Five Percent, Then and Now

September handed you a reason to review your cash. It did not hand you a reason to review your portfolio. Those are two different accounts with two different jobs, and the difference is most of what I want to cover this month.

The 10-year Treasury yield reached its highest level since 2007. The Federal Reserve raised its benchmark rate for the first time since 2023, to a target range of 3.75% to 4.00%. Short-term yields are the most attractive they have been in nineteen years, and the money sitting in your checking account is the money that should respond. Your thirty-year portfolio should sit still.

I have seen the other version of this. I was standing behind the teller counter.

The Summer of 1999

In the summer of 1999 I left Def Jam for what my mentor called a serious job, a teller position at NationsBank in downtown Charlotte, North Carolina. The merger with BankAmerica had closed the previous fall, and 1999 was the year the Bank of America name finally reached the branches.

It took about a week to understand how the branch made its money. Customers came in for basic transactions, and my job was to spot the ones who needed more: credit cards, home equity lines, CDs, and referrals to our partner brokerage for mutual funds. I got good at it quickly.

The CD pitch sold itself. Rates were at 5% and climbing, and every customer who walked past the rate board asked about them.

The mutual fund pitch was easier still. I had three Janus t-shirts to prove it.

Janus was the hottest name in the industry that year, and I referred customers into their funds all through the back half of 1999. By the time the year closed, their fourteen stock funds had averaged 81.6% against the S&P 500's 21%, riding large-cap growth and technology to returns that felt invented. More than $35 billion flowed into Janus funds in 1999, and in the fourth quarter alone they captured 23 cents of every dollar Americans put into stock mutual funds. One research director called it one of the most remarkable sales years any fund group had posted.¹

I contributed to those numbers, and so did every customer I referred.

The mood inside the branch was uncomplicated. Markets went up, and the only open question was how much.

July 28, 2000

Integration rolled on into 2000. Layoffs had been expected, mostly on the West Coast. Charlotte was safe, and we said so constantly. The merger meant expansion, in-store branches, new territory. I transferred to one of those in-store locations, my referral numbers kept climbing, and my manager Shelby wrote me a letter of recommendation so I could join the next cohort studying for the Series 7.

Then the headline: Bank of America Plans to Cut 10,000 Jobs.²

I had already resigned my teller role for the training program. The program was canceled. Nobody laid me off. The term they used was displaced, and it came with no severance, no transition support, nothing.

The Nasdaq had peaked near 5,048 in March and was down roughly 25% by the end of July. Bank of America stock sat near a 52-week low of $42-5/16, still quoted in fractions the way everything was before decimalization. The stock barely moved on the announcement.

My 401(k) was fine. My bank account was another story.

What September Sounds Like

Twenty-six years after that headline, the conversation has a familiar shape.

The 10-year Treasury closed the quarter near 5.3%. The Fed raised rates for the first time since 2023. And the S&P 500, which finished the month down about half a percent and looked almost calm, covered a rougher story underneath: roughly three-quarters of its member companies declined, and the index held its ground because a handful of mega-cap technology names carried it.³

The question arriving in my inbox is the same question that stood at the CD window in 2000. Why take the risk when 5% is sitting right there?

Two Things That 5% Does Not Tell You

The first is purchasing power. A 5% yield with inflation running at 3% is a 2% raise, not a 5% one. Nominal numbers feel concrete in a way inflation-adjusted numbers never do, and behavioral finance has a name for that gap: money illusion. It explains why a 5% CD in a 6% inflation year still feels like a win.

The second is reinvestment risk. A five-year CD is a five-year decision, and the rate on the one after it belongs to a future you do not set. Savers who locked in the rates of 1999 and 2000 learned this in 2003, when short-term yields had fallen below 1% and the equity recovery was already running without them.

Over rolling twenty- and thirty-year periods, diversified equities have outpaced fixed income by a wide margin. Shorter windows tell a different story, and the stretch from 2000 through 2009 favored Treasuries outright. I cannot tell you which kind of decade is coming. I can tell you that most of our client households are investing across a horizon measured in decades, plural, and that horizon is the one your portfolio was built around.

What to Do With This

Review the cash first. If your emergency fund, your near-term savings, or your practice operating reserves are parked in a checking or savings account earning close to nothing, September gave you the clearest reason in nineteen years to move them. Short-term Treasuries, Treasury money market funds, and high-yield savings have all repriced alongside the Fed. That money can earn meaningfully more without touching your long-term allocation.

Then leave the allocation alone. The reasons you hold equities are unchanged by a move in short-term yields.

One question before October closes. Is your short-term cash keeping pace with the higher short term rates, or with whatever rate your bank decided to leave it at?

I started my advising career on September 12, 2001, with no clients and a market in freefall. The lesson that stuck came from the year before, standing at that teller window: my portfolio survived something my checking account could not.

Fund the reserve. Leave the portfolio where it is pointed.

Sources

1. TheStreet, "Janus' Extraordinary 1999 Powered by Small Group of Favored Stocks," February 9, 2000.
2. CNN Money, "BankAmerica to cut jobs," July 28, 2000.
3. CNBC, "Broken market: 75% of S&P 500 stocks had a lousy September," September 30, 2026; Federal Reserve FOMC statement, September 16, 2026.

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