All-In on the S&P 500 Worked for 18 Years | Jared Dillian on Why It's Still Wrong

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Matt Zeigler (1:02)

You're watching Excess Returns, a channel that makes complex investing ideas simple enough to actually use, where better questions lead to better decisions. Who's with me today? Well, we've got, let's see, from Lehman to Daily Dirtnapping to DJ Stochastic-ing, with 18 books, 4 billion blog posts along the way. Here to discuss the newest book and what we can apply from it even today.

In these wacky markets, it's the awesome portfolio author himself. Hold it up, Mr. Jared Dillian.

Jared Dillian (1:33)

Yes. Yes.

I have the same birthday as Ed McMahon, so I can go, yes!

Matt Zeigler (1:41)

It is your birthright, your God-given birthright, sir, to Ed McMahon.

So, it's a great book. I'm just going to start. I want to start here. This is a great book. This is one of the better portfolio books that I think has come out in a while. I'm not saying, like, the psychology of money and those things sort of took us all in this other direction, but this is, like, a really, really good portfolio book. Do you realize what you did with this?

Jared Dillian (2:10)

I really don't, actually. Like, it's funny, because I...

So, when No Worries came out, God, I did, like, a billion podcasts. Maybe not a billion, but I did, like, 75 It was a lot.

Matt Zeigler (2:27)

Seventy-five is a billion in podcast years. It's like a dog year conversion.

Jared Dillian (2:30)

So, like, I got a lot of feedback on the book. Like, I haven't done as many podcasts this time. Not that many people have read it. I really don't know. Like, I don't have a lot of feedback on it.

I mean, people tell me it's good, but I don't know.

Matt Zeigler (2:46)

You said something obvious with a bunch of nuance footnotes and everything in between. So, we're going to get into this, but let me start you here because we've talked a lot about these things. There's other episodes. Go look up our back episodes on this stuff. Twenty-seven years on wallstreet.com crash, financial crisis, pandemic sell-off, and this is not a book that is, here's how to pick better stocks. This is a book about how most people approach investing right now is not wrong, but broken.

Explain why this book needs to be out there.

Jared Dillian (3:24)

Actually, I would disagree with you. I don't think what's going on now is broken. I think it's wrong. I think it's two different things.

Matt Zeigler (3:31)

Okay. Let's do it.

Jared Dillian (3:33)

What people have been doing has worked for the last 20 years or 18 years. It has absolutely worked.

People need things to be simple. They have a desire for simplicity. If you give them very simple instructions, if you say, put all your money in the S&P 500, dollar cost average it, hold it forever, that's very easy for people to understand. They've done that for the last 20 years and the results have been fantastic. I do think there's some reflexivity there. I think it has worked because people are doing it, right? Sure.

But it's wrong. And the reason it's wrong is, and maybe I'm just more conservative, but I don't want to trust my entire life savings to the stock market. Like this is kind of new in history. Like this wasn't happening in the 50s, 60s, 70s, even the 20s. Like where people put their entire life savings and trusted it to the stock market and said, look, it's returned 10% for the last 100 years. It's going to return 10% for the next 100 years. And even if that happens, when you invest in an index, you get the volatility of the index, which can be really unpleasant. Like even on an average day, the S&P moves a percent, which is a lot. Let's say you had your life savings was $600,000. Something that goes up and down $6,000 is quite a bit of volatility.