$25,000
North Star 25
Twenty-six names. The sector fund carries energy; the majors, the primes and the platforms carry the rest.
- Names
- 26
- Reserve
- 15.0%
- Yield
- 1.69%
- YTD
- +21.4%
- 1 year
- +31.6%
This is the page to open in a meeting. It starts where a client’s questions start — what is happening in the economy, where we are in the cycle, and why we think what we think — with every reason graded in public against the newspaper. Then it explains the North Star: the firm’s core book at seven account sizes, every name off the current watch list, the same 15% reserve at every size, spent on dates set in advance.
Six facts carry the whole picture. Every one of them is from the weekend paper, dated, so it can be checked.
Raised a quarter point on Sept. 16, 12–0 — the first increase in three years. Sixteen of eighteen officials see at least one more; futures put about 50% on October; prediction markets put 95% on no cut in 2026. The Fed is not coming to help. That is the one thing different from every dip since 2022.
The 10-year settled above 5% on Sept. 16 for the first time since 2007 and closed the week at 4.995%; the 2-year at 4.741%, its highest since July 2024. The Bank of Japan raised to 1.25%, the highest since 1995 — the largest foreign holder of Treasurys now has a reason to buy fewer. The long-Treasury index has lost 4% in a year at a 5.36% yield.
Consumer prices up 3.4%; wages behind prices for five months. Crude $100.30 with diesel up 68% on the year; the December 2027 contract prices $73.51, which is the market saying the strait reopens. A 30-year mortgage at 7.05%, prime at 7.00% — and the average money-market account still paying 0.44% while bills pay near 3.8%.
New 52-week lows against new highs on the NYSE on Friday — six to one, on a session the headlines called quiet. The S&P 500 sits 1.9% from its Aug. 13 record and is up 11.8% on the year; the typical stock is up 4.2%; the semiconductor index is up 68%. Utilities closed at a 52-week low. The Dow fell three straight weeks. The average is at the top. The average stock is not.
The S&P 500 trades at 20.1 times forward earnings — an earnings yield of 4.98% — against a 10-year at 4.995%. The premium for owning American stocks over lending to the American government is zero, to the decimal. Every dollar of return from here has to come from earnings that arrive on time. So far they have: third-quarter profit growth is tracking 28.9%.
Near the calm edge of its range on a day the 2-year made a two-year high. The bond market is pricing the next hike; the options market is pricing nothing. Tail bid, body asleep. If a move comes, it arrives as a gap, not a grind.
What the tape says, live. The sectors the cycle read is argued from, year to date, from the firm’s nightly quote bake (Sept. 18): energy and the majors leading, gold miners ahead of gold, the AI engine still running, defense paid, and long Treasuries and TIPS losing money while bills earn near 4%.
Our read: inflation runs hot and growth is still propped up by the AI-capex build-out — but late in its run. We sit straddling AI Capex Boom and Stagflation, and the book is positioned across both, with the reserve for the turn.
Two things follow from the map. The quarter we are in is the weakest of the four-year cycle, and every midterm year since 1950 has had a decline before the vote, averaging about −16%. And the twelve months after the vote have been positive nineteen times out of nineteen, averaging about +19%. The decline and the rebound are one pattern. A book positioned for only half of it fails at the other half — which is why the reserve is November’s shopping money, not scared money. The full cycle framework: the cycle portfolios page.
On Sept. 6 the September letter put dates and odds on the fall drop so that it could be graded. Fed week was the first exam, and the Sept. 19 editorial marked it: five calls confirmed, two pending, none wrong. Here are the six reasons, and where each stands.
Nineteen midterm years since 1950, nineteen declines before the vote, averaging about −16%. The pre-election quarter is the weakest of the cycle. That was true in August and it is true now.
The average year since 1980 gives back about 14% somewhere along the way; 2026 has not had a 10% pullback at any point. Twenty-seven record closes against zero corrections. The index is 1.9% from its high. The bill is unpaid, not forgiven.
The one reason the letter would keep if it had to throw the other five away. Every dip since 2022 got bought because the next move from the Fed was down. On Sept. 16 the Fed raised, and 95% odds sit on no cut this year. This is the first autumn in four years where the next move is up.
The letter had the 10-year at 4.783% with 42% odds on 5% before 2027. It settled above 5% on Sept. 16. Norway is cutting its Treasury book; Japan just got a 3% bond of its own to buy instead. The buyer base is thinning as the supply grows.
The largest IPOs in history queued into thin autumn books — the $100 billion Anthropic offering has moved to November, the week of the vote. Friday’s biggest gainers were two-times-leveraged single-stock crypto funds, up 27% to 33% in a session, while the broad tape fell. Speculation at the edges, erosion in the middle.
