Investing · The Lithos Blog
This spring the S&P 500 pushed past 7,200 to record highs while the conflict with Iran entered its third month. It is still near those highs today, with oil back above $100. Markets “should” be falling — so let’s look honestly at why they aren’t, and what that means for a family’s long-term plan.
The Contradiction
Here is the setup as of late July 2026. The conflict with Iran is in its fifth month, and the ceasefire announced earlier in the summer ended on July 8. Brent crude traded back above $100 a barrel this week. A new round of tariffs on nearly all U.S. imports took effect. Inflation, after years of grinding lower, has turned back up on energy costs.
And the market’s answer? The S&P 500 closed at 7,411.98 on July 24 — within about 3% of the all-time high of 7,620.90 it set on June 2. This spring, with the war already underway, the index pushed past 7,200 into record territory and largely stayed there.
When the headlines and the market disagree this loudly, families ask a fair question: is something wrong with the market — or with my plan? Let me clarify both, one at a time.
The Real Drivers
Three forces are overriding geopolitical fear right now. Notice what is not on the list.
Google, Amazon, Microsoft, and Meta plan roughly $725 billion of combined capital spending in 2026 — up about 77% from last year’s record. That money flows straight to chipmakers, semiconductor manufacturing, networking, utilities, and construction, and it has dominated index returns.
S&P 500 earnings growth has been running near 30% this reporting season, with analysts projecting continued strength into the back half of the year. Whatever you think of valuations, the profit engine underneath the index has been real.
Markets have treated the war as serious but bounded — painful for energy prices, not yet a global shock. That is a judgment, not a fact, and it gets re-tested every time oil crosses a round number.
Concentration
Here is the thing most headlines skip. The S&P 500 holds 500 companies, but it is weighted by size — and size has never been this lopsided. Per J.P. Morgan Asset Management, the ten largest stocks now make up 40.8% of the entire index, far above the 26.6% peak of the late-1990s tech bubble.
During one 28-session rally this spring, just ten stocks drove roughly 69% of the index’s gains. So when you own “the market,” you own a heavy, AI-flavored bet on a handful of names — whether you meant to or not.
Two honest balancing points. First, those same ten companies earn just over one-third of the index’s profits, so the weighting is not pure air. Second, concentration is not a prediction of a crash — it is a description of what you own. The purpose of seeing it clearly is not fear. It is making your allocation a decision instead of a default.
The Risk That Can Break a Retirement
Average returns get the attention. The order of returns decides retirements. Drag the slider and watch the same down year land on two different households.
Boat one — still saving
A down year while you are accumulating means every contribution buys more shares at lower prices. Uncomfortable — but time and contributions are on your side.
Boat two — drawing income
In distribution, the same decline forces you to sell shares at reduced prices to fund living expenses — permanently shrinking the base that has to do the recovering.
Illustrative math only, before taxes, fees, and market recovery assumptions. This is a teaching tool, not a projection or a recommendation.
One Framework Worth Knowing
One way planners address sequence risk is to separate money by when you will need it, so a bad year in the market never forces a bad sale.
Roughly years 1–3 of income needs. Liquid and stable, so living expenses never depend on this month’s market.
Roughly years 4–10. Bonds and, where suitable, income-oriented insurance products — designed to refill Bucket 1 as it depletes.
Years 11 and beyond. Full market exposure can be appropriate here, because this money has time to ride out a full cycle.
Many households approaching retirement discover that nearly everything they own sits in Bucket 3 — often through workplace accounts they set up decades ago and never restructured. The framework does not predict markets. It simply makes sure the next downturn, whenever it comes, lands on money that can afford to wait.
Timing, Honestly
You trim positions that have grown beyond their target while prices are elevated, and use the proceeds to fund the shorter-term buckets. You are not predicting a top — you are restoring the allocation you chose on purpose, from a position of strength.
The same adjustment is still possible — but now it means selling assets that have already fallen to raise the cash you need. The structure gets built either way. The question is whether it gets built by design or by necessity.
Protection Tools
For the middle bucket in particular, two insurance-based tools are often part of the conversation — used deliberately, inside a structure.
Interest crediting is linked to a market index with a 0% floor — in years the index falls, the credited rate does not go negative, so principal is protected from market-based losses. The trade-off: caps and participation rates limit the upside you capture. Guarantees rest on the claims-paying ability of the issuing insurer. Frequently discussed for Bucket 2 income roles.
Similar index-linked crediting inside a permanent life insurance policy — pairing a death benefit with cash value that can grow tax-deferred and, when a policy is properly structured and funded, be accessed through policy loans. Costs, funding discipline, and design matter enormously, which is why this is a sit-down conversation, not a checkout button.
Where to Start
Is your savings rate the thing you are optimizing — and do you understand how concentrated your index funds have quietly become?
Have you started building the bucket structure while you still have income to fund it — or is that job waiting for retirement day?
If next year looked like the slider above, which dollars would you actually sell to pay the bills — and at what price?
With workplace accounts maxed, do you know what tax-advantaged room, if any, tools like properly structured IUL could add — and what they cost?
These resources support the facts and research referenced throughout this article.
The official record: rates held at 3.50%–3.75%, with inflation elevated “in part reflecting the recent increase in global energy prices” and Middle East developments driving uncertainty.
federalreserve.govGoldman Sachs analysis: Google, Amazon, Microsoft, and Meta collectively plan roughly $725 billion in 2026 capital expenditure — up about 77% from last year’s record $410 billion.
finance.yahoo.comThe top ten stocks make up 40.8% of the S&P 500 — well above the 26.6% tech-bubble peak — while contributing just over one-third of index earnings.
am.jpmorgan.comThe S&P 500 closed at 7,411.98 on July 24 as investors weighed the Middle East conflict, chip-stock weakness, and oil prices near $100.
cnbc.com
Dr. Saha works with families, business owners, and aspiring entrepreneurs on financial education, wealth strategy, real estate, and entrepreneurship — helping people build stronger foundations and make confident decisions. Meet the author →
Next step
Bring your statements and your questions. We will walk through how your savings are actually allocated, what concentration you are really carrying, and how a time-horizon framework could apply to your family — education first, always.
