What Your Broker Won’t Tell You (w/ Jared Dillian) | Tony Greer Interviews

Every day, it was like Grand Theft Auto. You’re in this, like, multiplayer video game,
and you’re just getting bombs dropped on your head every day. The idea is to build a portfolio that has
a better Sharpe ratio, that has smaller drawdowns so you can stay invested over time. Stress is a big issue for people. And what causes stress with people? Debt causes stress and risk causes stress. It is pointless to short bonds. Right. And this is coming from somebody who was really
bearish on bonds and kind of wrong for a long time. [MUSIC PLAYING]
Hi. This is Tony Greer of TG Macro. We are going to interview Jared Dillian for
Real Vision. We’re going to talk about his early days at
Lehman Brothers, we’re going to talk about his second professional act as a financial
author and journalist, and we are going to talk about global markets. I’m excited to get started. I’m excited to be here with my good friend
and inspiration, Jared Dillian. Jared is the editor of The Daily Dirtnap. Jared is a contributor to Mauldin Economics,
Bloomberg, and Forbes. Jared spent nine years on Wall Street, two
years at the pea coast, seven years at Lehman. He has authored two amazing books. Street Freak is one of them, and the second
one is All the Evil of This World. He is an adjunct professor at Coastal Carolina,
and one of the most knowledgeable people that I know about markets. So let’s start digging in, Jared Dillian. Thanks for coming on the show today. What’s up? [LAUGHTER]
Oh, it’s fantastic to get to do this, isn’t it? Yeah. So I miss breaking phones. I’m going to be honest with you, that’s one
of the things that I miss about our days as institutional desk traders. When those scenes, being upstairs on the trading
desk, got hairy– the markets were moving. You had clients picking you off. You were trying to hedge. And all of a sudden, one client would pick
you off on a monstrous position. And you would go to cover it, and the market
would be gone. And you had every right in the world to go
bang and smash that thing right onto the keyboard and have everybody in the room go, what the
hell happened to Jared’s desk. Yeah. Right? So tell me about some of those days at Lehman. Yeah, I broke about half a dozen phones. I broke some mouses, or mice. I broke tape dispensers. I broke a lot of stuff, threw stuff across
the room. Yep. I can tell you about the worst day that I
had. Yeah, let’s hear it. And I even remember the date. It was February 27th, 2007. And this was kind of going into the financial
crisis. The financial crisis, I would say, started
the summer of ’07. And basically, we had had a period of time
where the S&P was moving 20 basis points a day. Extremely low vol, VIX below 10, nothing going
on, just creeping higher every single day. No volatility. And one day, we get to work and China had
raised their reserve requirements. And if you remember the ABX, the subprime
mortgage index, the ABX had, like, cracked. It was down 10 handles. So I get to work, and the SPOOS are down nine
points, something like that. Not outrageous, but it was a pretty big move. And I barely sit down, and we get this call
from an account in London that wants to sell 400,000 EEMs premarket. And this is before EEM split. So EEM was like $120. Yeah. Big trade. Yep. And I had just seen this account, like, three
weeks before. I was in London. This is their first trade, so I have to show
them a good bid. And I even remember, I think it was EEMs were
like 118 last. I bid them 116, down about 2%. They decorated my bid. Yep. And they opened 114 offered. Yep, yep, yep. That’s how that goes. And keep in mind, this is really before a
lot of high-frequency trading and a lot of liquidity. It was very hard to get out of that trade. By the time I got out, they were trading at,
like, 111. So we had lost a couple million bucks on that
trade. The market was down 3% or 4%. We were getting pasted all day long. We had lost two, three million bucks. Finally, the end of the day, I decide I’m
going to be the hero and I’m going to try to pick a bottom. And I literally stand up on the floor, I’m
like, offer side bid, 2 million spies, call your clients. And I’m making all this noise. Nobody hits me, so I sit down and I buy, like,
3,000 E-minis. And then the trap door opens up and the market
drops, like, 20 handles, and Globex breaks. Like, it actually– Globex shuts down, and
the only thing that’s trading is the big contract. And the big contract is trading, like, 10
up, 10 handles wide. And I’m long all these deltas and I can’t
get out. Mark to market, I’m down, like, five or six
million bucks. Holy smokes. And I literally sat there and I’m like, I’m
going to get fired. Yeah. This is the day that I get fired. Yeah. And just by a pure miracle, market rips back,
ramps into the close. I get out for basically UNCH. I mean, it was a terrible day, but like–
I mean, but that was– even though that was the worst day, that was not atypical of some
of the stuff that was going on in that period of time. Every day, it was like Grand Theft Auto. You’re in this, like, multiplayer video game,
and you’re just getting bombs dropped on your head every day. Yeah. And that’s what my life was like for, like,
four years. Yeah. It’s very consuming when you’re in that seat,
because in order to manage that book, you’ve got to be thinking about it 24/7, essentially. There’s no out, right? There’s no letdown until the weekend comes,
and then you’re probably still thinking about it because you’re so deep in it, right? Those were indeed I think the golden age of
desk trading. I think we got a couple of good experiences
in there before that seems to be changing quite a bit. So I got to meet you probably shortly after
that, I think. Somebody forwarded me on Bloomberg an infamous
