Helping advisors enable clients to achieve their financial goals

Seizing the Opportunity

by Doug Drabik of Raymond James, 10/2/25

Last week, my colleague wrote about Anchoring Bias, a psychological phenomenon that attaches a particular price or specific yield level to a bond. Bias occurs when an investor commits to a certain level and assumes that the market will revert to that level. History tells us that this line of thinking can be risky business. Why? Primarily because the economy is fluid, and the variables that affect rates and prices are numerous.

There is a sports analogy that seems apt, where golf stands out in a unique way from other sports. Basketball is played on a 94-foot by 50-foot court with two 10-foot rims on either end. Football is played on a 100-yard by 53.3-yard surface, with 10-foot goalposts on the back side of the 10-yard end zones. Hockey arenas are 200 feet by 85 feet. Although there may be other factors that vary, each game is played with these constants that players rely on from one game to the next. A golfer can play the same course 100 times and have a different experience each time. The temperature, lighting, wind, grass height, ground firmness, hole placement, and external noise factors can be different each time. The ball never lands precisely on the same spot, so every stroke is a unique experience.

Likewise, economic variables give rise to diverse investor situations. General interest rates, job markets, inflation, Fed policy, investor situations, consumer well-being, corporate health, and market sentiment are just a few of the variables that create a unique investment experience. There are plausible rationalizations that, given particular economic data, interest rates could be higher or lower in 6 or 12 months. So, should investors wait for those higher rates or buy in anticipation of falling rates? Will the stock markets continue to run? Are the top 20% net worth investors spending enough to keep earnings propped up, while 80% of the households struggle to keep pace? Will the Fed react to sticky inflation or fading consumption? It is easy to see how uncertainty is omnipresent in the investment world.

Here is what we do know and how many of your peers are seizing the opportunity. Stocks have risen at a remarkable pace, creating wealth in many portfolios. At the same time, interest rates have remained elevated, providing an opportunity to secure suitable income levels. Some investors are capturing stock profits and then locking in returns that can exceed 5.0% in safer fixed-income products. In this manner, the initial capital dedicated to stock growth remains invested while the earnings are used for preservation and a known return.

Securing rates of 4.0% or higher can be significant, as many retirees rely on a strategy of drawing down 4.0% of their retirement funds as their primary source of income in retirement. If funds are locked into today’s interest rates, it keeps the principal intact or even allows it to grow as invested dollars out-earn the drawdown. Investors not paralyzed by market biases have the opportunity to capitalize on the best of both markets by securing a known retirement income while remaining well-positioned for growth.

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