More Money

Why are you subscribing to this newsletter? Probably because you want more money through investing. You think I will dispense some wisdom (or even the occasional stock pick) that will add a few percent to your performance this year. Can’t say I blame you, because I’ve been doing this for a long time and made some mistakes, and you can learn from my mistakes so you don’t have to make them yourself. As for the stock tips, I usually don’t give those away for free, but if you stick around until the end of this newsletter, maybe I will.

The one thing I’ve learned over the years is that you can make a career out of hitting singles and doubles, racking up small gains over and over again, but if you really want life-changing money, you have to bet big, and you have to ride out the ups and downs and hold for years. Most people do this with stocks, whether they realize it or not. If you put 60% of your portfolio in something, it is a big bet, and you have to believe in it. If you put any more than 20% of your portfolio in something, it is a big bet, and you have to believe in it. 

There are a lot of people out there who believe in stocks. I don’t share that conviction, but their unshakable belief has taught me a lot about position sizing and conviction. The “stocks for the long run” people know in their bones that the stock market will be higher 10, 20, 40 years from now. I never thought that about stocks, but the funny thing is that I did think that about gold, and I have made even more money with that.

The Lesson Here

Anyway, the lesson here is to not be a candy ass. If you have an idea, you should put it on in a size such that if it works, you will make a life-changing about of money. That number is different for different people. For me, it is about $100,000 or $200,000. I don’t get out of bed for less than $100,000. For you, it might be $3,000—that would change your life.

Otherwise, you are what is known as a piker, which we have discussed before. I spent the first 10 years of my investing career pikering around, making $3,000 here, $7,000 there, but not really gaining any traction.

I’m not saying you have to be long the index. You can do this with a single stock, if you manage the risk. Chipotle isn’t doing well lately, but it did well for about 19 years. If you had your first burrito in 2006 and said, “Gee, maybe I should buy this stock,” and you did, made it a man-sized position, and never sold, you’d be retired. 

Deep down, I am a piker, because I never have that much conviction about anything, and maybe you don’t either. Maybe you have conviction that the stock market will go up over time, but it would have been better to have that idea 15 years ago. Retail investors often get the idea right but the timing wrong. My assistant, Gavin, always tells me about how he ends up being the exit liquidity at the top of a trend. Practice, young grasshopper.

So many people have done this with stocks to the point that now everyone believes in the wealth-creation properties of the stock market, to the point that the government wants to set up stock market investments for people, saying that it will compound at 13% a year. I would say that idea is pretty much consensus at this point. 

Having said that, the worst 20-year period for the stock market in history annualized 6% returns, which is still not too shabby. I don’t know what the stock market will do in 2026. Around April of this year, things weren’t looking too good, and we’re still up double digits, yet again. The problem is that most people will tell you that they are long-term investors, that they will ride out the ups and downs, but when push comes to shove, they are really tourists. We will find out who all the tourists are in a bear market. 

I like to buy things that are hated, the things that nobody wants. I like low valuations and high dividend yields. Nowadays, that’s things like paper, chemicals, and biotech. And sure, sometimes things are cheap for a reason. And sometimes you have to wait years. But if you buy cheap stocks with dividends and wait long enough, one day, the magic will happen. This is what value investors will tell you all the time, and it hasn’t worked, but guess what: Now it is starting to work. If Nvidia is sexy, I want the opposite of sexy. The last stock I added to The Daily Dirtnap portfolio is decidedly unsexy. But it’s cheap, pays dividends, and sentiment can’t get any worse—my type of trade.

In fact, there are a lot of things I want to buy right now, even with the index where it is, because there are so many cheap and unloved stocks out there. There was a period in the early 2000s when tech got crushed and value ripped—I mean massively ripped—because the money had to go somewhere. If 2026 was half as good as that, I would be happy.

Your Job vs. Your Investments

But like I said, you are here to make money. I will share a secret with you: Not many people get rich off their investments. Sure, some do, but most people get rich off their income. If you can manage to double your salary, that will go a long way toward ensuring your financial freedom, probably more than dorking around with ETFs. 

This year, I made more off my investment activities than I did at my newsletter job—much more, which is pretty satisfying. But for most people, that is not the case. Your time would be better spent focusing on your job or your business. There is a kid who goes around interviewing billionaires in parking lots. Like, this is his job. It’s a YouTube channel called the “School of Hard Knocks,” and pretty much none of the billionaires got to be billionaires by trading. Sure, some of them did: Soros, Druckenmiller, etc., but managing money is a business, too, and apart from putting up high returns, they had to do a lot of marketing to raise money. Raising money and making money are two completely different skills, and they rarely co-occur in the same person.

So, here is my advice to you: Focus on your job, but to the extent that you invest, have conviction and a very concentrated portfolio. Of course, the more you concentrate your portfolio, the more risk you have and the greater likelihood that things can go pear-shaped, so be advised that my advice is actually dangerous. 

But if you are like most people and have 60–80% of your assets in stocks, you are doing something dangerous already. You have a concentrated bet on the stock market going up, and you probably have amnesia about the last time that it didn’t. This is a discussion about risk management, not a prediction on the stock market. The stock market can go up for five more years, for all I know. But you know the drill: The higher valuations go, the more forward returns go down.

I hope you have enjoyed this year’s Jared Dillian letters. I’ve enjoyed writing them. Let’s hope for another year of music and cats and love and high returns. That’s all we can hope for.

Jared Dillian, MFA