Bloomberg that you wrote shortly, I guess, after Ben Bernanke’s first rate cut, I believe. And I’m going to read a small passage from
that. “Buy a ball-peen hammer. Buy an air compressor. Buy a cheese grater. Buy a German shepherd. Buy a racehorse named Currency Debasement. Buy one of those things you shake up and it
snows inside. Buy one of those things you push and you make
the lines on a baseball field.” What was that all about? Can you set that up? Because when I got this email, I wrote back
to you and I said, that was amazing, put me on your list, and off we went. So it was right after the first rate cut. And so I had a email list at the time, a list
of people I sent Bloombergs to. And it was pretty popular, I had a couple
of thousand people on my list. Yeah. And it was mostly for entertainment purposes,
although there was some content in there, too. If you recall what the political climate was
like in 2007, you know, we’ve swung very far left since then economically. Before Occupy Wall Street. Yeah, it was way before Occupy Wall Street. But at the beginning of the housing crisis,
we were blaming borrowers. Believe it or not, but we were blaming borrowers. And we were talking about these deadbeats
that weren’t paying their mortgages. I remember. You know, they took out these giant mortgages
and they couldn’t– you know, eventually, at the end of the crisis, we were blaming
the lender. But in the beginning of the crisis, we were
blaming the borrower, which I think was not misplaced. So that Bloomberg was a response to that,
that we were bailing out people who had borrowed all this money and were not going to pay it
back. And it sort of tapped into a sense of outrage
that people had as to what was going on. And so fed funds were at about 5.5%, and that
was the first rate cut, and they were on their way to zero. Right. And really, it was almost like a foreshadowing
of what monetary policy was going to be for many, many, many years to come. Yeah. I agree. I retroactively thought– I enjoyed it when
I read it, and then when we first started quantitative easing, I thought back at it
again, and it was sort of retroactively brilliant to me because, you know, when you’re talking
about currency debasement, quantitative easing, you know, you were talking about buy everything
because we’re going to start debasing our currency brutally now. And while it’s, you know, hanging in there
against the others, the purchasing power is obviously even much weaker than it was 10
years ago. I’m very impressed with the fact that you
always make yourself available to help others with finances. It’s a very, very tricky topic. People tend to shy away from what they don’t
quite understand. And I read your article about changing portfolio
weighting away from the 80-20 classic portfolio to 35-65, which is 35% stocks only and 65%
bonds. Could you tell me a little bit about that? Yeah. First of all, you know, I’ve been doing the
newsletter and associated things for about 10 or 11 years. And professionally, you know, I love to write. It’s fulfilling. You know, I like helping people make money. But I’m kind of helping people that don’t
really need help, you know? And I think I got to a point in my career
where I wanted to have more of an impact, and I wanted to help people who really, their
sophistication level is very low. And I wanted to help them more. So I’ve been shifting my focus a little bit,
not of my main newsletter, the Daily Dirtnap, but other stuff. I’ve been shifting my focus to personal finance. Yeah, I noticed. And I did a piece for the opinion page on
Bloomberg, and it was about the optimal portfolio. And there’s sort of this conventional wisdom
that you’re supposed to have an 80-20 or 70-30 portfolio, a portfolio that has a lot of stocks,
because that portfolio returns about 8% a year, and that gets you to a certain number
in retirement, and OK. So one of the things I found is that investors
may choose this portfolio that’s 80-20 where it’s mostly stocks, but they don’t actually
realize those returns because that is a very volatile portfolio. And it causes suboptimal behavior. For example, during the financial crisis,
the S&P 500 was down 57% from 07 to ’09. How many people hung on for 57% dollar cost
average the whole way down, stayed long. Nobody did. People barfed. They absolutely barfed. And you can tell people, you can coach them
and say, oh, if the market goes down, just– but people, they just can’t mentally deal
with a drawdown of that size. And if you have a portfolio that’s mostly
stocks, over a 40 to 50-year period, your earnings career, you are going to experience
at least one drawdown of that size. And you only make money if you’re compounding. And once you sell, you’re no longer compounding. So the idea is to build a portfolio that has
a better Sharpe ratio, that has smaller drawdowns so you can stay invested over time. So I’ve done a lot of work into this, and
a 35-65 portfolio is a portfolio that, along the efficient frontier, has the highest Sharpe
ratio. And you basically, your drawdowns are half
the size or less of an 80-20 portfolio. And actually, during the financial crisis,
you would have only had a drawdown of 24%. And most people can live through a drawdown
of 24%. Here’s the interesting thing. This is totally, totally cool. So the 35-65 portfolio, let’s modify it a
little bit. 35% stocks, 55% bonds, 3% broad commodities,
3% gold, and 4% REITs. So 35, 55, 3, 3, 4. OK. That portfolio gives you almost exactly the
return of the 80-20 portfolio and has half the risk. Is that right? Has half the risk. Have you back tested it? Yes. Wow. Over the last 20 years. So you can do a lot of things with portfolio
construction other than just naively having a portfolio that’s massively loaded up on
stocks. And the other thing about it is that stress
