What got us here may not get us there…
“A good hockey player plays where the puck is. A great player plays where the puck is going.”
– Wayne Gretzky (considered by most as the greatest hockey player of all-time)
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The topics for this quarter’s newsletter revolve around one theme.
We have lived through an unprecedented 45 years of a “Goldilocks” investing environment, and investors have been rewarded. An investment portfolio with only stocks and bonds has been more than sufficient to hedge risks and grow the US stock market (S&P 500) at rates faster than any 45-year period in US history (over 13% annually)*.
But there is evidence everywhere that many of the trends we have enjoyed for many years are running their courses or even reversing. So to “skate to where the puck is going to be”, I’m going to focus on two conditions we will see more of in the future:
- Higher Volatility and Inflation – How to easily and effectively invest beyond stocks and bond.
- Operating in a higher interest rate environment – How to invest more intelligently, borrow cheaper, and how to maximize our return on cash
In this issue
- Key Market Takeaways (Q2)…My Take and Your Plan
- New Ideas/Products – How to “stack” real asset/hedge fund style diversification on top of stock and bond investments
- Case Study: Cheaper borrowing in a higher interest rate environment
- Question from the Audience: How do I get the most out of my cash?
Key Takeaways – Q2 2026
Markets and Commodities
| Security/Index | Q2 2026 | 2026 YTD (July 13) |
| Nasdaq stocks | 26.1% | 11.9% |
| S&P 500 stocks | 17.3% | 9.1% |
| Emerging Markets stocks – EEM | 24.9% | 24.7% |
| Global (ex-US) stocks – ACWX | 14.8% | 12.9% |
| Commodities – DBC | -8.4 % | 17.8% |
| Oil Futures – USO | -13.8% | 53.5% |
| US Aggregate Bonds – AGG | 0.8% | -0.8% |
Source: Yahoo! Finance
Inflation
Inflation reached 4.2% (YoY for 12 months ending 5/31/2026), rising continuously throughout 2026.
Source: Bureau of Labor Statistics
Interest Rates
Average 30-year fixed mortgage rates for the week ending in 7/2/2026 was 6.43%.
Source: Freddiemac.com
Market Commentary
After a difficult first quarter for global stocks, due in large part to the Iran War (first strike – Feb 26), the stock market rebounded dramatically in Q2 as the market shrugged off the War’s initial shock and commodity prices dropped. Oil futures, however, are still up over 50% YTD and broader commodities are up almost 18%. As of July 9th, it appears that the cease-fire has broken down and oil prices are headed up again.
Maybe more importantly, concern over sticky inflation continues to grow as the prices of food and oil remain elevated. New Fed Chair Kevin Warsh stated in the most recent meeting that the Fed will not be comfortable with inflation above its 2% target rate, signaling that interest rate cuts are not forthcoming. That leaves little hope that mortgage rates will continue to drift down slightly, as they have for the last 3 years. Remember 2021(only 5 years ago)? In July 2021, 30-year mortgage rates were 2.88%!**
I can’t wrap up my review without commenting on the performance of the “Mag 7” (Amazon, Apple, Meta, Google, Nvidia, Tesla, Microsoft)+.
| Stock/Index | H1 2026 Return |
| S&P 500 Index | 8.6% |
| ACWX (All World ex-US stocks) | 12.2% |
| Mag 7 “basket” of stocks | Flat to slightly down |
Source: Yahoo! Finance
To better understand how rapid spending on AI infrastructure could be negatively affecting some Mag7 stocks, see my interview with Kai Wu on my YouTube Channel (@MichaelBerginesPersonalCFO). If you work for one of the Hyperscalers, or you are holding stock in one of these companies, the interview explains how you might want to modify your previous assumptions about stock price growth in this new environment.
My Take – and Your Plan
Inflation and higher interest rates are likely to persist, and macro issues such as the possibility of sticky inflation and ever-increasing US government debt/debt service suggest we need long-term financial plans that also work in a world of higher inflation, higher interest rates, and higher taxes. I am not predicting gloom and gloom, but I am saying that most portfolios are tuned for largely benign conditions that we can’t expect in the future.
I will publish a blog where I discuss growing US government debt and its possible implications to interest rates, inflation, and taxes later this month.
We will need to consider new allocations to reflect these merging economic trends and maximize returns on our assets: cash, bonds, stocks, alternative and real assets. Read on!
A New Investment Idea: Return Stacked ETFs
I like the ease and the cost-efficiency of adding these attractive assets without choosing to reduce your other investment holdings. When you own $100 worth of the RSST ETF (US Stocks and Managed Futures – the company’s flagship ETF), you really own $100 of US Stocks and $100 of Managed Futures.
Return Stacked ETFs has come up with a novel idea – a way to cost-effectively “stack” diversifying assets on “on top” of stocks and bonds without reducing your core investment. The assets can be diversifiers that have a history of strong performance during inflationary times or times of crisis (e.g. gold, managed futures) or alternative assets that are not typically correlated with the market (e.g. futures yield, merger arbitrage, bitcoin).
Example #1: Stocks up 10% and Managed futures down -4% creates a “net return” of 6% on your investment
Example #2: Stocks are up 6% and Managed futures are up 3% creates a “net return” of 9% on your investment
Example #3: Stocks are down -6% and Managed Futures are down -5% creates a “net loss” of -9%
Here are examples of the 4 categories of outcomes you could expect over a chosen time period and their probability of occurrence:
| Outcomes | Probability of Occurrence |
| US Stocks UP/Managed Futures UP | 35.2% |
| US Stocks UP/Managed Futures DOWN | 33.9% |
| US Stocks DOWN/Managed Futures UP | 18.4% |
| US Stocks DOWN/Managed Futures DOWN | 12.6% |
Source: Bloomberg (Return Stacked)
This strategy should theoretically reduce the overall volatility of the “Stacked Asset”, while holding the promise of additional return above the core stock or bond foundation of the ETF.
