The Playbook Wall Street Doesn’t Talk About
Invested In Us | Issue 23 | Week of July 28, 2026
The market headlines may change every day, but the fundamentals behind smart investing rarely do. This week, we’re breaking down what the bond market is telling us, how investors create value, and why data should always matter more than vibes.
🎥 Watch the full episode:
State of Capital
As of July 24, 2026, the S&P 500 was up roughly 9% for the year. Energy has been one of the clearest market leaders, while areas such as real estate and industrials have also shown strength. Value stocks have continued to outperform growth stocks, which is another sign that market leadership has started to broaden beyond the same handful of large technology companies that have received most of the attention in recent years.[1]
That is a healthy reminder of why diversification matters. You never know which part of the market will lead next.
The area I am watching most closely right now is the bond market.
Long-term Treasury yields have been creeping higher. On July 24, the 10-year Treasury yield reached approximately 4.7%, near its highest level since early 2025.[2] There is rarely only one reason that yields move. Inflation expectations, economic growth, Federal Reserve policy, geopolitical events and the supply of new government debt can all influence what investors are willing to accept in return for lending money to the federal government.
The supply of debt is especially important right now because the United States continues to operate at a large budget deficit. A deficit simply means the government is spending more money than it collects in revenue.
The Congressional Budget Office projects a federal deficit of approximately $1.9 trillion for fiscal year 2026, equal to roughly 5.8% of the economy. For perspective, deficits have averaged approximately 3.8% of gross domestic product over the last 50 years.[3]
It is important to be precise here. The problem is not simply that the government collects no money or that tax revenue is historically low. Federal revenue is projected to equal approximately 17.5% of the economy in 2026, slightly above its 50-year average. The bigger issue is that federal spending is projected to equal approximately 23.3% of the economy.[4]
In other words, the government is collecting a lot of money, but it is spending even more.
Over the last decade, we have also seen major tax reductions. The Tax Cuts and Jobs Act was passed in 2017, and many of its provisions were extended through legislation enacted in 2025.[5] Tax cuts can support households and businesses, but when tax reductions are not matched by spending reductions or stronger economic growth, the government generally has to borrow more to cover the difference.
The Treasury Department estimated that it would borrow approximately $671 billion in privately held marketable debt during the July-through-September 2026 quarter alone.[6]
My hope is that the economy remains strong because a slowing economy could put additional pressure on the budget. When economic activity slows, income and profits may fall, which can reduce tax collections. At the same time, demand for government assistance may increase.
As the U.S. Treasury issues more bonds, it must find enough investors willing to purchase that debt. When the supply of bonds rises, investors may demand higher yields/interest rates, particularly if they are also concerned about inflation, future deficits or the value of their money over time.
Higher Treasury yields can eventually affect mortgage rates, car loans, business loans and the value investors are willing to pay for stocks, businesses and real estate. A higher “risk-free” rate also gives investors more alternatives. If someone can earn an attractive return from a Treasury security, they may be less willing to take substantial risk unless stocks or private investments offer enough additional upside.
That is why I continue paying attention to the bond market. The stock market may get more headlines, but the bond market often tells us a much bigger story about the economy.
The Breakdown
How Multiple Arbitrate Creates Wealth
Smart investors do not always rely on luck or simply hope that an investment becomes more valuable. They often have a specific plan for creating value.
One way they do that is through something called multiple arbitrage.
Let’s use a simple lemonade stand as an example.
Imagine a lemonade stand sells 100 cups of lemonade for $1 each. That means the business generates $100 in revenue. After paying for the lemons, sugar, cups, labor and other expenses, the owner earns $20 in profit.
Now imagine an investor buys that lemonade stand for three times its earnings. Since the business earns $20, the purchase price would be $60.
The new owner then improves the business. They document the recipes, create clear operating procedures, track inventory, train employees, improve the bookkeeping, establish performance goals and make sure the business can operate without depending on one person to do everything.