is a big issue for people. And what causes stress with people? Debt causes stress and risk causes stress. And the goal of this thing is, like, if you
have a portfolio that is going to scare the shit out of you, like, once every five to
10 years, like, that’s not– Not worth it. –productive, where you’re calling your broker
like get me out, get me out. Like, who needs to live like that? Yeah. So basically, you’re going to have a lower
return, slightly lower return. It means you have to save more. Yeah. And that’s how you compensate. Yeah. I enjoyed reading that point in the article
because I try to force myself to do the same thing, and it’s hard culturally, right? We’re not programmed to save as Americans. It’s really difficult thing to do. But I think that you’re shaking a lot of common
sense into people with this idea. Yeah, and the other thing is that, if I say
to you you’re going to get an 8% return on your 80-20 portfolio, and you’re like, OK,
like, then I don’t need to save as much, because you think this actuarial return of 8% is going
to exist for the next 50 years. It might not. Stocks might return less. Bonds might return more. Yeah. Yep. No, it’s a great idea. And I just like the fact that you really take
that gut-wrenching out of it. You know, you really take that out of it. So I like the idea. Also along the lines of helping the sort of
everyman investor, I know that you’re starting a radio show on personal finance. And I’m really interested in listening to
it. I’d love to hear just sort of what was the
brainchild behind it, and when is it going to get going and what are your sort of basic
thoughts about it. It’s still in development, so I can’t say
too much. I hope to be on the air in the next couple
of months or so. It’s going to be syndicated nationally, you
know, at some point. We’re putting together syndication right now. But it’s going to be a show on personal finance. I’m going to compete with folks like Dave
Ramsey and Suze Orman and stuff like that. Yeah. I’m not totally getting away from the institutional
world. I’m going to have a dual focus. But like I said, this is going to be a focus
of mine for the next couple of years, is helping people who really need help. I think it’s great. I think it’s great, and I think you have a
great chance to make an impact with young people and start teaching them–
I mean, if you think about the generation that’s coming up right now, and the financial
issues that they’re dealing with with student debt and stuff like that, like it’s–
They’re unprepared. –yeah. You know? And that’s why I think that you’ve got a great
opportunity there. Yeah. So let’s move on and talk about Mr. Market. Q4 2018, the S&P is hemorrhaging from 2,800
down to a low print of 2,316, and the Mnuchin call happens, the call out to the six banks–
Morgan Stanley, Goldman Sachs, Citigroup, JPMorgan, Wells Fargo. And he told the whole world that we had ample
liquidity there. What did you think that was all about? Well, I think I had the same reaction as everybody
at the time, that Mnuchin is causing unnecessary panic. I mean, you know, we had a 20% meltdown in
stocks, but it’s not the financial crisis. So what is the concern? Why are we talking about liquidity? I kind of put that away for about a month,
and then the Fed started to pivot. Powell had his speech, and he starts walking
back there. We had four rate hikes planned for this year. They’re gone. Yep. And then you had Clarida talking about all
these emergency tools, like capping rates and negative rates and other stuff. And you know, I started to think, I’m like,
maybe Mnuchin’s call from Cabo San Lucas was- maybe something was actually going on. Like a distress signal? Well, maybe there was a financial institution
that was actually in trouble. A hedge fund, bank? Either, but probably not a systemically important
financial institution, probably a small to medium-sized financial institution. But I mean, if you think about this, what’s
the more likely possibility, that Mnuchin is deaf to market sentiment and is causing
panic for no reason or there was actually a problem? Something that had to get done. There was actually a liquidity problem somewhere. And I think that that explains a lot of the
behavior out of the Fed since then. I actually think the government, the Treasury
and the Fed, I think they were scared of something that happened in December. And like, I don’t have any insight into what
that is, but it explains all their behavior since then. Yeah, it absolutely does. I mean, for me, the Powell 180, which I call
basically an exorcism, was unbelievable to me. I mean, he came into office with his chin
up talking about rate hikes, running off the balance sheet. And like you said, in one month’s time, we
wound up talking about pinning rates and, like, the media was talking about another
round of QE, et cetera, et cetera. And what’s mind-boggling is that the US economy
is still doing fine. So clearly, Powell has got another motive
beyond the Fed’s dual duty, which is price stability and full employment. So now that Powell has gone and done a 180,
I feel like they’re at tremendous risk if the economy continues to improve because he’s
not going to be able say anything about rate hikes. What do you think is next for him or for the
markets, or what do you think the big risk is, or what do you think Powell– how should
we look at Powell going into the next quarter? Well, I think that the Fed has succumbed to
politics, unfortunately. And you know, I can sort of– you know, I
can take a dump on Powell and I can say that he had no backbone and he caved in and Trump
pushed him around. Yeah. Honestly, if you or I were in the same position,
we probably would have done the same thing. To resist the political will of that size
and scale is just impossible. But what you’re going to hear discussions
