INTERVIEW | Make Money by Finding Opportunity in Bonds, Building a Newsletter, and Thinking for Yourself with Jared Dillian

0:00You're listening to the Travis Makes Money Podcast. What's going on everybody? Welcome back to the Travis Makes Money Podcast. We're trying to help you make more money on this episode of the show. I have a new friend, Jared Dillian. He's the editor of the Daily Dirtnet, a daily market newsletter for investment professionals. Continuously published back since 2008, which is crazy. Jared worked as a trader for Lehman Brothers and is the founder and principal of Armington Capital. He hosted the Jared Dillian show, a nationally syndicated radio show on personal finance, and is the founder and content creator over at Jared Dillian Money. So I think he has a couple of things to say about money, at least that's what it seems like. Jared, what's up, man? Welcome to the show. Hey, thanks for having me. So let's go back in time. First off, man, tell me the first time you ever made a dollar that was exciting or shocking, where you just couldn't believe that somebody actually paid you money to do this thing. I remember my first stock trade. It was back in 1999 and I bought, I want to say like

1:0240 shares of Philip Morris. Yeah. And it was right at the time that Philip Morris, all the tobacco companies were getting sued by the states. They had the big master settlement agreement that cost them like 252 billion. And I bought the stock on the dead balls low at like $19 a share. And then I sold it at 25 and I thought it was a genius and then it went to $80. Oh, no way. So you sold it at 25. Yeah. Oh my gosh. But I mean, for a first stock trade though, that's a pretty solid first pick. Yeah, that was good. Yeah. I mean, I was 25, 25. Okay. Nice. Nice. Was your background in finance? No, I used to be in the Coast Guard. Oh, no. So I went to the Coast Guard Academy. I made Jim Math and graduated and I served five years. I was at C for a couple of years. I was on a cutter. And yeah, I got out as a lieutenant

2:02and went to business school and got a job on the options exchange in San Francisco. And then I worked at Lehman Brothers for seven years. I was the head of BTF trading at Lehman. Gotcha. How did you like that experience? That's why I got all the gray hair. That was that was the most stressful. I mean, if you think the military is stressful, like that particular job on Wall Street was the it's the craziest thing I've ever done. Like pretty much for 10 hours a day, your heart is pounding through your chest. You want to kill somebody like it was every day was just like going to battle. You know, so. But I mean, you're there for seven years. So you clearly enjoyed it a little bit, right? I did. I mean, you're with a bunch of smart people. It really works hard. You know, Lehman was a great firm. I had a couple ding dongs running it that ended up in bankruptcy. But yeah, it was overall. It was a very positive experience. I just I probably just lost a few years off my life. But gained a ton of experience. You know, yes. Yes.

3:07What was the next step after Lehman Brothers? So while I was at Lehman, I started writing market commentary, which was on Bloomberg. And you know, I started with a list of like 20 people. And you know, I'm a pretty good writer. I've written seven books. So it's it started to go viral. Like it started getting past all around Wall Street. So after a couple of years, I had thousands of people on my list. So I got that you were still working there while I was still working there. So I got the idea that I would, you know, I would leave Lehman and start a newsletter. And I would just, you know, pour some of those people into a paid subscription service, which at the time was a really smart thing to do because there weren't that many. Yeah. There was Dennis Garman. There was Jim Grant. There was 13 D, but there weren't there weren't that many newsletters. Now there's so much competition like sub stack is like every idiot has a newsletter. It's gotten totally saturated.

4:08But back in 2008, like I was I was one of the first movers. And I had a big, you know, I had a big on ramp, you know, I had a number of years where it did really, really well. So yeah, yeah, no kidding. So you your your plan at that time essentially was I've built up enough of it sort of an audience over here that I think I'm good if I end up leaving my full-time job and just doing this full-time. Yep. Yep. Okay. So what how did what talked to me through the the evolution of this? Because obviously we're talking like 2008, like you said, they're more than able doing this. We're in 2026 now. I assume that's evolved several times throughout the year. Yeah. I mean, you know, in the beginning, it was very hard. It was it was that was also stressful because, you know, I was basically starting a business in the middle of the financial crisis. And the I rented tiny office on 3rd Avenue. And the stock market was crashing every single day. You know, city group was at 99 cents. Bank of America was at 299. Like all the banks were going to zero. And I had just started this newsletter.

