Four magazine covers about artificial intelligence ran inside two weeks, two of them from Time, and then The Economist put Jensen Huang on its cover as a magician holding a crystal ball.
Most investors read coverage like that as confirmation that the theme is real. Jared Dillian, who trades on sentiment, reads a magazine cover as the end of a move.
"Like you do not want to end up on the cover of The Economist."
Dillian has written The Daily Dirtnap, a daily markets letter, for 18 years, and his new book argues that the way Americans actually save for retirement — everything in the S&P 500, held through every drawdown — is a bad idea.
I listened to the full interview so you can skip it. 39 minutes of audio, 23 minutes of reading.
Here are the 17 takeaways that matter.
👤 Guest: Jared Dillian, Editor of The Daily Dirtnap and author of "The Awesome Portfolio," a Wall Street veteran who has published the letter every trading day for 18 years
🎙️ Host: Phil Rosen, Chief Market Strategist at ProCap Financial and co-founder and Chief Executive of Opening Bell Media, whose daily markets newsletter reaches more than 200,000 investors
📰 Published: 9 September 2026 on the Full Signal podcast feed
🔴 YouTube | 🟣 Apple Podcasts | ⏱️ 39 min | ✅ Time saved: 17 min
Key Takeaways
4 AI magazine covers in 2 weeks put the market at the top, on his sentiment read
The Economist's cover of Jensen Huang as a magician with a crystal ball was the one that mattered
He is buying bonds at 5.3%, and says the bearish case only counts the supply
A 20% to 30% fall in stocks would produce the buyers everyone says do not exist
The Treasury's $4B a day of buybacks is a yield curve flattening operation
He agrees with Stan Druckenmiller that it weakens the discipline on the budget, and expects it to grow anyway
Strip out AI capital spending and he thinks the rest of the economy is in a mild recession
GDP at 1.5% alongside hundreds of billions of dollars of investment is what convinced him
A rollover in Costco stock is his recession signal, and Walmart's chart has already rolled over
Every shortage is followed by a glut, and data centers will not be the exception
The fiber laid in 2000 is in use today; the companies that laid it went out of business
His portfolio is 5 equal sleeves — stocks, bonds, cash, gold and real estate
About 9% a year since inception against 10% to 11% for the S&P 500, at half the volatility
Home equity is the real estate sleeve, and most people are already overweight it
Gold replaced commodities because rolling futures contracts eats the return
Bitcoin is left out because an asset that volatile is the one you would watch all day
Cash is not a drag on the portfolio, it is an option to buy something cheap later
If stocks fall 20% he guesses the portfolio falls 4–6%
In calendar 2008 it fell about 9% while the stock market fell about 36.5%
The hard part is that it underperforms the S&P 500 about two-thirds of the time
Years when the index is up 30% and the portfolio is up 12% are what break people
1. At The Tippy Top
Asked where the AI market cycle stands, Dillian did not hedge. "At the top. We're at the tippy top," he said — and his evidence is not in the numbers.
His method is sentiment, and magazine covers are the data. "I invest based on sentiment. And two weeks ago, we had four magazine covers on AI. Two of them were from Time"
Then came the cover he singled out. "And last week The Economist literally had a cover of Jensen Huang as a magician with a crystal ball." His reading of it: "Like that is skull and crossbones. That is death"
A cover marks the point where a story has reached everyone, which is where he sells. "Like you do not want to end up on the cover of The Economist"
He had seen one more signal minutes before recording: a film called Artificial, with Andrew Garfield playing Sam Altman. When items like that start appearing, he said, it is time to "grab a can of peaches and head for the hills"
2. Insurance Is Cheap Now
Rosen asked whether that makes this a market to short. Dillian said his portfolio is already defensive — long a lot of bonds — but that the answer is yes, with a specific structure.
