Jared Dillian: The Hidden Dangers in the Global Economy
In this episode, the ReSolve team is joined by Jared Dillian, the editor of The Daily Dirtnap and author of the book No Worries: How to Live a Stress-Free Financial Life. They delve into a variety of topics, including the power of diversification, the importance of understanding financial stress, and the current state of global financial markets.
Topics Discussed
• Jared Dillian's perspective on the current macro views on monetary policy, hard assets, and other financial matters
• The concept of financial stress and how to minimize it, focusing on debt and risk
• The importance of time and rational decision-making in buying a house
• A discussion on the current state of advice in the financial industry
• The 'Awesome Portfolio' - a diversification strategy that includes stocks, bonds, cash, gold, and real estate
• The role of gold in a diversified portfolio and its comparison to Dennis Rodman's role in a basketball team
• The potential future of inflation and its impact on the global economy
• An exploration of emerging markets, with a focus on India and Argentina
• A discussion on potential future challenges in the financial market, including the possibility of high interest rates
This episode offers valuable insights into financial stress, diversification strategies, and the future of global financial markets. It's a must-listen for anyone interested in understanding the complexities of the financial world and gaining strategies to navigate the uncertain financial landscape.
Transcript
Dennis Rodman is in the Hall of Fame, Basketball Hall
2
:of Fame, and he's the lowest scoring
member of the Basketball Hall of Fame.
3
:And there was actually a controversy
about whether he should even be
4
:included in the Hall of Fame.
5
:He scored like six points a
game or something like that.
6
:If you had a team full of Dennis Rodman's,
if you had five Dennis Rodman's on a team,
7
:it would be the worst team in basketball.
8
:Right?
9
:Because it can't score, but Dennis
Rodman can rebound and he can pass.
10
:So what happens is if you take
Dennis Rodman and add him to a
11
:team of four people that can score,
the team gets much, much better.
12
:Right.
13
:And that's really what gold is about.
14
:if you had a portfolio that was just
gold, I mean, you said gold did really
15
:well in the seventies, but also gold,
kind of like real estate has gone up 4
16
:percent a year since, you know, the 1930s.
17
:So if you had a portfolio that
would, that was just gold, it
18
:would not be very exciting.
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:When you, when you take gold and you
add it to a bunch of other stuff,
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:that's when things get better.
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:Mike Philbrick: All right, welcome
to another edition of Resolve Riffs.
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:Today we've got a very special guest,
freshly minted new author of the book
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:No Worries, How to Live a Stress Free
Financial Advice, Jared Dillian, also
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:the editor of the Daily Dirt Nap, a
fantastic newsletter for I think a lot
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:of out of the box thinking and has been
inuously in publication since:
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:Jared, welcome to Resolve Riffs.
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:I'm sure there'll be lots of, of our
listeners who will be pleased and excited
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:to hear what you have to say, both on,
uh, taking the stress out of money and
29
:what your current macro views are on, you
the current machinations around the world
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:with respect to monetary policy, hard
assets, and all of those types of things.
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:So welcome to the channel.
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:Jared Dillian: Hey, thanks for having me.
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:Adam Butler: should mention
it's, it's, this is not Jared,
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:your first novel, right?
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:You've got a, you've got a few
other novels under your belt.
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:What are they?
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:Jared Dillian: Uh, well,
the first book was a memoir.
38
:It was called Street Freak, Money
and Madness at Lehman Brothers.
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:And that was in 2011.
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:And then in 2016, I published a novel
called All the Evil of This World.
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:2023, I published an essay
collection called Those Bastards.
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:And then No Worries in 2024.
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:And I have a short story collection
coming out later this year.
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:Well,
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:Adam Butler: kind of cool.
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:So I think, you know, Mike and I lived
through many of the, same formative
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:milestones of the journey that probably
motivated the writing of your first
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:three books, maybe not your exact
experience with Lehman Brothers,
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:but the decisions made post Lehman
Brothers and, the constant creep of
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:Supervision, regulation, intervention,
markets, making markets less and less.
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:free to act on, you know, as
a price setting mechanism and
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:more, as a policy mechanism for
various government objectives.
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:but this latest book is, is quite
a departure from those themes.
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:at least that's my sense.
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:If so, what motivated that, that
shift in, in interest or curiosity,
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:that thread that you wanted to pull?
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:Jared Dillian: I really wanted to
write a book about personal finance.
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:around 2018 I started reading
all the classics, right?
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:So rich dad, poor dad and the millionaire
next door and the Dave Ramsey book.
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:And I read all those and I kind of came
to the conclusion that The advice that
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:people were getting, you know, average
people were getting from these personal
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:finance gurus was pretty terrible.
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:and at the time I had a radio show, uh,
actually had a radio show on personal
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:finance that was, not a big show, but I
was, I was on every night for two hours.
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:And the themes I kept coming back
to was this idea of financial
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:stress and how to minimize it.
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:And a lot of the advice
that people are given.
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:may help them get more money in
the long run, but it does at a
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:cost and that cost is your sanity.
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:So really the two sources of
financial stress are debt and risk.
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:So the idea is you want to minimize your
debt and minimize your risk to the best
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:extent that you can, and then you can
be happy with your financial situation.
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:Mike Philbrick: Is there any,
is there anything in particular
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:that really bothers you about the
current state of advice going on?
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:Any, any particular examples that
are, uh, get under your skin?
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:Jared Dillian: Well, a lot of
it focuses on Cutting expenses.
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:This, this obsessive focus on
cutting, cutting small expenses.
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:And the classic example that everybody
knows because Susie Orman talked about
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:it is, buying coffee at Starbucks, right?
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:She says if you buy coffee at
Starbucks, it is like peeing a
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:million dollars down the drain.
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:Because if you, if you saved 4, every day
for the next 40 years and you invested
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:it, you could have 100, 000 or whatever.
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:So, stop drinking coffee.
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:And what I found was, you know, if
you do the math on it, it really
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:doesn't make a lot of sense.
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:through one decision, like buying a house,
if you get a house that's 500 square
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:feet smaller, And it's correspondingly
cheaper than you're paying a lot less in
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:interest over the life of the mortgage.
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:And it ends up being way more money
than what you might've saved by not
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:being, not by not buying coffee.
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:So it's really, the goal is to focus on
the big things and not the little things.
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:The little things don't matter.
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:The big things matter.
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:Mike Philbrick: It reminds me a little
bit of you know, the, the willpower
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:sort of some of the books on willpower,
where you have these, you know, these
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:small things that you're going to deprive
yourself on a regular basis, but they
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:chip away at the ability for you to
actually stick to that sort of stuff.