5:13And I had no revenue. And every morning I would come in and puke in the trash can. And for like three months, it was the first thing I would do. I would set my stuff down and puke in the trash can. Because I literally I thought I did the dumbest thing of all time because Lehman was bought by Barclays. And I was offered a lot of money to stay at Lehman. And I turned it down to start this business, you know, and I basically was starting with zero. But then, you know, then some some check started coming in and then some water mouth started to work. And it took a while, but, you know, it's turned into a really big business. It's tapered off a little bit over the last five years because of sub stack. That's really, you know, that's cut into my revenue a little bit. Sure. But I have a lot of other stuff. I mean, you mentioned Jared Dillion Money, which is this whole other research platform that I have. And I'm also trading like I have, I have a fund now that I manage, which is pretty small. But yeah. Nice. Okay. So, so you have been in and around the financial

6:16markets for a really long time now, writing about these things. What's got you excited these days? In terms of like stock picks, companies that you have an eye on. I'm actually really not excited by stocks at all. I think, I mean, this is, it's the most expensive market in history. It's it's it has a lot in common with the dot com bubble, though it's not a perfect analog. I actually think the biggest opportunity is in bonds. Okay. It's like, well, I'm very much contrary and I tend to do the opposite of what everyone else is doing. And there's this narrative that inflation is out of control. Number one, and number two, the deficits are so huge. They're just going to result in this huge supply of bonds. It's going to drive up interest rates. And I disagree with both of those things. You know, inflation is higher than normal, but not by much. And it's coming down. And the deficit, even though it's too truney year as a percentage GDP, it's only 6%. It's been higher in the past. I don't think the

7:19deficit problem is intractable. So I just I just disagree with all of these narratives. And you know, if you bought a 30 year bond, first of all, you're getting a five and a quarter percent coupon, which is pretty good. You know, five percent is pretty good. But, you know, a 30 year bond has like a 15 year duration. So if interest rates go down by two percent, you're going to make 30% on that bond and capital gains. Like I actually think it's I think it's a really, you know, and if you look at the economy, you know, X AI, like GDP is only one and a half percent. If you take out AI, we're actually in recession. And I'm starting to hear a lot of anecdotal stuff about, you know, from my subscribers, you know, people who own businesses and, you know, just piles of resumes coming in for the number of jobs that are available. Like, it's kind of a long story, but very, very high on bonds at this point in time. So yeah, can you tell me a little bit more about bonds for somebody who's listening, who's maybe just brand new to this world. And they

8:21hear the term bond thrown around all the time, but they don't really have a full understanding. Can you explain what it is? Yeah. So a bond is a loan that is chopped up into a bunch of pieces in sold, right? So imagine you had a half a million dollar mortgage and the bank chopped it up into like these $1,000 pieces and individuals could own a piece of that mortgage. So that when you paid your mortgage, they would get a little bit of interest in principle, right? Bonds are, that's really what bonds are. They're, they're loans that are securitized. So the government, the most common bonds are treasury bonds. So the government, it basically, they'll, once a quarter, once a month, once a week, they will issue bonds into the markets. And that's how they raise money to fund operations. So for a 30 year bond, they might sell 30 billion of a 30 year bond investors buy them. And you're basically getting a 5% coupon every year until they mature in 30 years and then you get your money back.

9:22So yeah. So you're essentially loaning money to the US government, which is a pretty good payer of debts. Well, I mean, theoretically, like, I don't think the US government will ever default. I mean, really, I would say the bigger risk of owning bonds is that inflation goes up a lot. And you have this 5% bond and say you have 8% inflation. So now you have like a negative 3% real return. Sure. Sure. That's, that's, that's, that's, that's really the risk. But, you know, the US government, I'm sure there are some people listening to this who say that, you know, the government is a big credit risk and they're going to default someday. It's not going to happen. Yeah. That's the fantasy. And we're talking about like crisis beyond your financial portfolio if the US government starts that happens. We're all screwed anyway. Right. Exactly. There's going to be the last thing you're worried about. Yeah. Yeah. What about, what about some of these massive, in my opinion, overly priced

10:24IPOs that have happened recently, do you have you, have you talked about that that much? Yeah. I mean, so I talked about the analog to the dot com bubble and the dot com bubble, you had, you know, hundreds of billions of dollars raised, but it was over thousands of IPOs, right? There were a bunch of small companies that went public. Some big ones, you know, like Amazon or stuff like that. But it was mostly, it was, it was a thousand, thousands of small companies. Now we have basically three gigantic IPOs. We have SpaceX, we have Anthropic and we have OpenAI, right? And these IPOs are raising hundreds of billions of dollars. And if you look, you know, at the S ones, which is basically the offering statement, there's a lot of like pie in the sky, like, you know, the total addressable market is space and time. And Anthropic says their revenue is going to be 30 trillion a year. Like, I don't know how this gets by the SEC. Like, it's really, these really outrageous statements. And so expectations

