew headlines like "What's Wrong Warren?".
- Despite that, Berkshire then outperformed for the following decade, illustrating how famed managers can hit long painful drawdowns.
Short Horizons Make Winners Look Broken
- Investors typically have short horizons and expect instant returns, which makes them abandon good strategies during inevitable rough patches.
- Meb cites Twitter poll responses and Ken French warning that few should infer long-term from 3–10 year windows.
Evaluate With Rolling Returns Not Single Years
- Use rolling returns over 1, 5, and 10-year windows to evaluate consistency instead of relying on single calendar years.
- Meb shows SYLD outperformed its Morningstar category on every 5- and 10-year rolling observation since inception.