Shooting Strait

“Let me tell you something that we Israelis have against Moses. He took us 40 years through the desert to bring us to the one spot in the Middle East that has no oil!” — Golda Meir

 July 29, 2026

When I last updated the Update, we had just come off an outstanding six-month run, and I wrote, “I don’t know whether this latest burst is nearing its end or has room to run. That said, I’m certainly more cautious today than I was in March. Sharp moves like these are hard to sustain and prone to reversals or pauses.”

As it turned out, we had a respectable final quarter of 2025 and another exceptional one to start 2026. We took a breather in the second quarter, giving back part of the first quarter’s gains, and the pullback continued into July. Waiting for this pullback has been like having your significant other tell you, “We need to talk.” You know it’s coming, you’re not sure when, it isn’t going to be fun, but once it’s over it’s usually clear sailing again…until the next “necessary talk” rolls around.

If you’ve been paying attention over the years, it won’t surprise you that I’m excited to get this latest opportunity to put cash to work. These pullbacks are precisely why we trade tactically around our core holdings: Paring back after rallies and adding after declines boosts long-term results. The cycle goes a bit like the chart to the right, especially for uranium. A key catalyst is momentum traders. When our names perk up they come flooding in, but they aren’t long-term holders, and when momentum slows they head for the exits, further pressuring prices. The number of core long-term holders (ahem) grows slowly as the story evolves, lending the chart its upward bias, while the hot money drives the big swings around that trend. The dips would be frustrating if we weren’t taking advantage of them.

The “Market”

I don’t focus on the U.S. stock market because, as you know, I don’t really care what it’s doing at any particular time. It’s but one reasonable benchmark for Aggressive accounts, and it is NOT appropriate for Conservative or Moderate risk portfolios. Even in Aggressive accounts (including my own), I have zero interest in matching it, and I pay little attention to how it does day to day, month to month, or in any particular year. Over a full bull and bear market, I’d expect our Aggressive accounts to perform well against a basket of appropriately risky benchmarks that does include U.S. stocks, but that’s the extent of my concern about “the market.”  

Some numbers: I compared a representative Aggressive account’s quarterly returns to the S&P 500. Over 10 years, total returns were similar; over five years, we’ve handily outperformed it. Importantly, the correlation of returns was only 35% over the 10-year period and 12% over the last five.

The chart to the right shows the rolling three-year correlation between that account and the S&P 500. There was an 18-month stretch during The Covid Times when it ran close to 80%, so we will sometimes track the market reasonably well, but that’s coincidental. Over the last five years, the trailing correlation fell steadily from just over 80% to negative, meaning our Aggressive accounts have actually moved slightly inversely to the S&P 500 over the last three years. Clearly, I’m not at all concerned with mimicking the S&P 500!

Portfolio Activity

We’ve continued to be much more active than normal across most portfolios. I’ve been saying that for a couple of years now, so I may have to redefine “normal.” Much of the trading remains tactical, but we’ve also added a few new positions in both existing and new sectors.

Uranium stocks moved sharply higher in January, and we pared back into it. They have since given back most of those gains, and we’ve started to rebuild our exposure. Our core security that tracks the uranium price has been stable since March while the miners have been roughed up, so my attention has been on adding to the mining stocks. If the downtrend continues, expect more buying here, especially in more aggressive accounts (this is where I’ve been doing the bulk of my personal buying). We’ve done very well buying every previous pullback, and I suspect this time will be no different given the bullish outlook for nuclear power and the growing uranium supply deficit.

Gold and silver mining stocks extended their tremendous run through late February. We lightened into that run-up, leaving us at the end of June with our lowest precious metals exposure in over 10 years. I’ve long said we’d always hold some precious metals so long as fiscal and monetary policy remains imprudent, and we’re close to those minimum levels. The mining equities look more attractive than the metals here, and we’ve slowly started building a few new positions. Expect more buying if the space falls under further pressure.

On the oil front, the “situationship” with Iran drove a huge jump in the price of oil during the first quarter, from the high $50s to a peak just over $110. A basket of oil-producing stocks climbed about 50%. No surprise, we lightened into the move. There are a couple of drillers I really like over the next five years. We own one, already a big winner; we pared it back after it tripled in 10 months, but it’s now about 30% below its highs and starting to look juicy again. We own the bonds of the other and may add equity on weakness. The intermediate-term outlook for natural gas also looks compelling, and I’ll be looking to add opportunistically in the months ahead. A bigger sell-off following a robust and legitimate resolution with Iran could hand us an interesting opportunity across the sector.

In more conservative accounts, I’ve been very active adding yield. Over the last five-plus years we went from almost no yield securities when rates were at zero, to one- to three-year Treasuries, to money market funds, to a significant position in a diversified basket of yielding securities. Each shift reflected the changing dynamics within the fixed-income universe. Today we hold a mix of money market funds, corporate bonds, business development companies (BDCs), REITs, closed-end yield funds, and preferred stocks, with a healthy weighted average yield of 6–8.5%.