He wants the downside exposure without an unlimited loss if he is wrong. "I don't want to be naked short the S&P, but I want to have that downside exposure if I can get it cheaply"
What makes that possible now is price: "And volatility is very cheap right now"
Rosen asked him to explain the term, and Dillian gave the audience the mechanism. Options are priced off implied volatility, which he described as a forward-looking measure of how volatile something is expected to be. A low reading means options are cheap
His analogy was insurance pricing after a storm — a hurricane comes through and insurers raise rates. "So, what I'm saying right now is that insurance is very cheap"
3. Super Bullish On Bonds
On the bond market, where yields have been rising, Dillian is on the other side of the consensus and said so twice.
"I am super bullish on bonds right now. Veins are popping out of my neck"
The yields he cited: "Getting 5.3% on bonds, 4.8% on 10." He does not claim the risk is absent — inflation "is still not especially low," though he said it is coming down, and the fiscal position "is not great, but it's also not catastrophic"
His answer to the deficit argument is a ratio, not a level. People point at $2 trillion deficits and $40 trillion of debt, he said, "And I'm like, well the deficit to GDP is 6%. It's been much higher in the past"
The bearish case, in his account, models the supply of bonds and ignores the demand. "Well, I can tell you that if the stock market goes down 20 or 30%, people will show up to buy the bonds"
"So, it's easy to measure the supply, but it's very hard to measure the demand. And the demand can come out of nowhere"
4. Why Bonds Got Abandoned
Rosen said the investors he speaks to follow stocks and rarely look at bonds, and included himself — his own writing is almost all equities. Dillian's explanation was recent performance.
Bonds "had a terrible bare market in 2022," after a bubble in which "70% of government bonds had negative yields"
The framework most people used broke at the same time. "And the 60/40 portfolio broke 4 years ago. Like it just didn't work, right? Stocks were down 20% and bonds were down 20%"
He treats that abandonment as the buy signal. Investors have given up on the bond market, "Which is the exact time that you should be interested in it"
The second argument is arithmetic: "Also, the other thing I'd say is that the higher yields go, the more interesting they get." A 30-year yield at 6% would be a bad outcome, he said, but at that level the buyer is being paid for the risk
"I just think if there's just so much negative sentiment about the bond market, it's time to buy"
5. The Bessent Buyback
The Treasury's buyback program appeared on the department's website, and Dillian walked through what it does and what it could become.
The program buys $4 billion of bonds a day in 10-, 20- and 30-year maturities, which Dillian dismissed on size: "4 billion is not a lot"
The larger lever is the maturity mix. Scott Bessent can fund the purchases by issuing bills and two-year notes, pushing long-term yields down and short-term yields up: "So basically, it's a giant yield curve flattening operation. And he can do that in pretty big size if he wants to"
Dillian said 9 September was the first day of the operation and that he expects it to grow "to a point where it's making a difference"
He will not trade against it. "Like they're just bigger than me," he said. "I'm not Soros. I'm not going to break the Bank of England"
On whether the policy is a good one, he sided with its critic. "Stan Druckenmiller wrote the op-ed, or at least he had Claude write the op-ed about what Bessent is doing." Druckenmiller's argument, in his account: "And what Stan was saying was basically the 30-year or the 10-year interest rate is the most important price in the world, and it's the price of money." It is also the main thing disciplining federal spending, so suppressing it removes that pressure — "That's the point that Druckenmiller was saying, and I agree with them"
Agreeing with the critique is not a forecast: he does not think it stops Bessent, and expects him to keep going
Whether it is only talk
Rosen put his own read to him: that Bessent is mainly talking the bond market into position, the way President Trump has talked at the oil market, and that $4 billion a day is not consequential on its own.
Dillian half agreed. Jawboning works to a point, but without something behind it "eventually the market figures it out"
The announcement moved the market — "I think it was 10 or 12 basis points in 30s or something like that" — and yields have since gone back up. What the market is now doing, he said, is "daring him to increase the size of the buybacks"
He thinks the Treasury has already shown it will act. Bessent intervened on behalf of the yen and took dollar-yen from 163 to 153, in Dillian's account, which is why he believes "there's muscle behind his jawboning"
6. Japan's Slow Bomb
Asked what worries him about Japan, Dillian described a problem visible for two decades that has still not resolved.