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:So you end up failing on the small stuff.
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:And if you're not making the big
decisions right in the first place.
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:then it's kind of total catastrophic
failure across the board.
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:And I guess your point is get these
pillars correct, get the house right,
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:get the student debt right, you know,
figure out how to get a car properly,
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:use credit cards in a smart way.
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:and then the little stuff, enjoy
your life, I guess is kind of the,
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:Jared Dillian: The reason why that
fails is because human beings can
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:give up large luxuries, but they
can't give up small luxuries, right?
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:Like you can live in a slightly
smaller house and you're
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:not, Like this house sucks.
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:I hate it.
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:I can't wait to move out of here.
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:It doesn't really matter.
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:You're sitting in the living
room watching TV anyway.
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:Like you can give up a, you can
give up a slightly larger house, but
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:you can't give up coffee every day.
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:It's these small luxuries that we need
and they don't cost a lot of money.
117
:And I said, people can give
up large luxuries, but they
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:can't give up small luxuries.
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:Mike Philbrick: and I guess those, those
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:small, sorry, go ahead Adam.
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:Adam Butler: You know, it's cool.
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:I was gonna say, you know, so much
of the cost of a home is, not so
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:much related to square footage as
it is to time of travel, right?
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:Like, you want to live within a
certain time of travel to your,
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:to work, for example, right?
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:and there's, you know, there's sort
of a minimum amount of space that, a
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:new family, for example, can use to
approximate some kind of middle class
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:lifestyle, whatever that means these days.
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:So, you know, I'm just wondering
how you trade off because that time
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:factor is to my mind, quite different
than the space factor, right?
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:Because that time factor is something
that you'll just never get back.
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:You spend an extra 20 minutes in the
car every day, versus spending a little
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:more to live a little closer to work.
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:But all those homes are owned by people
who bought them 30 or 40 years ago.
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:You know, how do you try to factor
that into the home buying equation?
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:Jared Dillian: Well,
time is super important.
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:You know, the interesting thing is,
is that, in about two weeks, I'm
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:moving into a house that I built.
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:And the house has a dedicated office space
and I'm going to be working from home.
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:So my commute goes to zero, right?
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:my wife's commute gets longer.
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:she has about a 45 minute commute right
now, which is going to turn into an hour.
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:But she only has to go into work
like two or three days a week.
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:So it's not that big of a deal,
but like you said, like time
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:is, time is super important.
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:So I know I never, I never really
understood these people who lived
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:in like Easton, Pennsylvania and
commuted all the way to New York city
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:every day, like two hours each way.
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:Like, I mean, yes, you can be productive
on the bus and you have a laptop and you
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:can read books and stuff like that, but
that's a, that's a colossal waste of time.
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:Adam Butler: Yeah, I guess I agree.
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:I guess my, my point was, or question
was sort of how you, how you would
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:advise thinking through this issue?
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:Because I think, you know, the size
of the house has, to my observation,
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:kind of largely, Become secondary
to the time you get to spend with,
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:family or doing things that you
like rather than commuting, right?
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:And that as a function of that,
the, cost of time ends up being
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:the limiting factor, not the cost
of more, of more housing space.
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:Jared Dillian: Yeah.
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:And I think people tend to undervalue
time, with respect to money.
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:I think they put a higher value on
money and less value on time when
162
:it should be the other way around.
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:It should be the other way around.
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:So
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:Adam Butler: Yeah.
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:No, I agree.
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:And obviously working from home, is a
growing trend or, I guess it's probably
168
:in the middle of finding some kind
of equilibrium, but at the margin, it
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:seems like this is a growing trend and
that trade off will become less and
170
:less important over the next few years.
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:Jared Dillian: yeah.
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:Adam Butler: see
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:Mike Philbrick: is, is as you have
debt to, you know, pay it down
174
:quickly, which is interesting.
175
:I don't know if, you guys ever, you
know, heard about the, uh, when interest
176
:rates got to that sort of zero bound
and stay there for such a long time.
177
:Something I heard from the
younger generation was Why
178
:would I ever pay off, right?
179
:This idea that I'm always
going to have it anyway.
180
:And, and the, the management of
the, of that is so, um, it's at
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:such a low rate and so manageable,
I'll just leave her up continually.
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:And, as someone who.
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:You know, witnessed a little
bit of the 70s at the tail end
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:and can remember that in some of
the 80s and early 90s in Canada.
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:That's kind of a head scratcher.
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:People just didn't have the experience
of having a period of time where interest
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:rates ratchet up quickly, which they have.
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:So maybe this is less of a lesson
today than it was back then.
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:But walk us through some of the
thoughts on debt and how you think the
190
:perception of debt over time has changed.
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:Jared Dillian: Well pretend you had a
mortgage with a 0 percent interest rate.
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:Okay.
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:So you were just making
principal payments.
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:You can still default on that mortgage.
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:Like you can still default
on it and lose the house.
196
:Okay, so the value in paying off a
mortgage is to reduce your stress.
197
:Now, I paid off a couple of mortgages
in my lifetime, and I can tell you that
198
:when you own a house free and clear,
it reduces your stress massively.
199
:If you own your house free and clear.
200
:There is, you are untouchable.
201
:You are in an unassailable
financial position.
202
:It really, no matter what happens
to you, you have a place to live.
203
:Nobody can take the house away from you.
204
:So, you know, I say in the book
that everybody should strive.
205
:to pay down their mortgage
in 10 years at a minimum.
206
:my last mortgage, I paid off in
three and a half years, right?
207
:Now the other part of that
is, that's, that was a 3.
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:75 percent mortgage.
209
:so you say, well why did you pay
it off in three and a half years?
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:Well, basically, after I paid it off, I
added up all the interest I paid in three
211
:and a half years, and it was 70, 000.
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:And I said to myself, what could
I have done with that 70, 000
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:aside from paying it to the bank?
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:Like interest interest is the
worst thing in the world because
215
:you get no enjoyment out of it.
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:Is paying interest fun?
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:Do you get some utility out of it?
218
:It's basically all you're doing
is contributing to bank profits.
219
:And one of the things I say in
the book is you never want to
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:be a good customer of the bank.
221
:And a good customer of the bank
is somebody who makes a minimum
222
:payment every month, pays the
maximum amount of interest.
223
:Never prepays, and that's a
good customer of the bank.
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:So I never do that.
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:Adam Butler: Right, okay.
226
:So part of your, how to buy a home.
227
:Is to buy a home that you have a
good shot at paying off aggressively
228
:or on aggressive timescale, right?
229
:you, you've got a few other points
in the book about, you know, a lot
230
:of people don't make thoughtful
decisions in how they buy a home.