Finally, we’ve added some newer special situation names. We own a beaten-up payment service provider that is very cheap, throws off a ton of free cash, has been voraciously buying back shares, is in turnaround mode, and recently received a buyout offer I consider much too low. It just reported earnings and appears to be steadying the business. We also own a financial technology company that is likewise cheap, mid-turnaround, and a key partner and customer of the banking industry. Both could be doubles if they simply stabilize and generate modest growth.

We also added a name with a quirky mix of businesses: solar panel recycling, real estate investment, and renewable fuels technology. It’s a former mining company attempting an unusual pivot. I’m typically leery of companies spread across too many disparate businesses, but this one is very cheap, and the modest position is basically a call option that pays off if just one business pans out.

The final new add is in the software space. Yes. I bought an actual pure tech stock! I know. It’s been a minute. It was one of many names severely beaten down over the last year on the threat of AI. We dipped a toe in during the spring, following the panic that sent software stocks to multiyear lows, picked up shares close to those lows, and have a healthy gain. We’ve since trimmed the position and lowered our net investment. I’ve now done enough research to know which software names I view as less threatened by AI. We were only able to buy the one before the group rallied, but it’s a volatile space and another leg lower can’t be ruled out. I’m ready if it comes.

StrAIt of Hormuz

Well, look at that clever title—combining AI and oil geopolitics. A word about each. My views on AI warrant their own piece, and there’s a good chance anything I write today is wrong tomorrow. Big picture, I personally use AI regularly for modeling (numbers, not bathing suits), coding, automating back-office functions, research, and financial analysis. I’m not concerned about artificial general intelligence arriving anytime soon, if ever, given the current focus on large language models. I exist in the middle realm of appreciating the efficiencies and opportunities AI can provide without having to plan a prepper life inside an underground shelter safe from Terminator-like, shape-shifting cyborg harbingers of death and the inevitable nuclear annihilation they’d bring.

The financials and valuations of the key AI companies are another matter, and there I’m a hard pass. It looks very bubbly, with a gross amount of co-dependent, circular, incestuous deal-making. Exciting technology doesn’t necessarily mean sound investment. There are likely to be far more losers than winners in AI.

As for oil geopolitics, the key driver lately has been the on-again, off-again flirtation with a ceasefire between Trump and whoever’s actually in charge in Iran. I have no interest in betting on any short-term outcome: The distribution of possible outcomes is wide, and each outcome carries a different impact on oil, energy, and beyond. We’ll just take advantage of the opportunities the volatility creates.

So, what’s the overlap between AI and Hormuz? Uranium, of course! Both add to my long-term bullishness on the uranium thesis. The AI buildout requires tremendous energy to power data centers. How many get built is debatable, but we’re already seeing the following, much of it involving small modular reactors (SMRs):

• Microsoft restarting Unit 1 at Three Mile Island with Constellation Energy.

• Amazon teaming with Talen Energy and X-energy to power a campus from the Susquehanna plant and fund SMRs.

• Google agreeing to buy power from a fleet of SMRs developed by Kairos Power.

• Meta partnering with Constellation, Vistra, TerraPower, and Oklo for Illinois nuclear capacity and new generation for its AI supercluster.

• Oracle planning data center campuses powered by three on-site SMRs.

This new demand was never part of our thesis. Our uranium holdings should do fine even if AI demand evaporates, but whatever it does add will widen the supply deficit and pull forward the timeline for higher prices.

The situation with Iran echoes the Ukraine-Russia kerfuffle: Both have highlighted energy security. No one will take the Strait of Hormuz for granted anymore. Expect new pipeline capacity to bypass it, and expect nuclear to look relatively more attractive, since it lets countries with insufficient hydrocarbons securely raise the domestic share of their energy production.

The Long and the Short of It

We used significant moves higher in our core sectors over the past year to trim holdings and raise cash. More recently those sectors have pulled back—no surprise after big moves in a short period. I was happy to take profits higher, and I’m happy to add back lower. This isn’t our first rodeo. We fired off a few shots this year, and now we’re reloading. It’s impossible to know exactly when the pullback ends and the next leg up begins. Uranium in particular feels washed out, with the kind of sentiment I normally see near bottoms.  

As always, I’m on the prowl outside our core sectors, and it’s been gratifying to add new names. I don’t diversify for its own sake, but I always prefer a more diverse portfolio of attractive securities. I’m enjoying the volatility, since it reliably creates opportunities. Barring a major meltdown and panic (always possible, and inevitable at some point), I expect our recent and hopefully continued buying to pay off. I was expecting a pullback when I last wrote; now I’m expecting a new leg higher—though just as the pullback took a couple of quarters to arrive, the next leg up could take more time.

Ken Bell, CFA, MBA, non-AI generated hooman

Aspera Financial, LLC

The Market Rubbernecker is associated with Aspera Financial, LLC, an investment management and financial planning firm based in the Cary, Raleigh, and Durham area of North Carolina. This and all Market Rubbernecker missives and musings (written, oral, or mimed) are subject to the disclaimers, disavowals, and hindquarter-coverings found at www.asperafinancial.com/aboutrubbernecker.o.