A Case Against the "Conventional Wisdom" of Investing

Summary

Jared Dillian discusses his book The Awesome Portfolio and argues against conventional index-and-hold investing. He lays out a 20% allocation each to stocks, bonds, gold, cash and real estate that historically delivered about 9% annual returns with half the S&P 500's volatility and much smaller drawdowns. He also warns that AI and semiconductor overinvestment, plus magazine-cover euphoria, make Nvidia vulnerable, and says private equity and private credit are only halfway through a slow unwind. His current active tilts include overweight gold and a recent move into bonds.

• Dillian sees The Economist cover on Jensen Huang and AI boom overinvestment as warning signs for Nvidia and semiconductors.
• He predicts excess data center capacity and a chip glut, comparing it to the 2000 telecom buildout.
• His Awesome Portfolio allocates 20% each to stocks, bonds, gold, cash and real estate, historically averaging about 9% with half S&P 500 volatility.
• He emphasizes cash as liquidity and an option to buy future opportunities.
• He remains negative on private equity and private credit, seeing the unwind roughly halfway through.
• His current active positioning is overweight gold and recently moved into bonds.
• He suggests global equity exposure around 70% U.S., 20% non-U.S. and 10% emerging markets.