Jared Dillian: The Awesome Portfolio: Why Smoother Returns Beat Bigger Ones

My guest today is Jared Dillian—former Lehman Brothers index-arbitrage and ETF trader, founder of the 18-year-old professional market letter The Daily Dirtnap, registered CTA, author of seven books, and an unusually multidimensional market thinker whose work joins macro trading, practical personal finance, risk control, writing, mental health, and electronic music.

Today, are we talking about his new book The Awesome Portfolio, a simple, stress-free approach to investing.

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Core thesis: "to make people make stupid decisions" is, in Jared's telling, the whole purpose of volatility — Vanguard's own data shows investors rarely capture the returns their funds actually post.

Vanguard's "advisor alpha": simply having someone stop you from trading boosts returns by 3%. But Jared argues even a good advisor can't erase the stress of a 50% drawdown.

The Awesome Portfolio's worst-ever year: down 12%, versus an 89% max drawdown for the S&P since 1929. "Drawdowns affect psychology."

The "life hedge": your job and the market tend to move together, amplifying your life's volatility. The ideal hedge would move opposite — nothing fully does.

Risk of ruin, via a $300M Powerball thought experiment: "wealthy people think about the risk of ruin and middle-class people don't."

Reflexivity: the top 7 stocks make up 35% of the index, so buying the index means buying concentration.

The five 20% slices — stocks, bonds, gold, cash, real estate — rebalanced once a year, deliberately simple.

Why crypto got cut: even a small Bitcoin allocation would dominate investor attention and undercut the whole stress-free premise.

Stress-tested against a literal nuclear war, Jared still can't find a scenario where all five assets fail together.

Closing candor: "Books succeed when they tell people things they already believe" — which is why he expects pushback, not a bestseller.

Podcast Program – Disclosure Statement

Blue Infinitas Capital, LLC is a registered investment adviser and the opinions expressed by the Firm’s employees and podcast guests on this show are their own and do not reflect the opinions of Blue Infinitas Capital, LLC. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed.