Jared Dillian's 'The Awesome Portfolio' Recommends Cash Allocation Over Standard Index DCA

Dillian's core claim rests on historical sequences where prolonged drawdowns eroded dollar-cost-averaged equity positions more than equivalent cash reserves. Bloomberg's September 2026 segment presents the argument without testing it against specific cycle data such as 2000-2003 or 2022. Primary records from Federal Reserve flow-of-funds tables show household cash balances rising sharply before both episodes, consistent with the book's timing thesis.

Competing incentives appear in the data: index providers and asset managers earn fees on AUM regardless of sequence-of-returns risk borne by the holder. Dillian's position therefore collides with the revenue model of the largest passive vehicles. Treasury and money-market yield curves since 2023 document cash instruments delivering positive real returns while equity multiples compressed, supplying the concrete alternative he cites.

The next measurable test lies in 2026-2027 corporate earnings revisions. If S&P 500 forward earnings growth falls below 4 percent annualized while short-term Treasury yields remain above 3.5 percent, cash allocation outperformance becomes observable in 12-month rolling returns. Portfolio-level data from the Investment Company Institute will record the shift if it occurs.