231
:What are some other elements
that people often miss?
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:Jared Dillian: Well, you know,
buying a house for a lot of people
233
:is an emotional decision, right?
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:Like they they see a house or, you
know, they get a realtor and the
235
:realtor shows them a bunch of houses
and they fall in love with one.
236
:They say, Oh my God, we have
to, we have to live here.
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:Right?
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:We can, the kids can play in the yard
and we can put the TV here and bedrooms
239
:over here and they see themselves in the
house, then they have to have the house
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:and then it becomes an emotional decision.
241
:I would say 95 percent of home
buying, really unless you're an
242
:investor, is an emotional decision.
243
:Once you've decided you want the house,
you have to have the house and then
244
:you're willing to overpay for it.
245
:And that's what happens to
the vast majority of people.
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:It has, you have to separate.
247
:The emotions from buying a house.
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:It has to be just a rational decision.
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:Adam Butler: One of the things that,
cause I mean, that just seems to make
250
:a ton of sense to me and I've, I've
always embraced the idea of trying to pay
251
:off a mortgage as quickly as possible,
even, even during the low rate period.
252
:but you know, that, that seems to
have just flown out the window.
253
:And, and part of the reason that
that has, you know, people almost
254
:laugh at that idea now is that it has
paid so handsomely to be imprudent.
255
:Over the last 10 years, right?
256
:I mean, the smartest thing in retrospect,
you could have done 10 or 15 years
257
:ago is buy a home vastly outside of
your, affordability range, continue
258
:to ratchet down the interest rate
that you pay on that loan as, as the
259
:fed and other factors lowered rates.
260
:And of course, as a function of the
fact that people began to think about
261
:home prices in terms of not the cost of
the home, But the monthly payment on a
262
:home that the prices of homes went up
commensurately over that time and made
263
:everybody who decided to be over leveraged
to buy too much home, very rich, right?
264
:So how do you, how do you
counter this experience?
265
:I mean, I struggle with this.
266
:From a very frustrating
perspective all the time.
267
:And I'm, I'm wondering how you positioned
it in the book so that it connects to
268
:people who obviously have had a very
different experience with, with prudence
269
:and imprudence over the last 10, 15 years.
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:Jared Dillian: Well, I didn't talk
about this in the book, but interest
271
:rates are basically a signal.
272
:Okay.
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:And when interest rates are
low, they're telling you to
274
:borrow money and buy assets.
275
:And when interest rates are high, they're
telling you to sell assets and raise cash.
276
:Right.
277
:And now interest rates are high.
278
:So the calculus is completely different.
279
:I will say that the housing
market is still pretty strong.
280
:you know, at least in the U.
281
:S.
282
:for, demographic reasons.
283
:You know, you have a huge population
bulge, the millennials that are
284
:just starting to buy houses.
285
:And we also had 10 million people
come across the border, which are
286
:going to need a place to live.
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:So, you know, I think housing prices
over the next 10 years in the US
288
:are going to do what they did in
Canada from:
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:So, I think it's, I think they're
going to go parabolic here.
290
:I think it's going to be crazy.
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:Adam Butler: So then, you know, how, how
do you advise, the young person now you
292
:say, look, get in now doesn't really,
yeah, they're vastly overpriced already,
293
:but they're never going to get cheaper.
294
:So just be prepared to have far less
disposable income than your parents
295
:You know, you're going to have
to spend a lot more on your home.
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:Jared Dillian: yeah, I mean, that's, look,
that's an economic forecast and there
297
:are no economic forecasts in the book.
298
:You know, I didn't, I didn't, you never
want to put a forecast in a book, right?
299
:Because
300
:Adam Butler: Yeah.
301
:Jared Dillian: going to
turn out to be wrong.
302
:And then you're going to look stupid.
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:Right.
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:So I didn't make, I didn't make
any forward looking statements on
305
:what the housing market is going
to do over the next 10 years.
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:But, you know, usually the housing
market is, um, not, doesn't
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:really provide a great return.
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:Like if you look over the last 100 years,
housing has returned about 4 percent
309
:a year, which barely beats inflation.
310
:and it's, you know, having said
that, even though it hasn't been
311
:a great investment for a lot of
people, it is a great investment.
312
:Because a lot of people don't have
the ability to save and invest.
313
:they can't put money in a bank
account, they can't buy stocks,
314
:they can't buy mutual funds.
315
:But what they can do is
pay off a mortgage, right?
316
:And build equity over time.
317
:There's a lot of people in this
country Who have, you know, they
318
:bought a house for 70, 000 in 1979.
319
:And in 2024, they sold it for 900, 000
and it would, the mortgage was paid off
320
:and they had a hundred percent equity.
321
:And they take that money and they move
to a place like South Carolina and
322
:they buy a house for 250, 000 and they
just live off the rest and retirement.
323
:Like that story happens
over and over again.
324
:And these are people who never
bought a stock, bought a mutual fund
325
:or anything, but they just, Yeah,
326
:Adam Butler: Yeah, I guess the question
is, how do you, how would you advise
327
:millennials at the moment who are, as
you say, at the point in their lives
328
:when they do want to start a family?
329
:For many, the biological clock is ticking,
but they're faced with a housing market
330
:that is going from strength to strength.
331
:It started from very expensive,
interest rates have risen.
332
:So the monthly payment now is even
twice what it was, three years ago.
333
:I'm just wondering your,
your thoughts on it.
334
:Cause I, I personally struggle
with what the advice should be.
335
:Jared Dillian: it's a hard decision.
336
:I mean, look, it's also an
asset allocation decision.
337
:You want to have some money in stocks.
338
:You want to have some money in bonds.
339
:You want to have some money in cash.
340
:You want to have some
money in commodities.
341
:You also want to have
some money in real estate.
342
:And if you're renting, I mean, there's
nothing wrong with renting, but what
343
:that means is you don't have any exposure
to real estate as an asset class.
344
:So if real estate as an asset class
does really, really well, and you
345
:own stocks and bonds, which don't do
very well, then you're missing out.
346
:You're missing out on
that diversification.
347
:So, since you can't predict the
future, you basically want to own
348
:a little bit of every asset class.
349
:Which means you're probably going
to have to buy a house and the only
350
:advice in the book that I give is
that your housing costs should be less
351
:than 25 percent of your income, which
is difficult to achieve, but that's
352
:the goal that you should shoot for.
353
:So your mortgage, your HOA fees.
354
:Your property taxes, your insurance
should be 25 percent of your income.
355
:Adam Butler: Which basically, I think
for, you know, the top dozen major,
356
:major employment centers in the U.
357
:S.
358
:means that your average millennial family
is living about 90 minutes one way to
359
:the office if they have to commute.
360
:Jared Dillian: Yeah.
361
:Yeah.
362
:Pretty much.
363
:Yeah.
364
:I mean, you can stretch it a little bit.
365
:You can do 30 percent of your income,
but what a lot of people do is, you
366
:know, if you live in San Francisco,
then it's 50 percent of your income
367
:and that crowds out your ability to
save or even spend money on fun stuff.
368
:Right.
369
:So look, it's a balance like, you know,
these are, these are hard choices.
370
:Adam Butler: Yeah.
371
:Mike Philbrick: offs,
trade offs, and trade offs.
372
:Adam Butler: Yeah, for sure.
373
:Mike Philbrick: Yeah.
374
:I guess, yeah, those are sources of the
financial stress you talk about, and
375
:you have two sources of that you talk
about in the book, you want to elaborate
376
:on that a little bit more, cause you're
beating around the bush a little bit,
377
:but, you want to lay them out distinctly.
378
:Jared Dillian: So the two sources of
financial stress are debt and risk.
379
:And we've spent a lot of time talking
about debt as it comes to housing.
380
:Um, risk is the investment side,
financial markets risk, and you know,
381
:the conventional wisdom in investing
is that you should put all your
382
:money in the S and P 500 index fund.
383
:And why should you do that?
384
:Because it returns the most.
385
:You should put your money in
the thing that returns the most.
386
:Well, if something has a good return,
it probably also has a lot of risk.
387
:And if you invest in an index, you
get the returns in the index, but you
388
:also get the volatility of the index.
389
:And the S& P 500 is pretty volatile.
390
:It moves around a lot, about 1
percent a day, 15 20 percent a year.
391
:And over the course of an investing
lifetime, there's going to be
392
:one year when it's down 50%.
393
:It's just going to happen.
394
:So I don't think that's very good advice.
395
:because number one, it causes
people a lot of stress, right?
396
:Number two, they may not be able
to withstand that stress and they
397
:may liquidate their investments
at the worst possible time.
398
:So the goal is to be in some kind of
vehicle, which gives you a good return,
399
:but cut your volatility in half.
400
:Mike Philbrick: And then how, how
did you approach that in the, in the,
401
:uh, sleep at night portfolio that,
um, you talked about in the book,
402
:Jared Dillian: Yeah, I called the
awesome portfolio, and that's 20
403
:percent stocks, bonds, cash, gold,
and real estate in this portfolio,
404
:which we backtested back to 1971.
405
:this has returned 8.
406
:1 percent a year.
407
:for the last 53 years with half the
volatility of an 80 20 portfolio and
408
:the worst drawdown in any year was 12.
409
:2 percent.
410
:So you say look, like I'm getting one
percent less than the stock market with
411
:half the volatility And the worst year
that I can possibly have is down 12%.
412
:And by the way, in the year of
the financial crisis, it was
413
:down 9 percent when the, when
the broad market was down 38%.
414
:So even during the financial
crisis, you were protected.
415
:So this is.
416
:this is the solution.
417
:Mike Philbrick: So it's that
old adage of diversification.
418
:Yeah.
419
:And then how do you, so
we're large proponents, big
420
:proponents of diversification.
421
:One of the challenges is the tracking
error that comes with, you know,
422
:having everybody else in your friend
group who are in the S& P and having
423
:the best of times at times and the
worst of times at times, and you're
424
:not in that emotional rollercoaster.
425
:Do you have any thoughts on
that side of the equation?
426
:Jared Dillian: Yeah, I mean, this is,
this also takes some intestinal fortitude
427
:because 42% of the time you are going
to underperform the s and p by 10%.
428
:21% of the time you are going to
outperform the s and p by 10%.
429
:As it turns out, the times when
you're outperforming the s and p,
430
:you do it by a lot more than when you
underperform, but 42% of the time.
431
:You're going to be talking to people
at cocktail parties and they're
432
:going to be bragging about how the
market is up 30 percent this year.
433
:And you're going to be up 11 percent
and you're going to be like, why
434
:am I in this stupid portfolio?
435
:You know, everybody else is
getting rich but me, but in the bad
436
:times is when it has real value.
437
:Mike Philbrick: Yeah.
438
:And a lot of people have forgotten
that:
439
:the S and P where you get.
440
:Two 50 percent declines in the
market and zero returns for, you
441
:know, better part of 12 to 14 years.
442
:So it is a, stocks are risky
and they are a certain regime.
443
:Now that, that might move us
into, um, the area of gold.
444
:I know Adam, you found a, a
wonderful market carpet that
445
:showed the top asset classes.
446
:I forget who published Bank of America,
maybe, and gold seven out of the 10
447
:years in the seventies was the top
performing asset class, not by a
448
:little, I know you're a proponent of,
gold, Jared, but, you know, can we walk
449
:through a little bit of the, the value
of having these different pistons in
450
:the engine of the awesome portfolio
versus, you know, just betting on, stocks
451
:and sort of one regime all the time?
452
:Jared Dillian: Well, a lot of
people, you know, people who have
453
:an index fund, They say, well, I am
diversified because I have 500 stocks.
454
:I'm diversified.
455
:Well, I don't, I don't consider that to be
diversification at all because stocks are
456
:highly correlated to one another, right?
457
:So you have this big basket
of highly correlated stuff.
458
:And they say, well, I'm
going to add some bonds.
459
:Okay.
460
:Well, there's long periods of
time where bonds are actually
461
:positively correlated to stocks.
462
:We saw that in 2022.
463
:So basically what you have is if you have
stocks and bonds, a 60 40 portfolio, you
464
:have this basket of financial assets,
but you don't have any real assets.
465
:And once you start adding real
assets, like gold commodities, real
466
:estate, that's when the benefits
of diversification really kick in.
467
:Right.
468
:And particularly gold, you know,
the, the most special thing
469
:about gold is its diversification
qualities, because it is lowly.
470
:It is very little
correlated to anything else.
471
:And those correlations are not stable.
472
:They change over time.
473
:So it is the perfect
diversifier to any portfolio.
474
:Once you add gold to a portfolio, The
volatility immediately comes down.
475
:That's what makes it so useful.
476
:Adam Butler: uh,
477
:Mike Philbrick: with the, uh, the Dennis
Rodman analogy, which I think is, it bears
478
:repeating cause it's such a great, it's a
great illustrative story on the power of
479
:diversification, via a different avenue
than just scoring all the time, if you
480
:will, maybe you can walk us through that.
481
:Jared Dillian: Yeah.
482
:Well, Dennis Rodman is in Hall of
Fame Basketball Hall of Fame, and
483
:he's the lowest scoring member
of the Basketball Hall of Fame.