Inflation 3.4%, wages behind prices for five months, diesel up 68% on the year, a 7% mortgage. Underneath the index: new lows have beaten new highs 90–47, then 151–99, then 182–29. The average stock has already had its correction.
| What the letter said | What happened | Grade |
|---|---|---|
| Sept. 11 inflation: hot, and hike odds go past 80% and the 2-year through 4.5%; cool, and the odds drop toward 45. Named as the specific way the thesis would be wrong. | Core +0.3% against the 0.1% test. Hike odds went to 95% by decision day. The 2-year closed Friday at 4.741%, its highest since July 2024. | Confirmed |
| Sept. 16 Fed: a hike would be the first this year and the trigger the bear has waited on since March. | Raised 12–0 to 3.75–4%. Sixteen of 18 officials see at least one more. Futures put about 50% on October. | Confirmed |
| The Fed is not coming to help. Prediction markets at 93% on zero cuts in 2026. | Friday’s Journal printed the market itself: 95% on zero cuts this year, 2% on one, $53 million wagered. | Confirmed |
| The bond market is voting. 10-year 4.783%; 42% odds on 5% before 2027; Norway cutting government bonds. | The 10-year settled above 5% on Sept. 16, the first time since 2007, and closed the week at 4.995%. The Bank of Japan raised to 1.25%, the highest since 1995. | Confirmed — six weeks early |
| The fuel and the consumer: diesel $5.85, wages behind prices, 90 new lows against 47 new highs with the index 1% from a record. | Consumer prices +3.4%; wages behind for five months; 30-year mortgage 6.95%. New lows against new highs: 151–99 Thursday, 182–29 Friday. | Confirmed — widening |
| Sept. 18 expiry — the plumbing date; the two weeks after are on average the weakest fortnight of the year. | Passed quietly: the S&P moved 12 points. The fortnight starts Monday, Sept. 21. | Pending |
| The drop: base case 6–10% from the Aug. 13 high, the low between late September and mid-October, bought into the vote. | The S&P 500 is 1.9% below 7,798.99. The VIX closed at 14.81. Nothing has moved. | Pending |
| The bear’s veto: while the curve stays in contango and vol-of-vol stays under 90 through expiry, buy no hedges. | Honored. No hedge was bought. The two inputs were not measurable this week and the veto was treated as standing. | Honored |
Five components scored 0–10 by the desk from figures printed in the Journal, weighted as shown, summed. An opinion with arithmetic attached, published so it can be wrong in public. Every ingredient is on the board and the price has not moved: that is a loaded market, not a falling one, and the difference is the whole of what to do on Monday.
It has been right on timing since March. Third-quarter profit growth is tracking 28.9%, the third straight quarter above 25%. Unemployment is 4.1%; retail sales beat in August. The 1994 template — a hiking cycle into a strong labor market — produced a bond-market massacre and a stock market whose worst stretch stayed under 10%. The VIX has lived between 14 and 18 all summer, and calm regimes outlast the people who bet against them; 2017 never fell 3% from a high. The market is already hedged, and hedged markets grind rather than gap. An administration with a $5,000 check on the table will pull every lever between now and Nov. 3. And December 2027 crude at $73.51 says the strait reopens, which would take the fuel reason off the board in one headline.
The drop already happened, underneath the index, and the index never reports it. Six new lows for every new high is a correction in the average stock. If the cohort carrying the average keeps carrying it through November, the letter will have been wrong about the index and right about the market — and a plan that only knows the index will have missed the whole thing. That is why the North Star and the Midterm Dividend books are graded on the average stock, why the equal-weight index is the first purchase on the reserve’s list, and why nothing in the book is sized so that one name decides the year.
The Atlas was published in July: the eight risks that actually break retirement plans, what each did that week, which sleeve is assigned to it, and an honest grade. Two squares were thin then — the bond sleeve, deliberately small, and behavior. Here is the same map after Fed week, as re-graded on Sept. 19.