about among economists is wage growth, and the fact that we’ve had 10 years of expansion,
11 years of expansion and middle class wages have been totally stagnant. So there’s going to be a lot of talk about
using monetary policy as a tool to increase wage growth. So the Fed is way more dovish than we think. Now, if you think about this, if you go back
to when Trump became president, one of the things that I was pounding the table on was
that we were going to get the Trump Fed. We were going to get a bunch of hawks. And we got quarrels, but Goodfriend didn’t
make it through the nomination process. Clarida is a dove. There’s one more seat open, and it’s definitely
going to be somebody who’s a massive dove. Yeah. So the Trump Fed is not that hawkish to begin
with. And like I said, they’re going to become an
instrument of politics. You’re going to see people talking about wage
growth, and the propensity to cut rates at even tiny blips in the economy is going to
be very high. So you could actually see a scenario where
we have 1%, 2% growth, stocks are basically UNCH down 5%, and we’re cutting rates. I think that’s very possible. Wow. So buy bonds. Yeah. I mean, we’ve basically been given a green
light, the biggest flashing green light of all time to get long the bond market. So if you think about it, if you’re capping
yields– and Clarida was talking about a policy that the US had in the ’30s and ’40s. They capped long bond yields at 2% for, like,
I think was like seven, eight, nine years, something like that. And they ended that policy in 1946, I believe. Don’t quote me on that. So that’s been done before. They can cap the yield curve. And basically, what that is, it’s a put on
bonds. The Fed can have a bid at a price, and you
can sell to the Fed all day long, and the bond market doesn’t go any lower. So if the Fed is even contemplating this,
if they’re talking about it, if they’re hinting about it, if it even smells like this could
possibly happen, you have no reason at all to be shorting the bond market. It’s insane behavior to short the bond market
at this point in time. And the other thing is we have giant deficits. We have trillion and a half dollar deficits. So if yields back up to 3 and 1/4, 3 and 1/2,
you think they’re going to let the bond market go down anymore? It is pointless to short bonds. Right. That’s bearish. And this is coming from somebody who was really
bearish on bonds and kind of wrong for a long time, so. No, it’s interesting, the bond market is going
to be a– I know that there was a big move today with yields going lower on a sort of
weak manufacturing number. We’ve already seen Mario Draghi do the full
dove continuation for the ECB. We’re starting to see their bond market rally
to a point where we’ve now got nine trillion in negative yielding assets. To me, that’s the signal–
I think you could see– I mean, nine trillion with negative yielding bonds worldwide, that
number is going to go higher. Like, if I were to come up with a trade on
this– We know what it is. –I would say buy calls on green euro dollars. And buy gold. Well, yeah, that too. And the gold trade is– there’s more to it
than that, because it’s not just monetary policy with gold, but it’s MMT, right? It’s modern monetary theory. It’s 90% income taxes. It’s wealth taxes. It’s talking about really protecting your
wealth. Like, this is becoming a discussion again
for the first time in a really long time. I mean, I think back to, like, 2009, 2010,
when QE was getting revved up and people were buying, like, bullion off of, like, online
dealers and getting it shipped to their houses. Like, and there was this whole frenzy of activity
around precious metals. Yeah, totally. Like, if people start to get agitated again
about this modern monetary theory, 90% income taxes, wealth taxes, there’s political risk
to gold, and this is an environment that gets people excited about gold. Yes, I totally agree. I mean, there were gold coins trading on the
street in 2011 when the price was up between 1,800 and 1,900. It became a really, really popular thing. Obviously, the long boat got way overweighted
and gold pulled back, but it pulled back to a great level. The other thing with gold is that there’s
a whole bunch of things lining up at the same time. And I’m sort of perma bullish on gold, just,
you know, full disclosure. Yeah. But the supply/demand picture is amazing,
right? We’re talking about peak gold like we talked
about peak oil before. We’re just not finding any new gold. There’s no more discoveries. There’s no more finds. Right. Supply is going down, demand is going up. I mean, the whole supply/demand– in addition
to all the political stuff and monetary policy stuff, the supply/demand pictures is good
for the first time in a while. Do you suggest miners, bouillon, or an ETF? I mean, look, if you really believe that there’s
political risk, if you are at all scared or frightened about the direction that some of
the discourse is taking, AOC and things like that, then you have to think about physical. You have to think about physical. Yeah. You know, for a portion of what you’re doing. So the miners, I mean, the miners have– in
2011, they were terrible businesses. In 2019, they’re much better businesses. There’s consolidation. Right. You know, the miners have a lot of upside,
so. Yeah, I suppose they do. I don’t allow myself to be either a perma
bull or perma bear gold. I like to switch and trade them, and feel,
like, which way the market’s going. But I tend to stay away from miners because
I feel like they’re just gold plus financial engineering plus the potential of having an
irresponsible manager plus all the other associated risks. So you have to–
The one thing I’ll say about gold, if you go back to our earlier discussion on 35, 55,
3, 3, 4, gold should be a small percentage of everybody’s portfolio for diversification