484
:And there was actually a controversy
about whether he should even be
485
:included in the Hall of Fame.
486
:He scored like six points a
game or something like that.
487
:If you had a team full of Dennis Rodman's,
if you had five Dennis Rodman's on a team,
488
:it would be the worst team in basketball.
489
:Right.
490
:Because it can't score, but Dennis
Rodman can rebound and he can pass.
491
:So what happens is if you take
Dennis Rodman and add him to a
492
:team of four people that can score,
the team gets much, much better.
493
:And that's really what gold is about.
494
:It if you had a portfolio that was
just gold, I mean, you said gold did
495
:really well in the seventies, but
also gold kind of like real estate
496
:has gone up 4 percent a year since.
497
:You know, the 1930s.
498
:So if you had a portfolio that would,
that was just gold, it would not
499
:be very exciting when you take gold
and you add it to a bunch of other
500
:stuff, that's when things get better.
501
:Adam Butler: what does gold
respond to that makes it so
502
:different from stocks and bonds?
503
:Jared Dillian: I, nobody knows.
504
:Nobody knows.
505
:Seriously.
506
:I mean, gold responds to a
bunch of different things.
507
:I mean, theoretically inflation,
but not really, lately
508
:geopolitical risk, but not really.
509
:the thing that it has the highest
correlation to is budget deficits.
510
:That is the one thing that it
has the highest correlation to
511
:is budget deficits over time.
512
:Adam Butler: So the idea being
that governments have a really
513
:hard time scaling back spending.
514
:Eventually, it becomes very hard to fund
deficits through tax receipts because of
515
:the crowding out effect or what have you.
516
:And, they become more and more
incentivized to monetize some of
517
:that and then because the amount
of currency outstanding or Dollars
518
:outstanding, say relative to a fixed
amount of gold, which really doesn't
519
:change much from year to year.
520
:They don't mind hardly any
of it out of the ground.
521
:then, you know, over time, it's not
that gold so much as rising as it, as
522
:other stores of wealth are falling.
523
:Right?
524
:And, and gold stands out
from that perspective.
525
:That might be one narrative that,
helps explain why it's a nice
526
:diversifier against stocks and bonds.
527
:Jared Dillian: Yeah, that's right.
528
:I actually had a tweet thread
about that a couple of weeks
529
:ago that was pretty popular.
530
:I just, that's the exact concept
that I was talking about.
531
:So,
532
:Adam Butler: Gotcha.
533
:And then real estate, typically
people own real estate with
534
:quite a bit of leverage, right?
535
:Because they're, you know, they're
buying it, with a mortgage, right?
536
:I mean, obviously, if they pay it
down really quickly, then that, that
537
:leverage factor declines conventionally.
538
:But for many years, they end up with this.
539
:Like highly levered bet on, on real
estate and obviously equities are
540
:much more risky than bonds are.
541
:Any thought to the fact that you've
got, you know, different types of
542
:assets which are diverse in their nature
and what drives them from day to day
543
:and week to week and month to month.
544
:but they have very
different, Risk profiles.
545
:And that a lot of the time, you know,
leave a real estate or, the equity
546
:side of the, basket will dominate
what happens in the portfolio and the
547
:diversification opportunity from stuff
like bonds and cash are, they don't
548
:really have a chance to shine through.
549
:Jared Dillian: well, I mean, the funny
thing is, is that, you know, that 12.
550
:2 percent drawdown that I talked
about in the awesome portfolio,
551
:uh, that actually happened in 2022.
552
:that was, that was the worst
year for the awesome portfolio.
553
:Stocks were down, bonds were down,
real estate was on, you started to
554
:earn more money on cash and it was
also a pretty bad year for gold too.
555
:so that the one vulnerability to
any kind of diversification is
556
:rapidly rising interest rates.
557
:In a period of rapidly rising
interest rates, really, the
558
:only place to hide is cash.
559
:The only place to hide is cash.
560
:So that actually might happen again.
561
:You know, that, that
could be:
562
:It's possible that interest
rates could go up a lot more.
563
:We go through that again.
564
:so yeah, I mean, in times when interest
rates go up a lot, then everything
565
:becomes correlated to the downside.
566
:Adam Butler: Right.
567
:So let's, let's discuss some themes here.
568
:I mean, you mentioned that we, we
could see another, inflation push
569
:over the next couple of years or so.
570
:what might drive that?
571
:In your view, and then we'll also sort
of move around a little bit into some
572
:of the other themes you're watching.
573
:Jared Dillian: well, I mean, really
inflation is, you know, as Milton
574
:Friedman said, a monetary phenomenon,
but it's also a psychological phenomenon.
575
:And for years, even though the fed
was printing a lot of money, we
576
:had a disinflationary psychology.
577
:People did not expect price rises.
578
:The, this is how people behave.
579
:If you think that prices are
going to rise, then you act in
580
:such a way to make prices rise.
581
:Yeah.
582
:Let's say you're going to Home
Depot and you're going to buy a bag
583
:of fertilizer and it costs like 8.
584
:And you get to Home Depot and you're
like, well, you know, we have inflation
585
:and, I don't know what this bag of
fertilizer is going to cost a year
586
:from now and I might need some more.
587
:So instead of buying one, I'm
going to buy 10 and I'm just
588
:going to keep them in my basement.
589
:And the act of me buying 10 and
everybody else buying 10 pushes
590
:up the cost of fertilizer.
591
:It accelerates economic activity, right?
592
:So even though inflation has come
down from the highs, which were
593
:about 9 percent and now we're at 3.
594
:5%, we still have an
inflationary psychology, which
595
:I'm sure you would agree with.
596
:People are expecting
prices to go higher, right?
597
:If you go back to the late 70s, early
80s when Paul Volcker was chairman,
598
:the thing that he did that was so
special was he raised interest rates
599
:so much and so fast that it broke
that inflationary psychology, right?
600
:And we haven't done that yet.
601
:And if you go back to the 70s,
and if you look, There were
602
:really three waves of inflation.
603
:In 1969, you had a bump of inflation
to about four or five percent.
604
:Then in 1973, 74 went up to
about eight or nine percent.
605
:And then in 1979, it went
up to like 14 percent.
606
:So we are currently in, we just passed
the second wave of inflation, and I think
607
:that we are going to get another one
that is bigger than the previous one.
608
:So, because we did not break
that inflationary psychology.
609
:And this is going to continue until we do.
610
:Adam Butler: Right, and what would be
some signs that we were beginning to break
611
:that inflationary society, um, psychology?