"So Japan has had 200% plus debt to GDP for 20 years." Betting against it has been costly: "In 2008 you had Kyle Bass shorting JGBs. That didn't work for a long time. It eventually did work over the last couple years"
The bind is that inflation is now high enough to demand rate rises the government cannot afford. "Japan actually has about 3% inflation right now. But they're in a position where they can't really hike rates"
He is not positioned for the trade other people keep describing to him. Several have told him in recent weeks that the yen carry trade is what they are waiting to see blow up. "I'm not really in that camp. I think it's a little overblown to try to position for a tail risk event like that"
On carry trades generally: "Well, there's a saying that the road to hell is paved with positive carry, right?"
The currency is the exception. "Having said that dollar yen is going to get to a point where it starts to look attractive. And I think we're actually close to that point now," he said, putting that point at dollar-yen levels around 152 to 153
7. The Economy Minus AI
Rosen framed the next question with two numbers of his own: "We have trillions of dollars of capex flying around and I think we're going to get 5 trillion expected over the next 5 years," against an economy where "GDP is at 1.5%."
Dillian's inference is that everything outside the build-out is contracting. Capital spending enters GDP as investment, so hundreds of billions of dollars of it should be lifting the number. That it has not means the rest of the economy is, in his words, "actually in a mild recession"
His anecdotal evidence comes from subscribers who run companies: "I have a stack of resumes this high"
On the data, he said there was a good payroll report in September, but "August and July were a horror show." The jobless rate looks fine for the wrong reason — "The unemployment rate is 4.1%, but that's because the labor force participation rate keeps going down"
What is left once the theme is removed: take AI out, he said, and "it's actually pretty bleak"
The pessimism disclosure
Rosen said most macro commentators he reads are bullish on the economy, and asked whether that is a fair description of the other side.
Dillian conceded his own bias first: "I tend to see the downside of everything. So that may just be my personal bias"
What he is watching is foot traffic rather than data. "I'm starting to see empty seats. Things seem like they're slowing down a little bit." He said "I live in a vacation town which is usually wall-to-wall traffic all summer," and that traffic has been lighter this year
He was explicit about the scale: this is not 2009 and not a severe recession, just cracks and a slowdown
8. Shortage, Then Glut
Asked whether today resembles earlier infrastructure build-outs, Dillian went to 2000 and the fiber-optic boom.
The assets outlived the companies that built them. "What happened in 2000 was that all these infrastructure companies went out of business, right?" Global Crossing and its transoceanic cables were his example, and the capacity they laid is in use today — infrastructure "we built out 26 years ago"
He treats overbuilding as a property of capitalism rather than a forecast: periods of investment, then of overinvestment, and "then you have malinvestment"
Today's data center shortage is real, he said, and will invert. He called it a rule of capitalism that every shortage is followed by a glut: "It always happens and we will have a glut of capacity at some point"
He will not call the bubble
Asked directly whether asset prices are a bubble because of the glut to come, Dillian declined to rule on it.
The two largest AI businesses are not priced in public markets yet — "the two big AI IPOs, haven't happened yet," meaning OpenAI and Anthropic. Of Anthropic he said "they're massively unprofitable but the revenues are exploding"
His answer to a question he cannot model is to stop modeling. "I am not smart enough to figure this out honestly," he said. "I just kind of watch the charts. I look for distribution," waiting for prices to roll over rather than deciding in advance
9. Costco And Copper Charts
Rosen raised a chart Dillian had published of Costco's stock, which Dillian uses as an economic indicator. He started with the customer.
On the membership math: "the executive membership, which is $130 a year" pays "2% cash back on all your purchases." Shoppers then justify a $2,000 trip by the $40 of cash back. "It does not compute"
The indicator is the share price, and he has been publishing it for years. When Costco finally rolls over, "Like that's when we will be headed into a recession"
Where the two charts stand now: "So Walmart has already rolled over. Walmart's got a really ugly chart. Costco has put in a top. It's been flatlining mostly for about the last 6 or 8 months"
Asked whether the indicator worked in past cycles, he said the stock would have been a different one: "Yeah, but it wouldn't have been Costco. It probably would have been probably would have been Walmart, honestly, 25 years ago"
On copper he declined to have a view. "Yeah, copper actually broke out today. It's very close to the all-time highs," he said, but "I don't know if I have a strong opinion on copper"
His read on why others are bullish is the same sentiment argument as the covers: "I think generally people expect copper to go up indefinitely because it's the AI metal, right?"