purposes. You know, just for reducing the risk, increasing
the Sharpe ratio of your portfolio. Gotcha. Do you think Bitcoin ever sees the light of
day again? I do, actually. And you and I used to joust about this all
the time. You were bullish, I was bearish. And actually, I’ve been beaten up on Twitter
so many times about Bitcoin. So I’ve actually turned a little bit. And I used to think that Bitcoin was going
down into the triple digits. Yeah. I don’t think that–
You were 150 bid to cover or something, right? Yeah, I was, yeah. And I don’t believe that anymore. What changed you? Is it the same as the gold discussion? Yeah, yeah, just wealth preservation. So I think that that discussion is going to
start happening around Bitcoin. I still would rather own gold than Bitcoin,
but I think Bitcoin is probably done going down. Yeah. So. Yeah, it certainly feels like it. And Bitcoin continues to harness some pretty
good headlines with the amount of banks and central banks that are accepting it, et cetera,
et cetera. So I feel like there is a real push to make
it happen. So I don’t know what it means for price, but
I do believe that, in five years, that you and I are carrying around a Bitcoin wallet. And maybe that’s on a phone or something like
that, but I believe that we’ll have a chunk of it. Yeah, the technology has a ways to go. Yeah. So in your newsletter, you mentioned socially
responsible investing. And I’d love for you to go a little bit deeper
into that for us. So this is super interesting. So first of all, I’m going to say there’s
two parts to this idea. And the first part is not my idea, it’s somebody
else’s idea that I’m borrowing. The second part is my idea. OK. So the first part is people have observed
for a long time that socially responsible investing has been kind of a disaster. It has underperformed the S&P by a lot for
many, many, many years, and people can’t figure that out because they say, well, businesses
that are ethical and socially responsible and do the right thing, they should outperform
over time. But they never do. And people kind of can’t figure out why that
is. And the guys at AQR actually came up with
a theory about this. And what they said was that– let’s say you
have two portfolio managers. Portfolio manager A can invest in whatever
he wants. Can invest in anything, go anywhere. Portfolio manager B has restrictions. He has constraints. He can’t invest in tobacco, he can’t invest
in alcohol, he can invest in guns, he can’t invest in oil. Gotcha. OK? So how can you reasonably expect portfolio
manager B to outperform portfolio manager A? Yeah. Portfolio manager A can do whatever he wants,
portfolio manager B has restrictions. How can you expect the guy with constraints
to outperform the other guy? Totally. Now, he might, that might happen–
Magically. –but it’s hard. Yeah. But it’s hard. Now, if you think about it, the stocks that
he can’t own have to outperform. They must be owned by somebody, and those
people must be rewarded with higher returns, which is why the vice stocks, like just say
tobacco companies– if you take tobacco companies going back to 1999, I mean, they’ve massively
outperformed the S&P. So basically, what I started to think about
was there you’re talking about explicit constraints, OK? Socially responsible investing means I have
explicit constraints. I have specific companies that I cannot invest
in. What if there are other kinds of constraints,
like implicit constraints? And what I mean by that is a stock that is
so toxic, so embarrassing, so unwanted that you would never touch it, because if you had
it in your 13F, people would laugh at you. So like reputational constraints. So a pretty good example is a stock like Snapchat. Snapchat isn’t a vice stock or anything like
that, but it’s been such a disaster and it’s had so many management problems that it’s
just kind of a joke. Yeah. And it got to a point where nobody would touch
it and the stock got down to about four bucks. Have you seen the performance lately? It’s done great. Yeah, it’s back up. So what I started to think about was there
are these implicit constraints. And if you think about it, an index fund by
definition has no constraints. Right. And every active manager has constraints. If you’re a value manager, you can’t invest
in growth stocks. If you’re a small-cap manager, you can’t invest
in large-cap stocks. So most active managers have constraints. And if you think about it, like, why– I think
that explains a lot of the reason why active managers can’t outperform the index, because
the index is ultimately unconstrained. If you think about who owns these tobacco
stocks, it’s index funds. Let’s talk about oil for a minute, OK? I still am pretty bullish on oil. I tend to not fade what Khalid al-Falih says. And when he says that they are going to be
very strict on production cuts, keep production cuts online for six to nine months, et cetera,
et cetera, that is going to tighten up the market, that is going to make the price go
higher. So I’ve been betting on higher oil sort of
with that theme in mind. What are your thoughts on the energy market? So first of all, I want to say that you know
a lot more about energy than I do, like 100 times more. But what I started to get interested in this–
you know, I’ve been sort of a bear on energy for a while, and I just started recently to
change my mind. And this is very, very long-term stuff, but
what I started to think about was what I didn’t realize was how big the climate change idea
is, and the idea that people are really bearish on fossil fuels because they truly believe
that they think that we won’t be using them in 30 years, or even 10 years. Like, people believe that they’re going to
be obsolete and these energy companies are going to disappear. Yeah. I did not understand how pervasive that sentiment