612
:Do we need a major uptick in
unemployment or a major fall in prices,
613
:say in equity prices or, , you know,
in aggregate prices in order to.
614
:To believe that, that cycle may be over.
615
:Jared Dillian: You need all those things,
but interestingly, interestingly, one
616
:big component of inflation is regulation.
617
:And regulation is known
as inflation by fiat.
618
:So if you regulate an industry, you impose
costs on it, and the industry has to raise
619
:prices in order to cover those costs.
620
:So if you have a period of
time where you have increasing
621
:regulation, Increased costs.
622
:And what you, another thing that
you saw correspondingly in the
623
:late seventies and early eighties
was a big wave of deregulation.
624
:We saw that in the airlines, we
saw that in a lot of industries
625
:and prices dropped a lot.
626
:And it was actually
because of deregulation.
627
:So that's a big part of it.
628
:Adam Butler: Gotcha.
629
:And we don't seem to be in a
cycle where the government is
630
:hurrying to get out of the way.
631
:They, they seem to be moving, steadfastly
in, in the opposite direction.
632
:Jared Dillian: no.
633
:And if, and if we did, if the government
did get out of the way and started a
634
:wave of deregulation, you would want
to buy bonds until your head caves in.
635
:So
636
:Adam Butler: what are some of the other
themes that you're watching though?
637
:Jared Dillian: Uh, well, gold for sure.
638
:private equity is probably the biggest
one I'm focused on at the moment.
639
:I am of the belief that we have a
private equity bubble, like, so I saw,
640
:An article today that private equity
is going to be buying NFL teams.
641
:they've already bought minor
league baseball teams, but they've
642
:been buying dental practices and
pizza parlors and car washes.
643
:And, you know, the funny thing about
finance, Is that somebody comes up with
644
:a good idea and implements it and they
make money and then it turns into monkey
645
:see monkey do and everybody is doing it.
646
:We have 17, 000 private equity firms in
the United States and this all made sense
647
:when You know, interest rates were zero
and you could buy a business for four or
648
:five times multiples, but now interest
rates are 5 percent and you're buying
649
:businesses at 10 or 12 times multiples.
650
:Like, this is not going to end well.
651
:And it's going to have systemic effects.
652
:It's going to crash.
653
:It's going to be a problem.
654
:So
655
:Adam Butler: when private equity
gets involved is that, and it's this,
656
:it's this weird cycle where, you
know, so much of private equity is,
657
:investors are, are pension funds and
sovereign wealth funds and endowments.
658
:And so you've got these, pension
funds who are acting on behalf of.
659
:Their stakeholders, you know, ex employees
of a company or, you know, but just your
660
:average everyday citizens, and this is
their retirement savings and you give
661
:them money to private equity and they go
out and they buy homes and they go out
662
:and they buy gas stations and they buy
dental practices and they buy, um, health
663
:insurance providers, et cetera, et cetera.
664
:And then they proceed to make the margins
in all of those different businesses.
665
:wider, the, you know, cut the
customer service out in order
666
:to, to get those wider margins.
667
:And, you know, these are all
relatively essential services to
668
:the very people that Are funding
these private equity investments
669
:via their pension contributions.
670
:And it just goes round and around
and makes everybody's life worse.
671
:Jared Dillian: Well, I can tell you
that Pension funds and endowments,
672
:you know, places like CalPERS,
like, the, the goal in those
673
:places is to avoid accountability.
674
:the, those decisions are being made by
committees of lots of different people
675
:and, uh, everybody, you know, the,
the goal is to, Prevent embarrassment.
676
:So people do what is
popular or fashionable.
677
:So, you know, CalPERS actually
just put another 34 billion into
678
:private equity, on the highs.
679
:So, yeah.
680
:Adam Butler: Might be a good segue
into, um, we touched on it a little bit
681
:earlier, but you know, Mike and I, and
well, we have just in general on this
682
:podcast and at Resolve and of the view
that, that benchmarking in general is one
683
:of the most insidiously evil, pursuits.
684
:That, seem to be absolutely pervasive
in the investment management industry.
685
:any, any thoughts on, on
benchmarking in general?
686
:I mean, obviously, benchmarking is
driving the phenomenon that you were
687
:describing in private equity, but
it kind of drives a lot of those.
688
:You know, in the end, very
bad investments, right?
689
:Jared Dillian: what do
you mean by benchmarking?
690
:I don't understand.
691
:Adam Butler: Just like having a
policy portfolio, making sure that
692
:your policy portfolio is close to
the other policy portfolios or asset
693
:allocation mixes of your peer group,
and then being held accountable not to
694
:whether that asset allocation actually
makes sense or is aligned with the
695
:objectives of your stakeholders, but
using that benchmark allocation or
696
:the The underlying equity benchmarks
within the equity sleeve of the policy
697
:portfolio, or the bond benchmark within
that bond sleeve as an end in itself.
698
:Jared Dillian: Well, I, you know, I, I,
look, I think about things in terms of
699
:absolute return and not relative return.
700
:You know, like the mutual fund
world is very weird to me.
701
:You know, if you have a small cap manager,
and they lose 15% in a year, and the index
702
:is down 20%, then they're thrilled, right?
703
:Like, they're happy.
704
:And I'm like, guys, you've lost money.
705
:Like, I, you know, like, I don't get it.
706
:so I've always been, you know,
of the absolute return mindset.
707
:I don't, I don't really
understand that at all.
708
:So,
709
:Adam Butler: Yeah.
710
:I mean, the strange thing about that
example is that if the small cap
711
:manager who, you know, 95 percent of
people who allocated to that small
712
:cap manager wanted that manager to be
down just slightly less than the small
713
:cap index, and if the manager had.
714
:Too much tracking error to that index
and, did wildly differently, but
715
:even in a good way in that year, many
allocators would be pulling money from
716
:Jared Dillian: yeah, absolutely.
717
:Yeah.
718
:Adam Butler: Yeah.
719
:That's the insidiously strange and evil
dimension, or one of them anyways, of
720
:this obsession with, with benchmarking.
721
:Really makes no sense.
722
:Mike Philbrick: So what do
you, also let's, uh, expand.
723
:We gold, obviously you're a big
proponent of gold, both as a long
724
:term diversifier, as well as
potentially a short term opportunity.
725
:I think you're on sort of record for that.
726
:Anything you want to add there?
727
:And I'd like to broaden
the gold discussion out to
728
:commodities more generally.
729
:If you're seeing things, um, in the energy
space that are particularly interesting
730
:and how you're interpreting the impact
of oil and the oil shocks might have
731
:on, your current global macro thesis.
732
:Jared Dillian: gosh, I don't have a,
I don't have a global macro thesis.