Even if the business continues earning the same $20, another buyer may now view it as more organized, more predictable and less risky.
Instead of paying three times earnings, that buyer may be willing to pay six times earnings.
The value of the business would increase from $60 to $120, even though the profit never changed.
That is multiple arbitrage.
Now imagine the same example with a few extra zeros.
This is one of the ways private equity firms, business buyers and real estate investors can create significant wealth. They buy an asset at a lower multiple, improve the quality and predictability of the operation and eventually attempt to sell it at a higher multiple.
Of course, growing revenue and earnings can create even more value. If the lemonade stand’s earnings increased from $20 to $30 and the buyer was willing to pay six times earnings, the value would increase to $180.
But the bigger lesson is that professionalizing an asset may make buyers willing to pay more for the exact same dollar of earnings.
When a business has clean financial records, standardized operating procedures, clear employee responsibilities, measurable performance goals and less dependence on the owner, it may become more valuable because the next buyer has greater confidence that the earnings can continue.
The same concept applies to real estate. A property with poor management, weak records, below-market rents, high vacancy and deferred maintenance may trade at a lower valuation. An investor who improves operations, raises occupancy, strengthens the tenant base and produces more predictable cash flow may be able to sell that property at a stronger valuation later.
There is no guarantee that the market will award a higher multiple. Interest rates, investor demand, financing conditions and the economy will still matter. But experienced investors are not simply waiting for value to appear. They are actively trying to create it.
Policy And Economics
America Needs More Housing
Depending on which study you read, the United States is short millions of homes.
Freddie Mac estimated that the country was short approximately 3.7 million housing units based on data through the third quarter of 2024. A separate Brookings analysis estimated a shortage of approximately 4.9 million units at the end of 2023. The exact number depends on how the shortage is measured, but the basic problem is clear: the country has not built enough housing to meet demand.[7]
Over the period studied by Freddie Mac, the number of households grew faster than the housing stock. When the number of people looking for homes grows faster than the number of homes available, prices and rents generally face upward pressure.[8]
That is basic supply and demand.
Some politicians have proposed rent control as a way to address housing affordability. I understand why the idea sounds attractive. People are struggling with higher rents and want immediate relief.
Rent control can provide meaningful protection to tenants who are fortunate enough to live in covered units. But it does not create additional housing, and poorly designed rent restrictions may discourage owners from maintaining rental properties or bringing new units to the market.
A widely cited study of San Francisco’s rent-control expansion found that affected landlords reduced the supply of rental housing by approximately 15%. The researchers concluded that the policy benefited many protected tenants but also reduced the overall rental supply and contributed to higher market rents across the city.[9]
That does not mean every rent-control policy will produce the exact same result in every city. Local regulations, exemptions and housing conditions matter. But it does show why policymakers have to consider both the immediate benefit to existing tenants and the longer-term effect on housing supply.
From an economic perspective, the long-term solution must include bringing more supply online.
That means making it easier to build housing in the places where people want and need to live. It means addressing zoning restrictions, permitting delays, construction costs, infrastructure limitations and other barriers that make housing development difficult.
If demand remains high and supply remains limited, prices will continue facing upward pressure. We cannot fully solve a shortage without creating more of what is missing.
How To Conduct Due Diligence On A Property
When evaluating a real estate investment, do not begin with the color of the building, the appearance of the lobby or how the property makes you feel.
Start with the data.
First, understand the local economy. Is the population growing or declining? Are jobs being created? Are major employers entering or leaving the area? Are wages increasing? Who lives in the market, and what can they realistically afford?
A beautiful property located in an area that is consistently losing residents and employers may face more challenges than an average-looking property in a market with strong population and job growth.
You also need to understand supply.
How many comparable units already exist? How many properties are currently under construction? How many new units are expected to come online over the next one, three and five years? How quickly are recently completed properties being leased?
That process is generally referred to as absorption.