was. Yeah. And that was super, super interesting to me. And you know, regardless of you believe, don’t
believe in climate change or whatever, I think that that’s a very one-sided way to look at
the trade. And I would be betting that our use of fossil
fuels are going to extend well beyond 30 years. Right. Change just takes a really long time. Yeah. And I think the trade is very one-sided. And the other thing is that someone mentioned
to me the other day that, if you tried to open an energy hedge fund right now, wouldn’t
happen. I was going to say, you wouldn’t raise $1. You wouldn’t raise $1. Impossible. It’s a disaster. Yep. And that, to me, I think is an indication
that we’re hovering around a bottom in energy. And if you throw that in with the constraint
stuff, too, then I think it starts to be pretty compelling. So you know, this from a guy who’s been bearish
for the last year. Like, I’m actually starting to get bullish
on a long-term basis. Yeah. And then, if you ask me, when you throw in
the fact that Goldman Sachs is officially exiting the commodity business entirely–
That– I gotta tell you, that, to me, is the ultimate–
Right. –so when I was coming on the street in 1999,
I had an informational interview at Merrill Lynch. So this is when Merrill Lynch was in Two World
Financial Center. And they had that awesome trading floor that
was, like, multi-level, if you’ve ever been on that trading floor. Yep. And literally, I was standing there, I was
talking to, like, this money markets guy, and there were these guys up on one of the
top levels and they’re packing their shit in boxes. And they’re packing their stuff up and leaving. And I said to him, I’m like, who are those
guys? And his exact quote was, oh, those are the
commodities guys. We don’t need them anymore. Oh my god. That was what he said, we don’t need them
anymore. That was 1999. Right, and then we went on a 10-year supercycle. Two years later it started, right? Yeah. So I mean, that is the ultimate sentiment
indicator, when you start– I mean, investment banks are big, dumb organizations. Yeah. They fire on the lows, they hire on the highs. Right. They trade individual businesses very poorly. Yeah. Like, it’s the ultimate, ultimate bottom tick
in commodities. Yeah. You know, and the other thing is that, in
the ag space, I mean, it’s like– it’s death. Like, I went to a presentation a couple months
ago, and it had to be the most bearish presentation I’ve seen in my entire life. Yeah. You know, like soybeans are a multi-decade
problem, and like– It’s staggering. I just spoke at a commodity roundtable to
a group of farmers, and I am amazed that they are able to keep a smile on their face with
how much pressure that the trade tariffs have put them under. Because now, you know, China is putting a
tariff on our grains, and they’re also going around us to buy their grains from Brazil
and from Russia, and the poor farmer is sitting there watching the price grow through the
floor and figuring out what the hell he’s supposed to do next. And for the most part, the farmers are supportive
of Trump, so it’s kind of like a catch-22 to me. It’s really hard to– you know, you feel for
those guys because they’re rooting for the president at the same time the president’s
enacting, you know, tariffs that are absolutely killing their survival. So I don’t know, you know, I hate to be short
commodities below the cost of production type of thing, and we’re almost getting there in
the grain markets. But at the same time, I don’t know what the
catalyst that turns it around and makes them rally, though. So it’s a little bit difficult to call that
bottom. But like you say, I mean, I think that the
symbols like Goldman Sachs, it just reminds me of when Enron went bust and the oil market
took off and natural gas took off, and then Glencore IPOed, you know, in 2011 with gold
at $2000. You know, and that was the peak of that market. And I just want to say, man, if Goldman Sachs
is exiting the business and commodities are going to be able to trade without, you know,
the vampire squid wrapped around their throat, I’m hoping that that’s going to be a green
light go. And I’m trying to invest in quarterly, too. So I think that’s a trend that we’ll keep
our eyes close on. So I have another question for you. You have been– you know, you are a doer,
and you’ve been a tremendous motivation to me. If there was no Daily Dirtnap, there would
be no Morning Navigator. So I want to thank you for that, because you
keep leading the way. But where do you see Jared in 10 years? Well, I hope the radio show is really successful. And I really enjoy writing. I enjoy writing every day. I will say that I’ve been doing it for– going
back to 2004, so 15 years. Yeah. And it’s a job. Yeah, it is. I enjoy it, but it’s definitely a job. Yeah. And I’m excited about new challenges and doing
different things. I’m not exiting the newsletter business, but
I’m really excited about the possibility of doing something totally different. I have another book that I’m working on. Oh, great. It’ll be a personal finance-related book. It’ll take a little while. But yeah. Awesome. Well, all I can tell you is keep doing what
you’re doing. Keep leading the charge with the ferocity
and passion that you have, and keep inspiring me to better myself and be a better newsletter
author and think more clearly about markets, because you are a great beacon for me out
there, and I appreciate it. Thanks very much for doing the interview,
man. Well, that was an exciting conversation. It was great to hear a lot about Jared’s past,
about what he’s got planned for the future, about his view on the bond put of the Powell
Fed. And I think we covered a lot of really interesting
ground there. For Real Vision, this is Tony Greer. [MUSIC PLAYING]

