How Losing $500K in ‘08 Led One Trader to a Different Kind of Portfolio, with Jared Dillian

#756: In September 2008, Jared Dillian watched about half a million dollars of Lehman Brothers stock go to zero in a single week. He wasn't allowed to sell any of it. What he built afterward is a portfolio designed so he never goes through that again.

Jared Dillian was a trader at Lehman Brothers from 2001 until its collapse, and ran its exchange-traded fund desk. He's the author of The Awesome Portfolio and taught finance at the university level for 13 years.

In this episode, we discuss:

• Why to sell your company stock as soon as you're allowed to

• How living below your means gave him the freedom to start a business when Lehman fell

• How to gauge your real risk tolerance with a simple Las Vegas test

• How a portfolio split five ways (stocks, bonds, cash, gold, real estate) held up in 2008

• Why a 20% cash cushion can be an advantage instead of a drag

• What long-term bond yields reveal about the economy that stocks don't

• What it would actually take to close the Social Security funding gap

If most of your money sits in an index fund or your employer's stock, this conversation will help you figure out how big a drop you could actually stomach before the next real bear market tests you.

⏱️ TIMESTAMPS

Note: Timestamps may vary slightly depending on dynamic ad placements.

(02:29) Walking into Lehman Brothers the day it collapsed

(04:38) The $500,000 in company stock that went to zero

(06:57) How cheap living let him start a business instead

(19:54) Why buy-and-hold hasn't faced a real crash since 2008

(22:52) The Las Vegas test for your risk tolerance

(27:07) A five-way portfolio that fell just 9.8% in 2008

(28:46) The one scenario where this portfolio struggles

(29:33) Is 20% cash too much with inflation?

(44:45) Why bond yields are the economy's warning light

(51:25) Why half of retirees claim Social Security at 62

🔗 RESOURCES MENTIONED

• BEFORE YOU ADD BONDS OR REAL ESTATE FUNDS, KNOW WHICH ACCOUNT THEY BELONG IN 👉 https://affordanything.com/assetlocation

• Jared Dillian's website 👉 https://www.jareddillianmoney.com

• The Awesome Portfolio by Jared Dillian 👉 https://amzn.to/4ART5i4

• Jared Dillian on X 👉 https://x.com/dailydirtnap

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