Anne from Pennsylvania wrote into the Clark Howard Podcast with a problem that sounds like prudence but functions like paralysis. She and her husband, 64 and 74 respectively, hold about $5 million in savings with no debt, and have been out of the stock market for years, keeping everything in bonds and CDs. Her concern: “With the market overvalued in our opinion and talk of an AI bubble, I’m worried about investing now, but also about not keeping up with inflation.”
Financial advisor Wes Moss, appearing on the podcast, named the pattern directly: “You’re caught in the everything’s overvalued trap.” He is right. The math behind why he is right is something every near-retiree holding bonds and CDs should understand before making another allocation decision.
Why Waiting for “Undervalued” Markets Destroys Long-Term Returns
Moss’s core argument cuts through the noise quickly: “If we only were invested in markets when things were undervalued, we wouldn’t be invested all that often. So we’d miss an enormous part of that journey.” This is a well-documented feature of how equity returns are distributed across time, and 2026 has illustrated the point in real time.
The S&P 500, tracked by SPDR S&P 500 ETF Trust (NYSEARCA:SPY), was down roughly 4% through early April 2026 following a turbulent March. Investors who sat on the sidelines waiting for clarity had already missed the subsequent recovery: by mid-July 2026, the index had climbed to roughly 9% gains year-to-date, even as the U.S.-Iran conflict pushed oil prices sharply higher and inflation spiked to a multi-year peak of 4.2% in May. Those who waited for the “all-clear” signal never got one, yet the market advanced anyway.
That resilience reinforces Moss’s central point. Anne’s inflation concern is entirely valid, but the numbers now cut even more sharply than when this conversation aired. The Consumer Price Index for All Urban Consumers rose 3.5% over the 12 months through June 2026, with core inflation running at 2.6%. The Iran conflict drove energy prices up by more than 15% over the same period, and while gasoline fell sharply in June, providing some relief, inflation remains well above the Fed’s 2% target. Fixed income that yields less than inflation does not preserve wealth. It erodes purchasing power gradually, with the appearance of safety.
The Federal Reserve has kept its target rate unchanged at 3.50% to 3.75% throughout the first half of 2026, holding steady at the June FOMC meeting. Policymakers have signaled the possibility of rate hikes later in the year if inflation does not continue its retreat. The 10-year Treasury yield has climbed to approximately 4.6%, up from the 4.3% level cited when this article first published. A CD ladder or Treasury-heavy portfolio at those rates still barely clears inflation on a pre-tax basis and falls short after taxes for investors in taxable accounts. That math has not improved for the couple avoiding equities.
The Efficient Frontier Argument Is the Real Lesson Here
Moss went beyond the market-timing critique and raised something more technically precise. He explained that “when you get to 100% in just bonds… the risk actually goes up” compared to an 80% bond, 20% stock allocation. This is the efficient frontier concept, and it is counterintuitive enough that most investors never fully internalize it.
A portfolio of 100% bonds carries more volatility-adjusted risk than a mixed portfolio because bonds alone expose the holder to inflation risk, reinvestment risk as rates shift, and the drag of taxes on nominal yields. Adding even a modest equity allocation historically reduces overall portfolio risk while improving expected returns, because stocks and bonds do not move in perfect lockstep. The diversification itself does the work, and 2026 has underscored why that matters: bond investors who avoided equities to escape volatility still faced surging inflation eating into every coupon payment.
For Anne and her husband, with $5 million and a desire to leave something to one adult child, the stakes are concrete. A 4% withdrawal rate on $5 million produces $200,000 per year in income. Inflation running at even 3% annually cuts the real purchasing power of that draw meaningfully over a 20-year horizon. Equities have historically been the primary tool for outrunning that erosion, and nothing about 2026 has changed that fundamental relationship.
When a Phased Entry Strategy Makes Sense
Moss’s suggested path was deliberate: “Maybe you do 10% in markets today to the portfolio, and in 6 months, you do another 10%, and maybe that’s all you need and you’re at 20%, but at least you have some balance.” For a couple at this wealth level, that phased entry approach sidesteps the psychological trap of committing everything at once while still establishing the equity exposure the efficient frontier demands.
The approach fits anyone 60 or older with at least $1 million saved, no debt, and a multi-decade spending horizon. It fits less well for someone who will need most of their portfolio within five years, where sequence-of-returns risk is a genuine concern.
The University of Michigan Consumer Sentiment Index, a reliable gauge of public anxiety, stood at just 49.5 in June 2026, near historic lows and far below the 56.6 level that prevailed when this article originally ran. That reading marked the second-lowest in data going back to the 1970s, driven by the Iran conflict’s effect on energy costs and household budgets. Sentiment had been even lower in May, hitting a record-low 44.8. The lesson is that there will always be a reason to wait. Geopolitical crises, inflation spikes, AI bubble concerns, and Fed uncertainty have all made appearances in a single calendar year. That is precisely Moss’s point. “There is always something to worry about.” The question is whether worry constitutes a strategy. For a $5 million portfolio bleeding purchasing power in bonds and CDs, the answer is clearly no.
Editor’s note: This article has been updated to reflect market and economic data through mid-July 2026. The S&P 500 has recovered from a 4% year-to-date decline in early April to roughly 9% gains by mid-July, the 10-year Treasury yield has risen from 4.3% to approximately 4.6%, the annual CPI inflation rate reached 4.2% in May before easing to 3.5% in June, and the University of Michigan Consumer Sentiment Index fell to a record low of 44.8 in May before recovering slightly to 49.5 in June.
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