11:30are so high that I just, I find it hard to see a scenario where they just don't disappoint. And, yeah, you know, SpaceX, the IPO went well. And then as you know, it traded off quite a bit. I mean, look, like these, these are stocks I would like to buy someday. Like I would love to buy SpaceX. Yeah, I don't want to, I don't want to pay a two trillion dollar valuation. If the stock gets down to 30 bucks, I will happily buy it. And I think it will someday. So yeah, yeah, it was like a 92 X revenue or something like that on its IPO. Yeah, yeah, which is, I mean, I think Google was like nine X. Yeah, which was already like crazy. That was 2004. That was a long time. Yeah. Right. Yeah. What do you think? What do you think with SpaceX investing like a, like they, they sort of market themselves obviously as a space company. But in reality, a lot of their revenue comes from things that nothing to do with space. Right. Well, is, is, does, do you view that as something that's a potential issue in the future? Or do you think that like, oh, they're just

12:31diversifying revenue? That's not a problem. This is actually a great revenue stream anyway. I don't think it really matters where they get their revenue, you know, as long as they get their revenue and I mean, that's, I mean, I mentioned SpaceX in particular because I actually do like the company, like I do like the stock, I would like to buy it because I do think, look, I'm a big fan of Elon Musk. I'm just, I'm just dumbfounded at all the things that he does. I don't want to bet against him. I want to bet on him. It's just a wrong price. You know, it's just a wrong price. You know, financial markets being what they are, you know, that price will find it'll correct itself over time. Yeah. The market will decide essentially. Yeah. Yeah. Do you, do you get into the real estate world at all? Jared, do you stay pretty focused on like stock spawns, things like that? I mean, I know a little bit about real estate, but I have an aversion to it because I like things that are liquid. Like I want to be like I want to have assets that I can be out of everything in

13:36five minutes. Right. Like if I had 22 houses in Myrtle Beach and it took me a year to get out of all them, like that scares the hell out of me. So look, you know, people do very well in real estate. There's billionaires in real estate. I'm not comfortable with that liquidity risk and I've never been good at it. So, hmm. Talk to me a little bit about the business, the newsletter business. You mentioned Substack a couple of times. Do you view, I say a lot of people now like encouraging people to start a newsletter type business. What have you learned in that space that would be helpful for somebody who's considering that as an option? Well, one of the things I've learned is there's a couple things. First of all, you have to have something to say, you know, you have to have a voice and there are people who attempt newsletters who just don't have a strong voice and it just never works out. Like if you have, you know, a very vanilla boring voice, like you really have to have a strong voice when you're right. And for an investment newsletter, I mean, look, I think my

14:41track record of calls have been above average. I think they've been pretty good. But even still, like I don't think the your accuracy or your hit rate matters as much as your voice, right? You can be wrong 60% of the time. But if you make compelling arguments and you're convincing, that's really more important than how often you are right, you know. So I've had, you know, it's funny because I've had stretches in the newsletter where I get cold and I'm just wrong about a bunch of stuff. And my subscriptions actually seem to go up when that happens. No kidding. Well, it's, it's really weird. Like now there are also times when I get hot and people are making a lot of money off my picks and everybody's happy. But it's weird. Like it seems like when I'm wrong is when the business seems to do better. I don't know why that is. Yeah. Which is the sense of like polarity almost that you have to engage in. You mentioned something a little bit about that

15:41earlier about taking a contrarian stance. Do you think that's sort of necessary in order to be able to create audience engagement? No, I really don't. In fact, you know, look, I would say the most successful content creators in the financial world are people who I would call a one note Samba, like a one trick pony. Like for example, I don't want, I really don't want to name any names, but, you know, just take a guy that's like bullish on stocks all the time, right? Or somebody who's bearish on stocks all the time. There's an audience of people who just like to hear that message over and over and over again, whether it's right or it's wrong, right? And it's funny because, you know, I've kind of made a career out of being the guy that changes his mind very easily. I can be longer, shorter, you know, change my positions all the time. But the people who have been most successful are people who have a view and they stick with it for 10 years and they just build a huge

