The Gambler

We titled this quarter’s letter “The Gambler” for various reasons, which we will discuss later. These last 90 days have brought a lot of significant events. The war in Iran, stock markets decline, oil prices rising to new highs, and inflation starting to rear its head. Exhibit 1 shows the investment returns of various market measurements for the first quarter ending March 31, 2026.

The past three months have left many investors scratching their head with a few questions. Why aren’t the big Mag 7 stocks going up anymore? Why did gold prices peak? What happened to my long-term bonds?

When to Hold ’em, When to Fold ’em …

That was the famous chorus of Kenny Rogers’ 1978 song “The Gambler.” It’s very apropos for this market. We mentioned last year that the second years of presidential terms tend to be volatile. This quarter was no different, with the S&P 500 hitting a high on January 28, 2026, and falling from there. The 20-year U.S. Treasury bond hit a high on February 27, and now it’s at a new low. Gold hit a high on January 29, and has declined since then. We said all along that this was going to be a volatile year, with a number of ups and downs in the market. Without some sense of when to hold cash and when to deploy cash, many investors feel somewhat lost. In addition, many advisors know only to stay fully invested all the time. Notice Exhibit 2 showing cash versus stocks.

The Speculative Generations …

Gambling in the form of cryptos and sports betting has taken a front-row seat with Gen Z and Millennials. These two age groups think very little of true investing, i.e., buying a great company and holding it over the years. Exhibit 3 shows the level of participation in crypto by Homelanders (Gen Z) and Millennials. Almost a third of all these age groups.

Then notice Exhibit 4 showing levels of participation in sports betting and prediction markets. This is where these groups think they are actually investing in some sort of perverse way. They aren’t, however, learning true investing. It has been relatively easy to make money this way the last few years, but it won’t always be the case.

Many young people can’t afford a house and aren’t inclined to save money. Therefore, they roll the dice in these areas, but in the long run it likely won’t end well.

Do These Names Look Familiar?

One of the things going on now reminds us of the late 1990s. At Oxbow we have a list of hundreds of dot-com stocks that went public or showed a semblance of the Internet. Remember that a lot of the companies that have AI (artificial intelligence) in their name may not really be profitable in years to come. Currently just about every company that can tout AI is getting a lot of investor attention. Exhibit 5, however, shows just a few of the dot-com names that went up in smoke.

And Now ‘The Rest of the Story’

This is a line from one of my favorite broadcasters, Paul Harvey. The rest of the story in 2026 will no less be some of the same: a lot of volatility and moving parts in the stock market. For Oxbow, we continue doing the same things that allowed us to have a good first quarter. Our portfolios hold sizable positions in U.S. Treasury short-term (less than three years) bonds. We sold partial positions in gold and silver when they spiked to new highs early in the quarter. After the gold miners’ decline of -30%, we have started to add back portions of that group. Our stock portfolio is well-diversified, and that has helped us have a better return than the overall market. And our high-income portfolio has done well by holding a large amount of energy and commodities.

We of course have no idea how national and world events will play out over the remainder of the year. The one thing we can do is have portfolios that are OK regardless of what happens. Should markets move considerably lower, we will look to own more companies. Our business is the only one in the world where, when things are low-priced and on sale, virtually nobody wants them! The big, top-10 stocks from the last two years look as though they are starting to fade.

We Never Get Out Alive

Every year we unfortunately have a few investors that pass away. While we always think of the following, we don’t say it enough: At Oxbow we truly appreciate all our investors having faith and doing business with us. Your believing in us makes us want to always try our very best for you. All of us will eventually pass on, but while we’re here, we do our best.

Thank you, and we hope your spring is great. For what it’s worth … this is all our writing: no AI, ChatGPT, Perplexity or Gemini.

Ted Oakley

“Always be a little kinder than necessary.”
–J.M. Barrie

“Gambling: The sure way of getting nothing from something.”
–Wilson Mizner

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Any opinions, projections, or forward-looking statements expressed herein are solely those of the author, may differ from the views or opinions expressed by other areas of the firm and are only for general informational purposes as of the date indicated. The material contained herein has been prepared from sources and data we believe to be reliable but we make no guarantee as to its accuracy or completeness. This material is not intended to be relied upon as specific legal or tax advice or investment recommendations for any individual as the information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Investments involve risk and are not guaranteed. Investments involve risk and are not guaranteed.