Imagine that 1,000 new apartments are being built, but the market is only absorbing 300 units per year. That does not automatically mean the market will fail, but it should make you ask more questions. Rents could come under pressure, vacancy could rise and developers may begin offering free months, reduced deposits or other incentives to attract tenants.
On the other hand, if demand is strong, vacancy is low and very little new supply is being built, property owners may have more ability to increase rents over time.
You also have to evaluate the specific type of property you are considering. An overall city may be growing, but that does not automatically mean every real estate subsector will perform well.
Office buildings, apartments, warehouses, retail centers, hotels and self-storage properties can all perform differently in the same market. A city could have strong population growth and a healthy apartment market while still having too much office space.
You need to understand whether your particular subsector is appreciating, depreciating or remaining flat.
Then you need to review the rent roll.
The rent roll is one of the most important documents in a real estate transaction because it shows what is actually happening inside the property. It should identify every unit, whether the unit is occupied, how much each tenant is paying, when each lease began, when each lease expires and whether any tenants are behind on rent.
Do not only look at the total monthly rent. Study the details.
How many units are vacant? How many leases expire during the same month? Are certain tenants paying significantly less than others? Are the reported rents actual rents, or do they include concessions and free months? How much money is actually being collected?
You should compare the rent roll with leases, bank statements and property records to confirm that tenants are paying what the seller claims they are paying. A spreadsheet created by the seller is not enough by itself. You want supporting documentation.
You also need to compare the property’s rents with nearby competitors.
Look at similar properties with similar unit sizes, locations, amenities, ages and levels of renovation. Do not compare an older building without parking or laundry to a newly constructed luxury property and automatically assume the older building can charge the same rent.
If similar units are renting for more, there may be an opportunity to raise rents over time. But you need to understand why the current rents are lower.
The units may need renovations. Competing properties may offer better amenities. The location may be less desirable. Existing tenants may have long-term leases. The current owner may have chosen to keep rents below market to reduce turnover.
Never assume that below-market rent automatically represents easy upside.
You also need to study occupancy, vacancy, tenant turnover, late payments, concessions, bad debt and lease expirations. Then review the expense side of the property.
What are the property taxes? How much does insurance cost? Who pays for utilities? What is being spent on payroll, repairs, maintenance, landscaping, security and property management? Are the current expenses realistic, or has the seller delayed repairs to make the property appear more profitable?
Review the physical condition of the roof, plumbing, electrical systems, heating and cooling systems, elevators, parking areas, windows, foundation and exterior. You need to understand what may need to be repaired today and what may need to be replaced during your ownership period.
A property may produce attractive cash flow today but still be a poor investment if the roof, boilers and elevators all need to be replaced next year.
You also want to understand tenant concentration. This is especially important with commercial properties. If one tenant represents a large percentage of the property’s income, losing that tenant could create a serious problem.
Finally, stress-test the investment.
What happens if occupancy declines? What happens if rents remain flat? What happens if property taxes, insurance or repair costs increase? What happens if interest rates remain higher for longer? Can the property still cover its mortgage, operating expenses and necessary improvements?
A great investment should not only work when everything goes perfectly.
The best real estate investors understand the property, the local market, the competition, the financing and the risks before they invest.
At the end of the day, the opportunity usually comes back to supply and demand. You want to bring supply online—or own existing supply—in a market where demand is strong and competing supply is limited.
The Conversation
Every investment decision should be based on data, never vibes.
That does not mean the data will always be perfect or that every investment will work out. Investing always involves uncertainty.
But you should have a calculated and repeatable process.
Understand what you are buying, why you are buying it, what could go wrong and how the investment fits into your larger portfolio.
Stay diversified. Do not allow one company, one property, one sector or one investment idea to determine your entire financial future.
Thank you for reading and watching another edition of Invested in Us. I will see you next week.
→ Schedule a call with NJK Wealth Management: No minimums. No commissions. No judgment. Just a real conversation about your money.
We’re teaching money the way it should’ve been taught to us. If this issue helped you understand what’s happening, share it with someone who could use it.