Jared Dillian

AI Summary

→ WHAT IT COVERS Jared Dillian, 28-year Wall Street veteran and former Lehman Brothers ETF trading head, presents the "Awesome Portfolio" — a five-asset allocation strategy using stocks, bonds, gold, cash, and real estate that has historically returned approximately 9% annually with half the volatility of the S&P 500. → KEY INSIGHTS - **The Awesome Portfolio Structure:** Allocate exactly 20% each to five ETFs: VTI (total stock market), BND (total bond market), IAU (gold), TBIL (T-bills), and VNQ (real estate). Total expense ratio is 11.8 basis points — $11.80 per $10,000 invested. Rebalance once annually back to equal 20% weightings regardless of market movements. - **Historical Performance vs. Risk Tradeoff:** The Awesome Portfolio returns approximately 9% annually — roughly 1-2% less than the S&P 500 — but delivers half the market volatility. The worst single-year drawdown was negative 12% in 2022. The second worst was negative 9% during the 2008 financial crisis, making panic-selling far less likely. - **Bond Opportunity at Current Yields:** 30-year Treasury bonds at 5.3% and 10-year notes at 4.7% represent historically cheap valuations. A rate drop from 5% to 3% generates approximately 30% capital gains on a 30-year bond, given its duration of roughly 15. Investors avoiding bonds due to inflation fears are repeating the same behavioral mistake seen at every market bottom. - **Cash as a Strategic Asset:** Holding 20% in T-bills serves three functions: smoothing overall portfolio volatility, generating current yield, and maintaining liquidity as an option to deploy capital opportunistically. Without liquid cash reserves, investors are forced to sell appreciated assets — triggering taxable events — to fund time-sensitive opportunities like real estate down payments or private investments. - **Human Behavior as the Constant Risk:** A Finnish military study found higher-IQ investors outperformed lower-IQ investors by approximately 5% annually, largely through better market timing. The core behavioral problem: investors treat financial assets like Giffen goods, buying more when prices rise and avoiding assets when they fall — the exact opposite of rational purchasing behavior seen with ordinary consumer goods. → NOTABLE MOMENT Dillian reveals that his contrarian approach to portfolio construction stems directly from personal loss — his net worth was cut in half between 2007 and 2009, partly because he held significant Lehman Brothers stock that went to zero, motivating him to build a permanently lower-stress investment structure. 💼 SPONSORS [{"name": "Accenture", "url": "https://accenture.com/spotify"}, {"name": "Found", "url": "https://found.com"}, {"name": "Function Health", "url": "https://functionhealth.com/beginners"}, {"name": "Indeed", "url": "https://indeed.com/podcast"}] 🏷️ Portfolio Construction, Asset Allocation, Bond Investing, Market Volatility, Passive Investing