It’s About Time

Quarterly Commentary

4/27/26

1st Quarter 2026 Commentary & Outlook

TWO YEAR ANNIVERSARY

We want to start with sincere thanks to our clients. Without you we would not have the ability to do what we love – help people plan for their future and implement thoughtful investment strategies to get them there.

The title of this commentary, “It’s About Time”, has almost limitless metaphor possibilities.

  • Establishing one’s proper time horizon is the first step towards successful investing.
  • Successful investing is properly measured over five to ten years, not a few quarters.
  • Achieving financial goals is a stop along the way toward peace of mind.

We are relieved to see, at least temporarily, the valuation of many companies reflects the risks and return potential we have been anticipating.

1Q26 IN REVIEW

Before we address the oil shock, Middle East conflict, and the Artificial Intelligence (AI) developments, let’s start with the numbers. The S&P500 Index was -4.3% for the quarter ending March 31, 2026, and +17.80% for the trailing 12-month period.[1] The S&P500 Equal Weighted Index was -1.41% and +10.38% for the same time frames[2] and the fixed income market measured by the Bloomberg AGG Index ETF was -.21% and +4.12%.[3]

We include the S&P500 Equal Weighted Index not because it is a lower bar to achieve, but rather it is more reflective of the risk aversion preference in most families of wealth and what is expected of fiduciaries. Few people are bothered if more than a third of their wealth is concentrated in a handful of companies, as long as they are going up. On the other hand, when prices correct or “normalize”, most investors ask why they didn’t reduce some of the risk while things were good.

A year ago, the global tariffs were announced in late March, “Liberation Day,” and the S&P500 fell ~21% in a matter of a few weeks.[4] Prior to the drop, we had been defensive and capital had been preserved. When Trump reversed himself, “all things AI” soared again. Valuations were near all-time highs and continued to rise. The cohorts of customers, collaborators and competitors, all priced to “win,” didn’t make sense to us. So, we stayed with companies we felt were the lower-risk, higher-probability of long-term success.

One can never know the perfect time to buy, sell or swap, however we have long observed that if we own well-run companies that provide preferred or essential products and services that can endure unexpected events, we should experience favorable results. That continues to be our view and experience.

ECONOMY

For years I have been concerned that the US federal deficit and debt was a compounding problem that would drive inflation higher. Though inflation has risen, and the Bureau of Labor Statistics (BLS) continues to redefine it to avoid Cost of Living Adjustments (COLAs), it has not impacted consumer behavior as much as I had feared. At least not yet. How long global deficit spending can continue without apparent consequences is unknowable, but I suspect it could be much longer than I had previously thought.

DEBT TO LIQUIDITY RATIO – THE NEW NARRATIVE

Today, $70T of debt must be refinanced every year regardless of interest rates.[1] We may be early or just wrong in this opinion, but I suspect we will see the short end of the interest rate curve (Fed Funds) slowly go down and the back end (10–30-year Treasuries) slowly go up. If this happens, savers would be penalized and those who own long-term bonds may suffer from “transitory inflation.” Let me be clear: “Transitory inflation” means after costs go up a lot, costs continue to go up, just at a slower pace.

If we have a liquidity squeeze and the stock and bond markets go down, the new playbook appears to be for the US Federal Reserve to come to the rescue, issue “emergency” funding, and or absorb corporate defaults. My guess is the global threshold for pain is a decline of about 15% in the S&P500 index from current levels. Whatever the level is, if the US government intervenes, we want to own stocks or real estate, not bonds.

MARKETS

One of the main drivers of the recent stock market selloff has been the uncertainty whether Artificial Intelligence (AI), and massive capital expenditures by the largest technology companies, will reduce their valuations.[5] Secondarily the recent escalation of the conflict in Iran and the spiking of the price of oil could last longer than the confident tweets from 1600 Pennsylvania Avenue might suggest.

As you know, we have been assiduously avoiding several of the most popular companies due to stretched valuations. We have a few but have instead focused on companies we feel would benefit from industrial and consumer behavior, and increasing global liquidity, but had, in our opinion, less risk. This would be the land, water and power companies that support data centers as well as the securities exchanges, among others.