| Risk | July | Now · Sept. 18 | Covered by | Grade |
|---|---|---|---|---|
| Market | Fed held; Dow −1,153 in a day | Fed raised; the S&P 1.9% from its record; the Dow down three straight weeks; VIX 14.81 | Sizing; a 15% reserve in the North Star and Midterm Dividend books, from 0.5% in July; a written entry rule at −8% and −12% | Covered, stronger |
| Rate | 30-year 5.228%, highest since 2007 | 10-year 4.995% after a settle above 5%; 2-year 4.741%; long-Treasury index 5.36%; the buyer base thinning | No long duration anywhere in the books; bills and floating-rate paper reset with the Fed | Thin by designThe price risk is covered because we own no duration. The risk that moved is to the equity multiple. That square is now the live one. |
| Inflation | Stuck near 3%; three dissents pointing up | 3.4%; wages behind for five months; the Fed hiking, with a year for it to work | The energy sleeve (Exxon +36%, Chevron +37%, ConocoPhillips +41% YTD) and dividends that grow | Covered |
| Geopolitical | WTI’s $10 round trip in five sessions | Day 200 of the war; a ship hit in the strait Friday; crude $100.30 and falling; Dec. 2027 at $73.51 | Chevron, Exxon, ConocoPhillips at weight; the defense sleeve; Valero’s written tripwire | Coveredand too expensive to add |
| Credit | Nvidia backstopping about $250 billion of OpenAI financing | Turkey liquidating 131 funds; $349 billion queued to exit private equity; high yield at 6.85% | The avoid list: nothing priced by its own manager, nothing that borrows to buy what it holds | Covered, tested |
| Concentration | SK Hynix −10% on a record quarter | S&P +11.8% vs. the typical stock +4.2%; semis +68%; 182 lows to 29 highs; the index is the concentration | Sleeves; the equal-weight fund first on the reserve’s list; largest single position 3.5% | PartialThe offset is in place, and it is small relative to the index’s own bet. |
| Event | Humana, Boston Scientific, J&J’s $5.5 billion talc deal | Buffett’s exit; a summit unconfirmed; 90 GLP-1 suits; a $100 billion IPO moved to November | Position caps; no single outcome large enough to change the year | Covered |
| Behavioral | Gold slept through a 1,153-point day | The published rule held through a hot print, a hike, a 5% settle and a 1.14% relief rally: nothing bought in three sessions, no hedge bought under the veto | Written rules, pre-committed and dated, graded in public | Passing, so farThree sessions is not a record; it is a start. The fortnight that starts Monday is the one the rules were written for. |
Six of the eight risks are covered by something that pays cash on a schedule — barrels, bills, dividends, or the refusal to buy the thing with the lawsuit attached. A risk you can name has a defense. The Atlas does not make the weather better; it means that when the fog comes in, you already know where the rocks are.
The September letter set three conditions for new money, in advance: a core inflation print of 0.1% or less on Sept. 11, a Fed that holds on Sept. 16, and vol-of-vol under 90. The print came in at 0.3%. The Fed raised. The third could not be checked. Two failed outright, so nothing was bought — through a hot print, a hike, a 5% settle and a 1.14% relief rally. One green session does not repeal a rule written in advance.
A third of the 15% goes to work at an 8% drawdown from the Aug. 13 high, about 7,175 on the S&P — the equal-weight index first. Another third at 12%, about 6,863 — the power builders. The last third the week of the vote regardless, because it was always November’s shopping money. Micron holds a 1% seat for the Sept. 30 print. No hedges while the veto stands. No long duration while the 10-year is above the earnings yield. Energy held, not chased. A name that cuts its guidance in October is sized down that day, on the rule. The rule, in full ↓
Written down on Sept. 19 so it can be checked: a new record close above 7,798.99 before Oct. 2, which would say the cohort can carry the index through the weakest fortnight; a September core print of 0.1% or less on Oct. 14, which reopens the exit the Sept. 11 print closed; and a Fed on Oct. 28 that says one was enough. Any one of those moves the no-drop case back above 40. All three would move the meter under 4.
None of them needs the window or the meter to be right, and the week made each one worth more.
If the drop comes, these are the reason it is survivable. If it never comes, they are the reason nobody had to guess. Find your risk band →
Sixty-seven specialty books answer specialty questions. A household has one question — what do I own at my size? — and the North Star answers it with one book that widens as the account grows. North Star 25 holds 26 names; North Star 750 holds 77. The sleeves and the reserve stay the same at every width; seats are added as the account can carry them.
Fifteen percent of every size sits in short Treasury paper, SGOV and USFR. It is not cash waiting on a mood. It buys on three dates the September letter set in advance: a third at 8% off the August 13 high, a third at 12% off, and a third the week of the vote. The book never has to guess when. It only has to be there.
Nothing enters the North Star that the watch list has not already marked add, reinforce or hold. Names the list has not backed — ASML, the memory names, the chip-equipment group — wait in a room on the book page with the rule that lets them in. Two exceptions, SCHD and JEPI in the Income book, come from the house Dividends books and are marked as such.
Returns are weighted from the firm’s nightly quote bake and refresh with it; yields are trailing twelve months. Each card opens the full book at that size.
Twenty-six names. The sector fund carries energy; the majors, the primes and the platforms carry the rest.
Thirty-nine names. The midstream, power-builder and bank seats open.