47 thoughts on “What Your Broker Won’t Tell You (w/ Jared Dillian) | Tony Greer Interviews

  • Is it half the risk because of Golds inverse correlation and the dividends from the REITS mitigating any drawdowns?

  • Is it true we are still in the "collapse" of the currency, driving assets from Dow $6600 to Dow $26,000? Remember Dow was 28 ounces of gold in 1966 and 18 ounces now. Dow is down 30% in real money over a period of 53 years. Jared, love your views and free newsletter, 10th Man. Great stuff. Is gold real money and all else is just "credit" like J.P. Morgan said in 1907? Is bitcoin just another fraud?

  • Looks like 2 doosh bags shootin shit over there past fucking of the US economy… Stopped watching 3 mins in …..

  • Get on the radio, pod cast now. The names you mentioned are garbage, you will win over your competition. This shit was awesome, actually made me think. Also towards the end, it now (for me) makes sense that Buffet went in for OXY that acquired Anadarko (or in the process). Because it was a head scratcher for me.

  • These guys are talking like the fractional reserve lending business cycle is not going to create a deflationary effect in the near future. Quantative Tightening, increased tariffs, and an overleveraged corporate bond market (which creates a doubley overleveraged buyback of stocks in the stock market) are all very real effects right now.

    The dollar will one day weaken. But not before it strengthens immensely, first.

    More than any other asset, investors should be saving their dollars and/or shorting just about every other market. QT is pulling out 1.5$ billion/day. Governments are selling their bonds and pulling money in. Liquidity is drying up, and once a real panic starts….credit valves will be shut off and interest rates will skyrocket.

    A likely trigger could be China selling off US treasuries as a weapon of mass destruction in the trade-tariff war.

    The number one asset to own right now is the USD.

    Once the bubble collapses, then invest your dollars into other assets. Inflation will occur thereafter.