PRIVATE CREDIT

The headlines are full of the now-obvious problems in the private credit industry. For the last two years we have written prolifically about the house of cards being sold to private clients by private equity firms and their co-conspirator distribution channels.

We have been highly critical of the financial industry’s sales practices and, candidly, how complicit the general media has been. The stories on the benefits of private credit had been so favorable it made me wonder if the sales departments of the private equity firms emailed recommended scripts, along with payment of their advertising invoices.

For the last two years, as the problems have been building, we have warned in almost every commentary of the forming storm clouds (Past Quarterly Commentaries). Fortunately, to my knowledge, none of our clients have been exposed to the gating of withdrawals and the likelihood of losses in many of these partnerships.

What is not yet in the public narrative is how much of the $1.8T student debt is in some of these business development company (BDC) portfolios. Estimates from a year ago suggested $300-400B is in default.[6] The administration has waited to enforce wage garnishing until after midterms. My guess is almost none of it gets collected. I don’t know how GAAP will treat the defaults, but it could be a full write-off.

DEALING WITH VOLATILITY

Just last quarter, you will recall we needed to explain why we felt Texas Pacific [TPL], which was down materially, was worth holding. After being up over 100% in 2024, it’s price was down 22% in 2025.[7] Fortunately, and quite unexpectedly, the stock price rose ~60% in the first quarter.[8]

Whether the sharp price increase of TPL was due to a broader awareness of the need for data centers or the temporary rise in global oil prices is hard to know. We continue to feel the land, water, and power investments, particularly in Texas, are long-term holds. Your patience with the volatility is appreciated.

I will be heading to Midland, Texas in mid-May for a field trip to meet with the management of Texas Pacific. There is a close-knit community in the oil patch, and I expect to learn something about LandBridge, WaterBridge, and two other companies we are considering for portfolios right now. If you have ever watched an episode of “Landman” on Paramount, you will know I am not flying Southwest Airlines with a two-hour layover in Houston each way to take in the scenery in Odessa.

BLOCKCHAIN

This quarter we revisit if the fundamental use case of the blockchain – aka Bitcoin (BTC) remains intact. After studying the blockchain and cryptocurrencies since 2017, we wrote two articles, the first in late 2024 and the second in January of 2025 explaining our thesis (“Blockchain & Cryptocurrency Mining” and “Economic Purpose of Blockchain”).

About a year ago we began adding small amounts to portfolios when Bitcoin was in the $82-86k range. On October 6, 2025, BTC hit a high of ~$126k and we wrote “it had gone up ~50% and could go down 50%” (“Beauty in Constraints”). More recently it was in the $66k range.[9] One should reasonably ask if the business case has deteriorated or more directly, is this just a Ponzi scheme[10] or today’s version of Holland’s famous Tulip Bulb mania?[11]

Recently we added to positions because we believe the fundamental use case of the blockchain as a validation method is intact. The next “halving” of the bitcoin award occurs in about two years.[12] Between now and then, as the bitcoin award gets closer to being cut in half, either the cost of new computers and energy must go way down, or the price of bitcoin needs to rise. Otherwise, the business use case fails. Is failure a possibility? Yes. In our opinion, the probability of failure is remote, and the benefits far outweigh the risks. Only time will tell.

EMERGING TECHNOLOGY

From time to time, we will invest small amounts in emerging technology or in a company we believe is misunderstood and the price has collapsed (like Hawaii Electric) or the long-term future is very promising (Miami Stock Exchange). Many of our ideas are not mainstream and take time to work out. In two or three years from now we will find out.

“You don’t have to worry about someone stealing your ideas. If it is really good, you have to cram it down their throat.” [13]

Howard Aiken, Inventor of the Harvard Mark I

PORTFOLIOS

In aggregate, Promethium composite portfolio, net of fees, were positive in 1Q26, and the trailing one-year results were modestly above the S&P500 Equal Weighted Index, with less volatility. Individual client results varied of course, primarily due to legacy positions with meaningful gains. Our investment approach tends to appeal to families of size and complexity seeking compounding results over decades and who prefer to lose less in down markets.