733
:I'm just, uh, I'm, I'm just a trader.
734
:I just, I, I mean, I would just
say that commodities broadly have,
735
:you probably seen that chart.
736
:of commodities relative to financial
assets over like the last 15
737
:years or something like that.
738
:And financial assets were very
expensive and commodities were very
739
:cheap and that chart was on the lows
and now it's starting to tick up again.
740
:So if we really do have an
inflationary environment, which I
741
:think we will over the next couple
years, commodities are going to
742
:outperform and they're starting to.
743
:gold and copper for sure.
744
:Oil has come up a lot.
745
:the one thing that really has,
we've seen cocoa and, uh, orange
746
:juice obviously have exploded.
747
:Some of the soft commodities,
coffee has gone up a lot.
748
:Uh, the one thing that really hasn't
gone up, Is agriculture, which
749
:is kind of a function of, climate
change, which has been beneficial
750
:for agricultural production and also
crop yields and stuff like that.
751
:So, but yeah, commodities have
come up a lot and I expect
752
:them to come up even more.
753
:Mike Philbrick: And then, yeah, so
that this idea of diversity as well,
754
:I think, you know, there's been a few
folks out there talking about, for
755
:example, the S& P 500, 500 stocks, but
you know, 4 percent is designated, 4.
756
:5 percent designated to sort of
the energy sector and another 2
757
:percent to the material sector.
758
:And so if you're thinking that.
759
:Your stock portfolio has
any hedge to energy prices.
760
:It's really not true.
761
:I mean, you have to go back to 2008
when, the exposure to the energy
762
:sector was up in the 16 percent range.
763
:At least then you had some exposure.
764
:Today's exposure exposure is de minimis
and the cashflow is coming from the energy
765
:sector, you know, sort of three times.
766
:The size of the free cashflow coming
from Microsoft and Microsoft, you know,
767
:three times the valuation in the index.
768
:So it's, we are set in a particularly
strange way for, you know, a dis
769
:inflationary environment, sort
of peaking in the S and P 500.
770
:And if we get an inflationary environment.
771
:You know, underneath the surface,
the index can churn a long time,
772
:not go very far as the sectors
underlying sort of readjust to
773
:where cash flows are coming from.
774
:Jared Dillian: yeah, I mean,
uh, a lot of things there.
775
:First of all, the good news is, is that
unlike the seventies, you can, it's now
776
:super easy with the click of a button.
777
:You can get exposure to the energy sector.
778
:We have ETFs, right?
779
:So, you know, you can, you
can build whatever portfolio
780
:of sector ETFs you want.
781
:you don't have to just accept
what's in the S& P 500.
782
:So that's really easy to do.
783
:Yeah.
784
:Mike Philbrick: Yeah, so you
should, you should empower yourself.
785
:And then the awesome portfolio, it
seems a little bit, it's somewhat
786
:similar to the Talmud as well.
787
:I don't know if you've, if you've
ever seen the Talmud portfolio from
788
:several thousand years ago, I think
it was a A third businesses, a
789
:third gold and a third, is it cash?
790
:Something along those lines.
791
:Jared Dillian: I don't know about this.
792
:Mike Philbrick: You know, it's,
it's a, it's like a:
793
:portfolio, like of a, of a similar
elk you've, you've, dissected a
794
:little more at a little bit more, uh,
795
:Adam Butler: certainly in the same family
as the permanent portfolio and, you know,
796
:the idea of global risk parity, you know,
you know, this sort of the idea being that
797
:we want to be diversified Against regimes
that are unfriendly to equities, right?
798
:I think that's, that's the basic theme.
799
:Jared Dillian: Yup.
800
:Yup.
801
:Adam Butler: that we can, that we
can see through history and that are
802
:favorable for different asset classes.
803
:And, and you should be positioned
to benefit from that and not be
804
:completely at the whims of whether you
happen to be in a positive tailwind
805
:environment for equities, right?
806
:What about international equities?
807
:Jared Dillian: Well, that's
a great question because US
808
:stocks are super expensive and
foreign stocks are really cheap.
809
:So gee whiz, like you should definitely
be overweighted to international stocks.
810
:And so I actually got this question
recently about the awesome portfolio.
811
:Like somebody who's like, why
don't you have any international
812
:stocks in the awesome portfolio?
813
:I mean, Think of the Awesome
Portfolio as an index, and you
814
:can depart from that index.
815
:I actually, I have almost
nothing in the way of U.
816
:S.
817
:stocks.
818
:In fact, I am probably net short U.
819
:S.
820
:stocks.
821
:In fact, I know I am.
822
:I'm net short U.
823
:S.
824
:stocks.
825
:I have Investments in India and Argentina
and EM broadly and Europe broadly.
826
:but I I'm net short the U S which is
kind of by design, but kind of not.
827
:but certainly.
828
:You know on valuations like U.
829
:S.
830
:stocks are just so overvalued
relative to overseas.
831
:And one of the reasons
that is, is because the U.
832
:S.
833
:is the only country with big tech stocks.
834
:You know, and big tech
stocks have done the best.
835
:Europe doesn't have big tech stocks, so.
836
:Adam Butler: So let's
explore some of those.
837
:I mean, I'm a big bet in India.
838
:And, emerging markets.
839
:What is behind those?
840
:Any, any particular narrative
you're following there?
841
:Jared Dillian: Well, India, India,
India is really, it's become sort of
842
:consensus in the last couple of months.
843
:it's a great chart.
844
:It's been doing well.
845
:Modi is still popular in India.
846
:He's still an economic reformer.
847
:the demographics are good, unlike China.
848
:You know, the thing about the
emerging market CTFs is that they're
849
:all heavily weighted towards China.
850
:Like the EEM has like 35 percent
in China or something like that.
851
:And China has the worst
demographics of any EEM country.
852
:No, not to mention all kinds
of other bad stuff, you know?
853
:So I think with EEM, you
can't really generalize.
854
:Like you could generalize in 2002.
855
:You could say, I'm just going
to buy all emerging markets.
856
:Because they all have the
same characteristics, but
857
:you can't do that today.
858
:You have to pick and
choose in emerging markets.
859
:So
860
:Adam Butler: And Argentina,
you're bullish on.
861
:Jared Dillian: yeah, I actually, uh,
I've been in Argentina for a while.
862
:as soon as I heard of Javier
Millet, I bought Argentina.
863
:I had him picked to be the next
president and, that bet worked
864
:out and that's been a great trade.
865
:So,
866
:Adam Butler: Yeah, it seems to me
that that model that he is doing a
867
:pretty darn good job of executing
on, is kind of a sandbox for what
868
:the global economy is eventually
going to need to reconcile with.