10. Five Sleeves At 20%
The second half of the interview covered Dillian's new book, "The Awesome Portfolio." He began with what he thinks is wrong with the default plan.
That plan is a single asset class held through every drawdown — everything in the S&P 500, dollar-cost averaged, and $10 million at retirement. The way people save for retirement now is, in his words, "just a bad idea"
The index is not the problem; the ride is. "The returns are great, but the volatility can be breathtaking, right?" During last spring's tariff selloff it moved eight or nine percent a day: "I kind of don't want my life savings in something that moves around eight or nine percent a day"
He frames the American approach as a national habit rather than a strategy. "The rest of the world doesn't do this. In Europe, Japan, they put it in the bank or they buy bonds"
The allocation: "So the awesome portfolio is 20% stocks, 20% bonds, 20% cash, 20% gold, and 20% real estate." Five uncorrelated asset classes, which he says brings the volatility of the whole portfolio down sharply
The record he claims is "about 9% a year since inception versus 10 or 11 for the S&P," at "half the volatility," with a worst drawdown of 12%. His comparison: "Versus the S&P where from the top of 07 to the bottom of 09 you had a 57% draw down"
Maintenance is one trade a year. Rebalancing back to 20% each means "selling winners to buy losers," which leaves the holder free to think about something else — "playing with the dog or whatever"
One allocation for every age
Rosen asked whether it works at any time horizon, then pushed back as a young investor who would want 70% stocks.
The convention Dillian is replacing is the age rule: in the old days, he said, a saver's bond allocation was set to their age — 30% bonds at 30, 70% at 70 — which is what target-date funds automate over a career
"So the awesome portfolio just takes all the brain damage out of that." Younger holders can tilt slightly toward stocks and older ones away, but the flat 20% across the board is "one size-fits-all. It works all the time"
His response to the request for 70% stocks was to swap the asset. "Well, what I would say to you is how about 70% gold? How do you feel about that?" Rosen said that sounded boring. Dillian's point was that the objection is to concentration, not to the asset: "This is just about diversification, right?"
He told the story against himself. The first mutual fund he bought, at 23, was a Vanguard total stock market index fund, sold on the promise of "instant diversification. One fund, you get 500 stocks"
His objection now is crowding. "The problem is that when everybody in the country is doing the same thing, you have 150 million people in the same trade in the S&P 500, then you are subject to liquidity black holes and crashes." In the pandemic, selling of index funds and ETFs "drove correlations to one," leaving "no bid for any of this stuff"
Rosen asked whether passive flows into the S&P 500 are one of the things he is positioned for. Dillian: "Yes. Yes"
11. Home Equity Counts
Asked whether a house counts toward the real estate sleeve, Dillian said it does, then dealt with the problem that creates.
The equity in a house is the allocation, which makes the sleeve one you "can't rebalance" — physical property cannot be trimmed back to 20% each year
For those who do not own one, the sleeve is a REIT ETF: "And the one I recommend is VNQ, which is a Vanguard one, right?"
Most households are already overweight the sleeve, on his numbers: the typical person has "a $400,000 house, they have 80,000 in equity" and $50,000 to $60,000 of liquid assets, and nothing else
The fix is addition rather than sale, done over time. "Bring up your cash, bring up your gold, bring up your stocks, bring up your bonds to 80%"
He included himself in the problem: "I'm actually overallocated to real estate, too. I just built a house. It's very big," with about 90% equity in it, and a plan to rebalance by bringing everything else up once it is paid off
12. Gold Over Commodities
The 20% gold sleeve is the allocation Rosen said sounds high against a conventional portfolio. Dillian said gold was not his first choice.