Every investor is seeking to invest in the next company that can be held for 30 years, and compound returns in excess of the general market. They are difficult to find and difficult to hold after appreciating significantly. We believe we may have a few of those companies in our portfolios now but certainly not all.

RESULT YES, RACE NO

We strive to deliver strong, after-tax, compounded results but we are not a “performance” shop. We believe very satisfactory results can be achieved by owning quality holdings that have a reasonable chance of compounding. We seek companies that could be held for long periods of time, appear to us to have less risk and may be overlooked. Though this may sound like every marketing piece ever written, an examination of our years of quarterly commentary (The Promethium Playbook 2020-2024) reveals what we saw, what we thought it meant, and how we attempted to protect portfolios against or position for potential developments.

If we lose less money in down markets and participate in up markets, the compounding effect will inure to our financial benefit, not to mention make it easier to sleep well at night. We cannot accomplish this every period, but that is our philosophy and approach.

Our audited, SEC compliant, net of fee composite results are now over seven years. Please let us know if you would like to receive more information. Each year we are able to accept a few new family relationships. If your friends or family have a similar perspective on life and investing, encourage them to give us a call.

PROMETHIUM UPDATE

This past fall we published “Money & Meaning: What I’ve Learned from Advising the Very Wealthy,” and am very grateful for all the help and encouragement. It has been well received, and we hope it helps generations to come.

IN MEMORIAM

One of the lesser-known giants of the investment industry, a person whom I have admired and followed closely over the last ten years, died suddenly last week. Murray Stahl, Co-Founder and Chief Executive Officer of Horizon Kinetics, wrote his first research report in May 1995 on an obscure company with a tiny $62M market cap, Texas Pacific Land Trust. It was so small and obscure; institutions generally could not buy it. It had a meager 2% dividend and no debt but a return on equity of 46%. Split-adjusted, it was about $0.64. Today, almost 31 years later, the price is over $400 and not counting dividends, it works out to be about a 65,000% gain. Good things can come in small packages, and it can pay handsomely to look in places others ignore.

Were Benjamin Franklin here, he might remind us that ‘time is what life is made of, do not squander it.’

Christopher F. Poch

April 15, 2026

Important Disclosures

Investment advisory services offered through Promethium Advisors, LLC, a Registered Investment Advisor with the U.S. Securities and Exchange Commission. This material is intended for informational purposes only. It should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney or tax advisor. This information is not an offer or a solicitation to buy or sell securities. The information contained may have been compiled from third party sources and is believed to be reliable.

Michael Howell is a well-regarded global liquidity analyst who describes that today we live in a debt refinance world versus a capital expansion society.

[1] https://www.spglobal.com/spdji/en/indices/equity/sp-500/#overview

[2] https://www.marketwatch.com/investing/index/sp500ew?countrycode=xx

[3] https://www.ishares.com/us/products/239458/ishares-core-total-us-bond-market-etf#:~:text=OK,of%20Apr%2010%2C%202026%203.94%25

[4] https://www.mufgamericas.com/sites/default/files/document/2025-05/Chart-of-the-Day_5_21_Markets-Complete-Post-Liberation-Day-Round-Trip-Though-Still-Below-Peak.pdf

[5] https://fortune.com/2026/02/06/what-is-a-data-center-capex-spending-630-billion-dollars-amazon-microsoft-google-meta/

[6] https://www.ed.gov/about/news/press-release/us-department-of-education-begin-federal-student-loan-collections-other-actions-help-borrowers-get-back-repayment

[7] https://www.investing.com/equities/texas-pacific-land-trust-historical-data

[8] Ibid

[9] https://finance.yahoo.com/quote/BTC-USD/history/?frequency=1wk

[10] https://business.fau.edu/centers/center-for-forensic-accounting/public-resources-on-fraud/particular-areas-of-fraud/ponzi-schemes/

[11] https://www.history.com/articles/tulip-mania-financial-crash-holland

[12] https://www.swanbitcoin.com/education/bitcoin-halving-dates/#:~:text=Next%20Bitcoin%20Halving:%20March%2026th,In%20this%20article

[13] https://en.wikipedia.org/wiki/Harvard_Mark_I