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00:00ONES AT 50%. YOU HAVE ALMOST EVERY EQUITY MARKET IN THE WORLD TO CLIMBING BY TWO THIRDS. YOU NEVER KNOW. THAT IS THE STAGE FOR SECULAR BULL MARKETS. IF YOU LOOK AT WHERE THE RETURNS HAVE BEEN IN THE UNITED STATES, SUB ARE REPRINTS -- RETURNS SINCE 1999. IT TAKES A WHILE TO WORK OFF THOSE BUBBLES. 15 YEARS LATER, SUBPAR RETURNS, BUT NOT NEAR A SECULAR LOW FOR THE START OF A BULL MARKET AGAIN. WE'VE HAD A PRETTY STRONG SIX-YEAR RUN, BUT WE ARE BACK INTO EXPENSIVE TERRITORY. >> YOU TALK ABOUT HOW U.S. STOCKS ARE EXPENSIVE AND HOW THE BEAR MARKET COULD HAVE A LONGER RUN, BUT WE SEEN A REAL NICE BOUNCE THE LAST COUPLE OF WEEKS. WHAT WOULD NEED TO HAPPEN FOR YOU TO SAY THAT U.S. EQUITIES HAVE MOMENTUM ON THEIR SITE AND ARE IN A REAL UPTREND, BY THE WAY SHOULD ASIDE? >> WE'VE HAD MOMENTUM OVER FOREIGN MARKETS OVER THE LAST SIX YEARS. IT IS 50-50 WHICH OUTPERFORMS. THE U.S. HAS DOMINATED ALMOST ALL EQUITY MARKETS FOR THE PAST 10 YEARS. IF THEY CONTINUE TO GO BACK UP, I WILL NOT SAY THAT WE SHOULD BE OUT OF THIS MARKET. WE WILL START TO GET BACK IN . I HAVE NO PROBLEM WITH THAT. IN GENERAL, THE VALUATION SIDE -- THEY HIT MID 40'S IN THE U.S. IN THE LATE 1990'S. 20 OF OTHER MARKETS HAVE HIT 40, 50, 60, AND JAPAN AS HIGH AS 90 IN THE 1980'S. WERE NOT IN A BUBBLE. IT IS NOT HORRIFIC. THEY ARE EXPENSIVE. IF THE TREND CONTINUES, WE WILL GET OUT OF THE WAY. >> WE HAVE A TRACK NOW OF JAPAN, A MAJOR STOCK MARKET THAT TOOK YEARS TO HIT THE BOTTOM. >> JAPAN ISN'T SOME BACKWATER. IT IS ONE OF THE WORLD'S LARGEST ECONOMIES IN TERMS OF GDP RIGHT NOW. IT IS A FUNDAMENTAL, INSTRUCTIONAL EXAMPLE OF A BUBBLE. TWICE AS BIG AS OURS IN THE 1990'S. AND PEOPLE TALK ABOUT THE DEMOGRAPHICS, WHY JAPAN HAS HAD OR RETURNS FOR 20 YEARS, BUT IT TAKES THAT LONG TO WORK OFF A REALLY EXPENSIVE EVALUATION. IT'S GOING TO TAKE A WHILE TO CATCH UP, SO JAPAN ARE THE TIME IT FINALLY GOT IT CHEAP, NOBODY CARED. NOBODY WANTED JAPANESE STOCKS BECAUSE THEY HAD BEEN DEAD MONEY FOR 20 YEARS. WHAT HAPPENED? THEY HAD A MONSTER RUN. YOU FIND OPPORTUNITY -- WHAT'S HAPPENING IN SOUTH AMERICA, BRAZIL, EUROPE, EASTERN EMERGING, WHERE THE REALLY CHEAP COUNTRIES ARE IF YOU'RE LOOKING FOR BIG RETURNS, BUT CERTAINLY NOT THE U.S. JOE: YOU TOOK THE NEXT QUESTION RIGHT OUT OF MY MOUTH. YOU LIKE BRAZIL AND RUSSIA. VERY FEW PEOPLE LIKE RIGHT NOW. HOW CHEAP IS BRAZIL? HOW COULD YOU LOSE ON BRAZIL? COULD IT STILL GO LOWER? >> YOU FIND THAT VALUATIONS CORRELATE WITH HOW MUCH OF A MARKET HAS ALREADY DECLINED, SO BY THE TIME YOU ARE BUYING THESE MARKETS LIKE BRAZIL AND THE LIKE RUSSIA, ANOTHER FOUR OR FIVE OTHER COUNTRIES, EASTERN EUROPE, CZECH REPUBLIC, USUALLY THEY HAVE DECLINED BY 50%, 60%, 70%, 80%. LOOK AT GREECE. YOU ARE BUYING MARKETS THAT NO ONE WANTS. I GAVE TALKS IN COLUMBIA AND MEXICO WHEN THEY WERE IN BUBBLE TERRITORY AND SAID THIS IS WHY THIS IS REALLY EXPENSIVE IN A BUBBLE. NO ONE WANTED TO HEAR THAT. EVERYONE GAVE 100 REASONS WHY THAT IS NOT THE CASE. THE SAME THING HAPPENED ON THE FLIP SIDE. I WAS GIVEN A TALK AND AUSTRIA AND SAID THE MARKETS ARE REALLY CHEAP. THIS IS WONDERFUL. NOBODY CARED. IT HAD ALREADY DECLINED SO MUCH. SAME THING IN BRAZIL. YOU CAN FIND 100 REASONS WHY NOT TO INVEST, BUT HISTORICAL VIOLATIONS ARE BETTER WAYS TO INVEST IN MARKET CAP AND A MUCH BETTER IDEA THAN INVESTING IN EXPENSIVE COUNTRIES. THIS IS PARTICULARLY IMPORTANT AS THE U.S. IS ONE OF THE MOST EXPENSIVE COUNTRIES IN THE WORLD. YOU CAN PICK UP A BASKET OF THESE CHEAP COUNTRIES FOR A P/E RATIO OF AROUND 10, LESS THAN HALF THE U.S. >> COFOUNDER AND CHIEF INVESTMENT OFFICER OF CAMBRIA INVESTMENT MANAGEMENT. >> MORE ON YAHOO! AND GOOGLE. CORY JOHNSON WILL BE JOINING US TO TELL US THE SIGNIFICANCE OF THIS AGREEMENT AND WHAT IT MEANS FOR YAHOO!. ♪

Meb Faber: U.S. Stocks Are Still Too Expensive

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