    These guys want you to buy their assets at a time of peak pricings.

  • This is basic portfolio theory. lol @ 3% gold tho. Not worth bothering with an allocation of anything < 5%. Read bogleheads.org and learn about the permanent portfolio (but too conservative for growth of retirement funds) and the golden butterfly alloc (I do something similar). Use low cost index funds.

  • There was a liquidity problem last winter, the junk bonds market froze. No US high yield bonds were offered between November 30 and January 10.

  • Just a number in your head, phone, carries your wealth/currency, accepted world wide. for the first time in history, even the poorest can have a better than Swiss bank account, free of charge with full control of their finances . Crypto is sweeping across a world of 7 billion people. Things are going to change, bigly. No bank, no central bank, they are no longer needed.

  • I used to work as a trader…long time ago…and you described the phone being smashed exactly right. Except in this case it was my colleague, and he another time was sick (from a rather long business lunch) over his plug in keyboard which I kindly binned and plugged in as another for him to finish his Rruters screen trades…i miss those days of the freedom to be who you were at work, whisky in goffe on winter mornings and still make a profit at day end ( most of the time)…ahhh.

  • Loved the account of first impression trade, market drops against you, millions down, then market bounces back up for you to get out!

  • Yield Price Fixing and Theft! Where is the outrage against the Govs/CBs Infinity Debt (theft) expansion. Want to help the citizens, help them understand they are being robbed on a daily basis and motivate them to pull the Govs/CBs credit cards!! Jared like many folks in this industry have awesome smarts, but why will these guys never call out theft for what it is?! Still enjoyed the discussion. Thanks!

  • 25:24 254 GigaByte atm… open port 8333 and run a full node no need to carry around, every alt is faster for simple TX ♥

  • Down several million and by a miracle it came back at the close! Miracle or citadel trading doing it's maiden PPT trade and it was massive? Tell him about the weekend after AIG got taken over!

  • AIG stock portfolio liquidation caused the 2007 waterfall? I e-mailed Lou Dobbs saying he was done at CNN? Minorities did it! Santelli and the bald fat fuck leesman shouting about building a neighbor a new bathroom or throwing your mortgage in the chicago river? Good time watching Bush the second begging for a bailout all week?

  • Yeah over the last twenty years… rates have been going down. lets see how that works with rising rates

  • Chickens are gonna come home to roost. You got politicians and NGO:s in a unicorn state who dreams about green utopia and hates nuclear energy. Fossil fuel is life, is value, is the foundation and engine for the civilization we built. It will be evident soon when the climate hysteria is over. Wester countries have been lured to dismantle their infrastructure and prioritize solar panels and windpower. Try running your car on an AAA-battery. What a laugh. There are no unicorn leaders in the East and that`s part of their success and prosperity moving forward.


  • You are doing a great job , Sir for helping Americans to have a success because you are a servant of Jesus Christ . God bless both of you and thank you so much .

  • What do you think about Silver in Business Market for now to the Future ? Do you think people who have only Physical Silver , should sell them back and buy the Physical gold or not ?

  • Why did people who lost
    57% make their investment
    back? Answer: the FED dumped
    trillions of $s into the system
    to create another bubble in

    To stay in stocks and bonds
    past this point and believe
    this is a valid path to retirement –
    would violate the fact that over
    a thousand fiat currencies in
    history have not failed.

    What is a share of stock in Enron
    or a bond from say Venezuela
    worth today?

    What is a oz of gold or silver
    worth – what a paper – derivative
    contract deems it worth. Certainly
    its true value is higher, but not
    zero either.

  • 10:30 I held on. Kept buying too. Paid off later when the markets were blown up with cheap, easy money.

  • Seems like on one hand you have people who are keen to short the stocks (Bonds, Gold), and on the other hand you have people who are bullish on Tech stocks (FAANG) for life.
    Both camps are doing nothing else but shilling their own bags to pay for their retirement nests. Good luck finding buyers in this crowd of part-timers Millennials and helicopter baby Z-ers.

  • Just started watching Real Vision Finance. Amazing channel. As my dad says, the amount of information we have compared to 50 years ago is astounding. He worked as an investment banker but he still says I know more than he did at 30 because of how I can study on the internet. I work in real estate but as a property manager. I don't have a formal academic background in finance but I study it for personal benefit. I learned nothing from this video because I couldn't engage all the jargon. I'm sure a lot of people who already more financially astute than me gleaned something from these anecdotes though.

  • So what won't my broker tell me? Who came up with this title? You can go on Bloomberg and get ten different opinions on energy, oil, bitcoin, none of which disagree. Why did I just watch this?

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