September 2025
Written by Mick Jagger and Keith Richards, “You Can’t Always Get What You Want” appeared on the Rolling Stones’ iconic 1969 album Let It Bleed, one of the most legendary rock albums of all time. The Beatles’ “Hey Jude” inspired the choir-backed recording, and — aside from being a part of music history — the title phrase has been stuck in my head lately while watching markets.
Despite my concerns over valuations, the economy, and Fed independence, stocks have continued to grind higher, almost relentlessly so. The closest comparison I can recall is the late 1990s when the S&P 500 rose more than 20% a year for five straight years; we’re only two and a half years in this time.
There are plenty of differences between the two eras, but watching the daily march higher in stocks while shaking my head feels eerily similar. “March” may be understating the ascent in the ’90s — it felt more like a sprint. Not only did the market climb, but it did so in the face of high interest rates, as well as Fed Chairman Greenspan publicly questioning investors’ “irrational exuberance.” (And yes, I did feel a little nostalgic this week when Fed Chairman Powell opined that stocks are “fairly highly valued.”)
The Fed vs. the Market
President Trump wants lower interest rates, but he may not get what he wants. The economy has slowed and the President has been pressing for cheaper borrowing as a countermeasure. First, he asked (emphatically so) Powell to make steep cuts to interest rates, but Powell ignored the request given the inflationary pressures the country was already facing. Then, the President tried to have Powell fired — for a cost overrun on a construction renovation at the Federal Reserve’s headquarters — and now he seeks to remove Fed governors altogether. The Supreme Court will decide their fate, but ultimately I believe the market will decide long-term borrowing costs.
The Federal Reserve began to cut interest rates in September 2024, at which time they lowered the Fed Funds Rate from 5.50% to 5.00%. Since then, they have cut rates by 0.25% in November 2024, December 2024, and September 2025. Despite those interest rate cuts, the 30-year Treasury yield has risen (see Exhibit 1). That’s a remarkable statistic: The economy is slowing (which typically means lower interest rates), the Fed has been cutting rates for a year and has signaled further cuts may be on the way, the President is doing everything possible to pressure the Fed to lower rates further, and still long-term interest rates are higher.
Lessons from History
The Federal Reserve can steer short-term borrowing costs, but rates that are 7-10 years and beyond are largely determined by the market. Higher long-term rates can affect everything from a 30-year mortgage to a long-term corporate loan. One may wonder, “Why are long-term rates now moving in the opposite direction of Fed policy?” A few (of many) reasons are that investors are worried about longer term inflationary pressures, our country’s high level of indebtedness, and the independence of our Federal Reserve. Consequently, I believe the more President Trump urges for rate cuts, the higher long-term rates are likely to go.
History shows what happens when governments try to bend markets. In 2021, President Erdogan of Turkey was convinced that the country’s interest rates needed to be lower despite high inflation readings. He pressured his central bank and installed an ally to head the organization to implement his policy view. Soon thereafter, Turkey experienced a collapse in its currency and annual inflation readings in excess of 70%.
This experience isn’t unique to developing economies. We tried it, to a lesser degree, here in the U.S. during the 1970s. Anyone who lived through the subsequent inflation shock and skyrocketing interest rates can tell you that didn’t end well, either. (How does a 16%, 30-year mortgage rate sound?) The lesson is clear: you can’t legislate trust or fully control investment markets.
Policy Risks Ahead
The Administration may ultimately sidestep its fight with the Fed and use blunt force instead — for example, capping 30-year mortgage rates for first-time buyers at 5%. For new homeowners, cheap borrowing may feel like a gift, but for those who remember the Financial Crisis and the scores of people who found themselves over-levered with cheap debt, this idea is probably worrisome.
Fed policymakers face a tougher dilemma: how to support the job market while keeping inflation in check, all against a backdrop of worsening fiscal imbalances. As Fed Chairman Powell pointed out in a recent speech, “Two-sided risks mean there is no risk-free path.”
On the positive side, the U.S. is leading the global AI boom. Yet here, too, the gap between wants and needs is clear. Policymakers want innovation to drive broad job growth, but so far the economy is only getting concentrated profits. NVIDIA, the world’s most valuable company, has added trillions in market cap over the past year, but has increased its headcount by just 7,000 year-to-date to 43,000. By contrast, J.P. Morgan employs more than 300,000.
Concentration Creates Tension
Here’s what I want: for markets to keep climbing and for tech to lag so diversified portfolios outperform without adding to some of the excesses we see in markets. Based on recent history, it’s a seemingly impossible ask.
With technology now representing 45% of the S&P 500, its swings dominate market performance. Over the past three years, tech stocks are up 152%, while the other nine S&P 500 sectors combined are up just 31%. Like many diversified investors, Hamilton Point owns less technology exposure than the market. That 121% gap underscores how hard it is for non-concentrated strategies to keep pace. While most investors just want the market to go up, regardless of how it gets there, I frequently find myself in the odd position of being okay with some market declines, if technology stocks are the cause — not because I want markets to perform poorly, but because I think it’s healthy for the broader market.
Would I love to see that 121% gap reverse? Absolutely. Almost as much as I’d love to see Vanderbilt make the College Football Playoff. But markets rarely deliver what we want. Hopefully — as the song goes — I’ll get what I need.
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