16:42following. Yeah, people, you're bringing up something I've struggled with as a podcaster because, obviously, these are similar businesses. And my producer and I talked about that all the time about like how much easier it would be to build an audience if you would just like take a stance and stick with it regardless of what the evidence suggests. But it's just, it's like, I can't do it. I can't like it. It's just not who I am. Like I have to be able to check online. I like that about you. I think you have to be intellectually honest. Yeah, exactly. Yeah. Yeah. It's a responsibility to have an audience, you know, and I mean it. And it's not just for the sake of increasing clicks and increasing sponsor revenue and all that stuff. It's like if I'm providing information that I personally believe is incorrect. I just don't know how people like lay their heads on their pillows that night. It's even like they're either doing it on purpose or it's potentially even worse than that where they have like engaged so deep into their own confirmation bias that they've actually convinced themselves that the evidence doesn't matter. You know what I mean? That your stance is

17:46true regardless. You're speaking my language. I think I think it's both. I think some people believe they're on BS. Yeah. And then I think some people are just very cynical and they know what works and they just do that and you know, collect the check. So yeah. Yeah. Well, tell me about the future of the business, Jared. Where do you view this, you know, newsletters in general, your business specifically in the next five to 10 years? What if you had a crystal ball? What predictions would you make? Well, the newsletter business is a great business because you have a lot of freedom, right? It doesn't take a lot of time. Like I write very quickly. I put out a three page note every single day. So I mean, which sounds like a lot, but I've been doing it for so long. It takes me like an hour and a half and then, you know, but I'm just screwing around. So, but I have freedom to travel. I can do it from anywhere in the world. If I have a laptop and Wi-Fi, like I can travel all over the place. It's really the best lifestyle in the world. The problem is it doesn't grow fast if it all.

18:52It's a very slow growing business and the nice thing about the business is that it's infinitely scalable, right? So whether I have one subscriber or 10,000 subscribers, I really don't have an increase in overhead. It's infinitely scalable. And that's what's cool about it. But, you know, like we were talking about earlier, like if you don't have a compelling voice or if you don't have something interesting to say, like it just it grows very slowly. So there have been, look, there have been people who have been more successful than me. And the right content that is very seductive, I guess is the word. Like they're very good at telling a story and weaving a narrative. And it's very compelling stuff. I'm not as good at that. So. Yeah. What's I've said? Newsletters, do you like to subscribe to? I subscribe to none. And yeah, there's, look, there's there's a lot of people I respect. And I like listening to their views. But I can't consume their content because it will affect my thought process.

20:00Like it like I might have an opinion that I came to myself and then it'll change my opinion. And then I'm basically writing somebody else's opinion. And so I just I just tune everybody out. And that's not it's not intended to be an insult to other people. I literally just cannot read other people's stuff. Yeah, you want to keep the brain clear to make sure that you're writing what you actually think. Yeah. Yeah. Jared, I appreciate taking the time man. I'd love for people to go check out some of your stuff. Obviously we talked about some similar things and you with a lot more credibility than I have. So I'd either recommend people go check out some of the stuff you're putting out, working they go. Can I well, first of all, can I talk about this for a little bit? Oh, yes, please. Yes. So this is the awesome portfolio. This is my new book. This is my seventh book. It's coming out next week. And basically what it is is a portfolio that you can live with without all the volatility of investing 100% in stocks. So your diversified across asset classes, it returns

21:00a little bit less than the market, but it has half the volatility and you have teeny tiny drawdowns. So this is something that you can invest in and literally just forget about you never have to look at it. You can work at your job. You can live your life. And this is basically the the the sub the subtitle is a simple stress free approach to investing. Nice. Really intended to reduce your stress. So yeah, I love that man. I'm a big believer that every single person has to take control of their finances. And I'm always looking for resources to recommend to them that that simplify the idea of putting your money places and not having to become a portfolio manager in order to you know, protect your finances. So definitely check out Jared's new book, The Awesome Portfolio. I'll be grabbing a few copies myself and giving them out to some people. The awesome portfolio and you can find that anywhere books are sold. Oh yeah, absolutely. Yeah, hopefully in the airport. I like it when my books end up in the airport. That's the best. Yeah. Hey, if I see it out in the wild,

22:04bro, I'll take a picture and tag you on Instagram or something. Yeah, but dude, I appreciate taking the time. I know you're a really busy guy. I don't take that for granted at all. Everybody else tuning in. Remember money only solves your money problems, but it's a little bit easier to solve the rest of the problems. You got some money in the bank. So let's solve that one first here in the Travis makes money. Podcasts. Thanks for tuning in. Catch you next time. Peace.