869
:and I, you know, when I was.
870
:Reading about his policies, it seemed
to me that it was more likely that
871
:they're going to go through a period
of extreme contraction and pain
872
:before they come out the other side
with a clean balance sheet, a strong
873
:currency, a healthy private sector,
a healthy, contained public sector.
874
:It seems like the market is sort
of That valley and into the healthy
875
:state that it, you know, might emerge
into and sort of two to three years.
876
:Did you have that intuition at all?
877
:Or did you think this was going
to be, roses right from the start?
878
:Jared Dillian: well, I mean, there,
if you talk to anyone in Argentina,
879
:things are very painful right now.
880
:you know, they've cut a massive
amount of government employees, which
881
:has affected retail in particular,
like people just don't have money.
882
:so I mean, you know, look, Malay
managed to balance the budget within
883
:a couple of months of taking office.
884
:I mean, it's just an
incredible achievement.
885
:I am, it's funny because, I have a
subscriber in Miami who emailed me
886
:last week and he says, look, I have
a friend who's, who knows Malay.
887
:Do you want me to ask him any questions?
888
:And I said, no, not really.
889
:You know, just does he think he can do it?
890
:And he said, yes, he thinks he can do
it, but he is up against the unions.
891
:He's up against, the Congress
like it's, but I, you know, he's
892
:been very successful so far.
893
:So
894
:Adam Butler: Yeah, it seems to me
that, you know, as this progresses,
895
:right, that, you know, the government's
spending is the private sector's
896
:income and the government's.
897
:Debt is the private sector savings.
898
:And so in order to sort of clean this up
and balance the budget, there's a lot less
899
:income to go around in the short term.
900
:again, huge long term
benefits that the West.
901
:Has managed to, avoid at all
costs for the last 20, 25 years.
902
:and I see this as coming out the other
side, if it can be fulfilled and if
903
:people can endure the short term, you
know, two or three years of, of pain,
904
:as being very positive, but it'll,
it remains to be seen whether or not
905
:Jared Dillian: let me give you one,
let me give you one quick statistic,
906
:So in the United States, in the
United States, the stock market.
907
:Market cap is 170 percent of GDP.
908
:In Argentina, it's 9 percent of GDP.
909
:Right.
910
:which is the lowest in the world.
911
:So if you think that if Malay is
successful, and by the way, the
912
:mean is about 100 percent of GDP.
913
:If, if Malay is even moderately
successful and gets the stock market to
914
:50 percent of GDP, that's a five bagger,
915
:Adam Butler: Yeah, no, that's a
really, really interesting statistic.
916
:That's very interesting.
917
:any other themes besides, India and
Argentina that stand out in your
918
:portfolio, even if they're just tactical?
919
:Jared Dillian: No, not really.
920
:I would say that's about it.
921
:Mike Philbrick: And anything, anything
on the negative side that you're, I mean,
922
:obviously private equity, you mentioned,
you don't have a lot of us exposure, so.
923
:You would be sort of eschewing
the, the semiconductors of shooing
924
:the market cap side of things.
925
:Is that sort of the, the feel and more.
926
:Getting that commodities and, and
economies that are, demographically
927
:have positive, waves behind them along
928
:Jared Dillian: Yeah, pretty simple.
929
:Pretty simple.
930
:Mike Philbrick: I mean, it's not
that simple and it's, and it's not
931
:that, sort of well adopted yet.
932
:I mean, something that, gets me excited
about a trade setup, if you will,
933
:is you have, you know, gold as an
le, it's kind of like tobacco:
934
:You've got, the ETF products
across the board in pretty
935
:substantial reductions in AUM.
936
:And at the same time, you
have breakouts to new highs.
937
:Of this, uh, shiny metal.
938
:And so you really don't have,
you know, the, average investor.
939
:And I mean, the average investor,
both retail and institutional,
940
:because institutional investors
do not buy physical gold, they're
941
:going to buy gold largely through.
942
:A proxy, like an exchange traded
fund or product of some kind.
943
:So somebody's buying it, obviously,
you know, we're seeing that through
944
:some central banks in the world.
945
:And then we had some news over the
weekend and the, um, the appropriated
946
:funds of the Russians being, potentially
sent over to the Ukrainians, which is
947
:an interesting set of circumstances,
which is going to make everyone question
948
:the sovereignty of their assets and
where they're held and what they're held
949
:Jared Dillian: Oh, yeah that and and
that's you know, look like as Gold is
950
:actually having a bad day today as you
know I'm not terribly worried about it
951
:I think that you know central banks are
gonna continue to buy it, but that's not
952
:even my core thesis You know, my core
thesis is really about the monetization.
953
:So
954
:Mike Philbrick: So, so that, that's
more of a pegging of the yield
955
:curve, 30s, 40s type situation.
956
:You want to just walk us through that for
the last, for, we'll wrap on that point.
957
:Does that
958
:Jared Dillian: Yeah, so this
happened in the 30s United States
959
:pegged the yield curve for the Fed.
960
:long bond yields were held at 2 percent
for the period, for a period of want to
961
:say like 13 years or something like that.
962
:and at the end of it, at the end of
world war II, inflation ripped to like
963
:18 percent or something like that.
964
:We had a big wave of inflation.
965
:so this is going to be
potentially much bigger.
966
:This, this is, uh, You know, what we're
talking about is the stuff that gold
967
:bugs talk about, like, Weimar Germany
or, Zimbabwe or something like that.
968
:but you know, we really could see a big
developed economy like the US, engage
969
:in full on debt monetization in order
to keep interest rates at a manageable
970
:level, like that actually could happen.
971
:Like you can see the future,
you know, it's coming.
972
:So,
973
:Mike Philbrick: Right.
974
:And with, you know, 1.
975
:1 trillion in, in the cost of the
debt alone, it's going to be some
976
:interesting math to go through
as we progress into the future.
977
:All right.
978
:Awesome.
979
:Well, Jared, thank you for taking the
time and, and, covering the book for us.
980
:And, as I said, you're the editor
of the Daily Dirt Nap and you
981
:mentioned you're on Twitter.
982
:Where else can people find you
that's beyond the, just the
983
:websites for the various, properties
we've mentioned previously.
984
:Jared Dillian: Twitter
I'm on at daily dirt nap.
985
:And the best place to find
me is Jared Dillian money.
986
:com.
987
:Mike Philbrick: Perfect.
988
:Adam Butler: Brilliant, Darren,
thanks so much for coming on, man.
989
:Jared Dillian: Great, great talk.
990
:Enjoy talking to you guys.
991
:Adam Butler: Yeah, us too.
992
:Have a great one.