He wanted broad commodities and could not make the arithmetic work. "what I wanted was a commodity index" — the Dow Jones AIG index, the GSCI, now the Bloomberg commodity index
The problem is the cost of holding futures, not the commodities. "But what I found was that commodities tend to underperform because most of them are negative carry right because there's a cost of storage," built into the price of later-dated contracts, so rolling from one contract to the next "eats away at the returns"
Gold solved both problems at once: "And what I found was that gold was a good proxy for all of commodities and it's actually a better diversifier because it has a 0% correlation to stocks and everything else"
13. No Bitcoin In It
Rosen asked whether the case for gold is the case for bitcoin. Dillian said bitcoin only started behaving like a store of value two weeks ago.
"Bitcoin rallied a bit a couple weeks ago on that bond repurchase announcement, right?" — the first time in its history, on his reading, that it traded as a hard asset
Before that the correlation pointed the other way. "Like up until that point, it had acted like tech stocks. It was more correlated to the Nasdaq than with gold"
The reason it is not in the portfolio is behavioral rather than analytical. "Bitcoin is super volatile. It's like an 80 vol" — an implied volatility of about 80%. Add it to the other five and "guess what you're going to be staring at" all day — the bitcoin line, which "defeats the purpose of this whole exercise"
Rosen agreed, saying anyone staring at a five-minute candle chart is usually looking at bitcoin
14. Cash Is Optionality
The 20% cash sleeve drew the same objection, and Dillian said it drew a much louder one when he first published the idea.
He designed it when cash paid nothing. The 20% sounded even higher in 2018 and 2019 because "interest rates were zero back then." He published a special report on it in 2019 and got "all this hate and discontent from people" for putting a fifth of a portfolio in an asset yielding zero. Cash now pays 4%
The historical case is that the worst-looking sleeve occasionally wins: "And look, in the 1970s, the late 1970s, cash would have been the highest performing asset in the awesome portfolio"
The real argument is liquidity. "Liquid net worth is the most powerful force in the universe." His example: someone worth $2 million holds $400,000 in cash, sees a condo they want on vacation in Fort Lauderdale, and can act — "Just write a check. You don't have to sell stocks"
"And cash is an option to buy something cheap in the future. That's what it is. It's really optionality"
15. Down 4–6% In A Crash
Asked how the portfolio behaves in a 2008-style break, Dillian gave the calendar-year numbers.
In calendar year 2008, "the stock market was down about 36.5%," he said. "And the awesome portfolio was down about 9%. It massively outperformed"
He would not supply a dot-com figure he did not have: "I don't know off the top of my head what it did in dot-com." He said it outperformed then too, and of 1973: "I remember it outperformed a lot"
Applied to his own AI thesis, sleeve by sleeve: if stocks fall 20% or 30%, then "Bonds go up, gold probably goes up, real estate's probably unchanged maybe it goes down a little bit, and you have cash"
The estimate that follows: "So if stocks are down 20%, my guess is the awesome portfolio is down like four to 6% in that scenario"
16. The FOMO Problem
Rosen asked why more people do not simply adopt it. Dillian's answer was that the cost is paid in the years when nothing goes wrong.
"Because about two-thirds of the time it is going to be underperforming the S&P, right?"
What that feels like: there will be years when the S&P 500 is up 30% and the portfolio is up 12%. "And it's going to feel terrible. It's going to feel absolutely terrible." The risk is that the holder starts changing the allocation and buys stocks "at the worst possible time"
"So the toughest part of doing this is the discipline of resisting FOMO. That's the hard part"
On whether it removes the need for a financial adviser, he was careful. "Now I have nothing against financial advisors. They help a lot of people." But he expects an adviser handed the book to reject it: a client asking for 20% gold and 20% cash gets "who is this idiot?"
The obstacle he names is the strength of the convention, not the quality of the argument: "What I want to tell you is that the conventional wisdom around how we invest and how we do things in the markets is so ingrained that it's really going to take something big to dislodge it." A book, he said, starts the conversation rather than finishing it
Books that confirm beliefs
Dillian then made a publishing argument against his own book.
