Connecting What’s Happening to What Really Matters
Federal debt just hit $40 trillion, but that's not the number that should have your attention.
In this month's Beyond the Headlines, Zach Horn breaks down what's really moving portfolios: 30-year Treasury yields at their highest in nearly two decades, long-term bonds have been swinging like risk assets, and why the top 7 S&P 500 companies now make up a third of the index; nearly double the historical average. Plus, the diversification story most investors got wrong in 2010, and how the tides have turned. Same principles, applied to today's headlines; watch to see how they connect.
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Don't want to watch the video? Here’s the transcript you can read instead:
Hi, I’m Zach Horn, and welcome to the September edition of Beyond the Headlines.
The past month gave us a headline that was hard to miss: U.S. federal debt crossed 40 trillion dollars for the first time. That's the number that got all the attention, but something else was happening at the same time in the bond market that was probably having a bigger impact on your portfolio.
The 30-year Treasury yield climbed above 5.3 percent, its highest level in nearly twenty years, and the Treasury responded by doubling the size of its bond buybacks.
We're less focused on the debt itself than on what rising rates do to your portfolio. Generally, when interest rates increase, bonds issued earlier at lower rates become less attractive, so their prices fall. The longer the maturity, the bigger the drop. And people who bought thirty-year Treasuries for safety years ago have recently watched them swing like risk assets.
Our approach to bond management is more complex. Maturity, credit quality, and where a bond sits on the yield curve all matter. How we position them in a diversified portfolio is deliberate, and it gets decided long before you see a headline like this one.
The same thinking applies to stocks. Spreading your equity exposure across regions matters, and international is where that's paid off lately. The international benchmark returned double the S&P 500 in 2025, and it's ahead of the index again so far this year.
Rewind a few years, and the question we sometimes heard from clients was, “Why would anyone own international stocks at all?” But the people collecting outsized returns now are the ones who held the allocation through the years overseas stocks lagged. That patience is what makes diversification work. The good years often belong to the people who stayed through the hard ones.
We can't tell you if international stocks keep outperforming. Nobody can. What we can say is that right now we see more value abroad than at home. That's why we've been tilting in that direction, and why we think there's still room to run.
International exposure is one kind of diversification people underestimate. Concentration is another. Plenty of investors assume that holding an S&P index fund means they’re well-diversified domestically. But today, the top seven companies account for roughly a third of the index’s value, compared to an average of about 17 percent historically.
This is how a Market-Weight fund holding five hundred names can still leave you leaning hard on a handful of companies in one sector. Owning a Market-Weight index is fine. But assuming the index handles diversification for you is where it’s easy to miss out.
None of that is new advice from us. What you heard today is what you heard last year and what you’ll likely hear from us in years to come. We stand on our values of diversification, investing for the long-term, and sticking to a well thought out plan through the stretches when it might feel a bit unsettling.
These values can help across different market cycles, which means our team at Foster & Motley doesn’t have to generate a new message when markets get noisy. Instead, we pick up the phone and continue the conversations we’ve already been having with clients for years. That's the benefit of long-standing, generational relationships.
If you want to talk through how any of this fits your own plan, reach out to your Foster & Motley advisor or give us a call to see how we can help.
We'll see you next month.