Forty-seven names. The full sleeve set: every seat the list backs, sized for a Neutral bias.
Fifty-nine names. The quality consumer seats (WMT, V, HON) and the second names in each sleeve.
Seventy-three names. Services, royalties, the aerospace supply chain and the smaller semis.
Seventy-seven names. The last defense and healthcare seats; midstream and cyber sized up.
Forty-nine names for a household drawing $6,000 a month. Twenty-four months of withdrawals sit in bills; the equity book is built for the coupon first and the compounding second.
Read the rows top to bottom. From $25,000 to $750,000 the proportions barely move: AI and tech narrow from 24% to 19% as the bench widens, energy sits near 14%, and the reserve is 15% in every row. The Income row is a different animal. Energy doubles, staples and healthcare take the tech weight, and a dividend-fund sleeve appears.
| Book | Reserve | Energy | AI / Tech | Power / Infra | Defense | Gold | Healthcare | Financials | Staples / Consumer | Industrials | International | Dividend funds |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| North Star 25 | 15% | 13.2% | 24.4% | 6.1% | 6.1% | 7.1% | 10.2% | 7.1% | 5.1% | 3.1% | 2% | — |
| North Star 50 | 15% | 11.8% | 23.1% | 7.6% | 7.2% | 5.9% | 9.7% | 7.2% | 5.5% | 3.8% | 2.9% | — |
| North Star 100 | 14.9% | 13.9% | 20.9% | 8% | 8% | 6% | 9% | 7% | 6% | 3% | 3% | — |
| North Star 250 | 14.9% | 13.9% | 19.9% | 7.8% | 6.9% | 6.1% | 7.8% | 7.8% | 9.3% | 2.6% | 2.6% | — |
| North Star 500 | 14.9% | 14.8% | 19.2% | 8% | 7.5% | 6.7% | 7% | 7.8% | 8.4% | 2.9% | 2.3% | — |
| North Star 750 | 14.9% | 14.6% | 18.8% | 7.7% | 8.3% | 6.4% | 7.7% | 7.9% | 8.1% | 2.8% | 2.2% | — |
| North Star Income | 14.3% | 21.3% | 6% | 4.3% | 4.3% | 2.6% | 11.5% | 9.8% | 13.2% | 1.3% | 1.7% | 9.4% |
The 15% is spent in thirds, on levels and a date fixed before the fact. Measured from the August 13 high of the S&P 500.
Buys the equal-weight index, RSP. Not before.
Sizes up the power builders — GEV, PWR, VST. The same names, more of them.
Spent that week, whatever the tape says on the day.
One seat sits outside the thirds: Micron holds 1% for the September 30 print. If guidance confirms the memory shortage, the seat fills that week — not after the midterms, and not before the number. The full waiting room, name by name, is on the book page.
The $1M book is built for a household drawing $6,000 a month. It says what the coupon covers and what it does not.
A 7.2% draw is well above the 4% starting point, and the first bad year decides more than the average year does (sequence of returns). The book is built so the next 41 months of paychecks never depend on selling a stock on a red day. What it cannot do is make 7.2% safe on its own. The review should put a pension or Social Security figure beside the draw, or bring the draw toward $4,500, before this book is the whole plan.
Sixty-seven books is a research library, not a menu. The Aggressive, Dividend, Midterm, Theme and Sleeve books remain at the full library for the specialty conversation, and the nightly bake keeps every one of them current. The North Star is the page a household opens first: one book, seven tabs, the same sleeves and the same reserve at every size. Nothing is deleted. The seven books sync into the client portal the same way the sixty-seven do.
The POLARIS method sets the heading — the goals, the timeframes, the income the plan has to produce. The North Star is the fixed point the portfolio is steered by when the news changes and the heading does not. Polaris is the north star; the two names belong to each other on purpose. The reserve is what makes holding the course possible, and the name says what the book is for.
Capital Wealth LG is an SEC-registered investment advisor. This page is the desk’s positioning commentary and an opinion stated so it can be graded — not a forecast, and not individualized advice. Sections 1 through 5 restate the September letter and the Sept. 19 editorial; their market figures are from The Wall Street Journal, September 19–20, 2026 weekend edition, reflecting the Friday, September 18 close, and the odds, the meter and the window are the author’s constructions from figures printed there. They will be wrong in ways the author cannot foresee. Model allocations differ by tier and client. Company names and tickers identify holdings and categories discussed, not recommendations to buy or sell any security. Model returns and the cycle-evidence strip are weighted from the firm’s nightly quote bake as of Friday, September 18, 2026; yields are trailing twelve months from the same bake. Election-cycle statistics per First Trust Portfolios L.P., S&P 500 Index 1950–2024. Past performance does not guarantee future results.