Why Most Returns Are Average—and How to Break Out of the System

For investors who think deeper.

When investors ask, “Why are bank returns so low?” the honest answer is simple: because they have to be.

Traditional banks—along with government-backed products like CDs—are built on a risk-pooling model. Through FDIC insurance, all banks are treated the same, regardless of asset quality, underwriting discipline, or long-term solvency. The strong are forced to subsidize the weak. And when you insure the entire system, you’re bound to the performance of the average.

That’s not safety. That’s flattening.

The Hidden Cost of “Safety”

Let’s break this down.

FDIC insurance doesn’t eliminate risk. It just socializes it. You—the depositor—are paid nearly nothing in yield because you’re being protected from someone else’s failure.

That’s why a poorly run bank with bad loans and weak controls pays the same as a top-tier institution. They’re all wrapped in the same guarantee. And like all guarantees, it has limits—both in dollar terms ($250K per account) and in sustainability. Just look at any debt ceiling crisis or rising bond yields. The market isn’t stupid. It’s telling you: even the government has an issuer risk profile.

Now consider what that means for your money:

• You are being paid suppressed returns for someone else’s incompetence.

• You are earning below-inflation yields in exchange for psychological comfort.

• You are, essentially, subsidizing mediocrity.

Sometimes that’s fine. We do it ourselves in certain aspects of life. Could we build a car from scratch? Probably. But we don’t. We buy from a reliable brand because that’s what we need the car to do: work, reliably, every day. It’s average. It’s perfect—for that purpose.

But your portfolio isn’t a Camry. Or at least, it shouldn’t be.

The Truth About Exceptional Returns

To earn above-average returns, you must exit the average system.

That doesn’t mean taking reckless risk. It means making better, more intentional choices about who you trust with your capital.

Here’s where it gets interesting:

• In private markets, not all firms are created equal.

• And if you pick the right one, you can earn more without taking on more risk.

Why? Because the best firms are already carrying the system. They are the reason FDIC insurance has any value. They’re the reason government bondholders sleep at night. They’re the backbone of tax revenue, GDP, and the productivity that gives fiat currency its meaning.

Zimbabwe can print money too. So can Venezuela. But no one cares—because the quality of firms using that money is too low to support the illusion. Without real economic substance, the “guarantees” are just headlines.

What Makes Steadfast Different

At Steadfast Equity, we structure our bond offerings to reflect economic reality—not marketing optics.

• We issue low-leverage debt, with <$200M in obligations backed by >$800M in diversified, real assets.

• We match bond duration to the type of asset—monthly income where appropriate, compounding and capital gains where optimal.

• We back some of our highest-yielding positions not with yield-chasing, but with overcollateralized lending into capital appreciation strategies (e.g., private roll-ups going public at 3–4x return multiples).

Our assets aren’t all income-only—because short-term income obsession often caps long-term upside. We invest in portfolios that can be exited for multiples on invested capital. That takes planning. That takes time. And it takes real underwriting.

We’re built for investors who want to outperform the system, not just hide inside it.

Be Like Water. Not Stone.

Our firm is designed to endure. We are multi-jurisdictional not to avoid regulation, but to avoid fragility. Compliance is necessary—but dependency is dangerous. That’s why we operate like water: we flow around geopolitical friction and carve our own path through time.

The rock may look strong, but it’s the water that shapes the canyon.

We don’t rely on insurance schemes or government bailouts. We rely on quality. The same quality that props up the entire financial system—and the same quality that can help you outperform it.

If you’re ready to stop earning average returns in an over-insured system designed for the lowest common denominator, it’s time to step out of the herd.

Steadfast Equity exists for people who think like that.