"So books, especially financial books, really succeed when they confirm people's beliefs, right?"
His example was "The Millionaire Next Door," which he summarized as telling readers that "If you want to be a millionaire, then you have to buy 69 cent pork and beans and have one cheap suit and have a beater car and live in a tiny house." It matched what readers already believed about thrift, and it sold
His own book does the opposite. "This book is going to tell people to do the opposite of what they've been taught their entire lives. There's going to be a lot of cognitive dissonance," he said, and hedged the outcome: "Unless I'm an exceptionally good writer, this is going to be a tough sell for a lot of people"
17. Why He Wrote The Book
Rosen asked why he put an argument he expects to be resisted into a book at all.
He runs his own money this way. "First of all I structure my whole life around this portfolio. Like I've been living this for many years"
The motive he gave is what he has watched happen to people in past cycles: "I've been through the down part of cycles and I see how miserable people are and it's all preventable, right?"
It is not sold as a way to make more money. It loses to the S&P 500 all the time, he said: "It's not about making the most money. It's about being happy with your financial situation and not experiencing this volatility and just living a stress-free life"
Bonus Insights
Rosen asked where to find his work. Dillian pointed to jareddillianmoney.com for the newsletters, a Substack about non-financial subjects — life and stuff, in his description — called We're Gonna Get Those Bastards, and djstokastic.com for his music
On the run at The Daily Dirtnap, which Rosen called an institution: "18 years. It's unbelievable." Rosen said his own daily newsletter is almost at three years
Dillian's word for Costco's customer base was a cult. He lives about an hour from the Myrtle Beach store and goes roughly four times a year
The pandemic crash is the mechanism he most wants to avoid being caught in: when everyone owns the same index, "the trap door is going to open up"
Rosen's own view on why the book will land is that money is the largest source of stress for most people, particularly for anyone picking stocks or holding memecoins
Dillian's bottom line is that a market whose story has reached magazine covers and movie casting is at its top, that the position against it is not a short but a long position in bonds yielding 5.3% while volatility is cheap, and that the portfolio he wants to hold through the break is five equal sleeves — stocks, bonds, cash, gold and real estate — which he says fell about 9% in 2008 and would fall 4% to 6% if stocks fell 20%.
Products, Companies & Tools Mentioned
Costco (His recession indicator: a $130 executive membership and 2% cash back that he says make shoppers spend $2,000 to get $40 back, and a share price flatlining for six to eight months)
Walmart (The chart he says has already rolled over, and the stock that would have been the indicator 25 years ago)
Vanguard and VNQ (The total stock market index fund he bought at 23, and the REIT ETF he recommends for the real estate sleeve when someone does not own a house)
OpenAI and Anthropic (The two big AI initial public offerings that have not happened; of Anthropic he said the company is massively unprofitable while its revenues are exploding)
The Economist and Time (The magazine covers behind his sentiment case — four AI covers in two weeks, then Jensen Huang as a magician with a crystal ball)
Global Crossing (The dot-com example: laid fiber-optic cable across the ocean, went out of business, and the capacity is in use 26 years later)
The Bloomberg commodity index, the GSCI and the Dow Jones AIG index (The commodity indices he tested before choosing gold, rejected because rolling futures contracts eats the return)
Books & Resources Mentioned
The Awesome Portfolio – Jared Dillian (The book the second half of the interview covers: five sleeves at 20% each, rebalanced once a year)
The Millionaire Next Door (His example of a book that sold because it confirmed what readers already believed about thrift — pork and beans, one cheap suit, a beater car)
The Daily Dirtnap (His daily markets letter, written for 18 years, where he says he has been making the Costco argument for years)
Jared Dillian Money (Where he told listeners to find his newsletters)
We're Gonna Get Those Bastards (His Substack about everything other than finance)
Stan Druckenmiller's op-ed on the Treasury's buyback program (The argument Dillian says he agrees with: the 10- or 30-year interest rate is the price of money and the main discipline on federal spending)
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