You can learn more by checking out their website – www.returnstackedetfs.com or dropping me a note.
Case Study: Cheaper Borrowing in a Higher Interest Rate Environment
I have two younger clients who have built meaningful portfolios but have not bought homes yet. They are starting to plan, and they are assuming that they will need to sell a part of their portfolio for the down payment and possibly incur capital gain tax in the process. Not ideal.
Beyond the issues related to a down payment, the interest rate environment is very different now that it was for people who bought just 5 years ago (or earlier). See below
| 30-year Fixed (2026) | 30-year Fixed (2021) | |
| Home Purchase Price | $2.0 million | $2.0 million |
| Amount Financed (80%) | $1.6 million | $1.6 million |
| Interest Rate | 6.43% | 2.88% |
| Monthly Payment | $10,040 | $6,643 |
| Total Payments (30 years) | $3.6 million | $2.4 million |
| Interest Paid (30 years) | $2.0 million | $800,000 |
In this example, every reduction of 50 basis points (0.5%) is worth $500 savings on monthly payments, and $180,000 savings on interest over the life of the loan.
Synthetic Borrowing with your portfolio as collateral
I will not dive into the details here – www.syntheticfi.com does a great job of education – but your portfolio can be collateral for you to borrow money for a set period of time (up to 5.45 years). At the end of the borrowing period, you pay back that money plus an additional amount (interest).
Current rates published July 13, 2026 on the SyntheticFi website allow for 1991 days of borrowing (5.45 years) at 4.54%, almost a full 2% cheaper than bank lending! How much you can borrow is a function of the quality and the value of securities you have in your portfolio, not the purchase price of your home. The borrowing can be used for down payment or money you would normally raise with a traditional mortgage.
Synthetic Borrowing Potential Benefits
- No need to sell investments (and lose market opportunity PLUS a potential tax impact) or commit money for a down payment
- Borrowing is currently between 1-2% cheaper than current 30-year fixed mortgage loans
- Full deductibility of interest payments (mortgage loans are limited to the first $750K paid)
This strategy can be particularly beneficial if you are buying international property, where loans are difficult to secure or significantly more expensive than mortgage loans in the US.
Synthetic Borrowing Considerations
- This strategy requires borrowing against your securities and makes your securities subject to margin requirements
- This risk becomes material if you borrow too much relative to the value of your securities and the value of your securities drops significantly
- This risk can be significantly mitigated by conservative borrowing and high- quality securities holdings
- The longest period of borrowing is 5.45 years, at which time the loan can be paid off or refinanced at existing rates, assuming sufficient collateral
- There is a fee for generating and maintaining the loan, which varies by company (fee/% of loan)
If you want to discuss the structure in detail, or you want to understand if this strategy might be appropriate and helpful for you, drop me a line.
Question from the Audience: How do I get the most out of my cash?
I am starting to get this question now that summer is here, people are doing construction projects, going on vacation, or selling stock and not looking to put it all back into the market.
Low inflation and low interest rates between 2012 and 2022 meant money market interest rates averaged approximately 0.5% annually**! Not much, and many people got used to making very little money on their cash and stopped paying attention.
Not paying attention now is a lost opportunity, and, with interest rates at current levels, there are many types of cash equivalents you can use to optimize your return quickly and easily. Furthermore, your anticipated federal and state income tax rates, as well as what state you live in, are also variables to be optimized. Here is a cross section of cash equivalent ETFs you can purchase in any brokerage account, how they are taxed, and a range of recent yields:
| Types of ETFs | Tax treatment – federal | Tax treatment – state | Pretax Estimated Yields (July 2026)^ |
| Money Market | Taxed | Taxed | 3.3% – 3.5% |
| Short-term Fixed Income ETFs | Taxed | Taxed | 3.9% to 4.1% |
| Short-term treasury bill ETFs | Taxed | Not Taxed | 3.8% to 4.0% |
| National Muni bond ETFs | Not Taxed | Taxed | 2.7% to 3.4% |
| State-specific Muni bond ETFs | Not Taxed | Not Taxed | 2.7% to 3.2% (CA) |
Given these varying tax treatments and rate differences, understanding your tax bracket is important, as well as knowing where you live, your anticipated cash needs, and why you are holding cash, in designing your strategy.
I have built a tool to allow us to design a quick, customized cash portfolio for you that maximizes the after-tax interest you can earn. If you want to play with it, let me know!
Summary
Staying aware of what is happening in the markets, staying agile, and planning for your future and the future of the markets can bring you material excess returns. No earth-shattering moves and nothing super sophisticated – it requires only a little knowledge, a little time, and consistency. One percent extra cash yield, two percent lower borrowing rates, and protecting your portfolio from more inflation doesn’t sound like much, but the power of compounding makes any benefit meaningful over time.
If you want help “skating to where the puck is going to be”, drop me a line and we can chat!
* YahooFinance! (nominal returns)
+ WSJ, July 9th, 2026, “The Great Rotation is here” and YahooFinance!
**FRED (Federal Reserve Bank of St. Louis)
^ YahooFinance!
Reader Survey: What Should I Cover Next?
Email mike@prosperowealth.com and let me know what topics matter most:
Markets • Investing • Taxes • Retirement • Concentrated Stock • Planning
— Mike
Important Disclaimers:
This material is for informational purposes only and should not be construed as investment, tax, or legal advice. Past performance is not indicative of future results. All investments involve risk, including loss of principal. Index performance is shown for illustrative purposes only and is not directly investable. Data sources include publicly available information believed to be reliable but not guaranteed.
