St. James Investment Company has released its “Value Investors” third-quarter 2026 investor letter, outlining an increasingly difficult environment for value investors. Rising interest rates, higher energy prices, record government debt, and geopolitical conflicts are testing market fundamentals, even as the S&P 500 trades near all-time highs and stock valuations remain elevated.
The letter does not disclose a specific third-quarter return for the Select Value portfolio. Instead, it highlights the widening gap between stocks and bonds since the pandemic. According to the firm, U.S. equities have outperformed bonds by an average of 28% annually over that period, while stocks now account for 52% of U.S. households’ financial assets.
St. James warns that rising oil prices and long-term Treasury yields could intensify inflationary pressures and increase the risk of stagflation. The letter cites a 10-year Treasury yield of 5.23% and a 30-year yield of 5.55%, underscoring the higher borrowing costs facing consumers, businesses, and the government.
Looking ahead, the firm remains cautious about a market increasingly shaped by enthusiasm for artificial intelligence. Its message is straightforward: resist chasing compelling narratives and focus on businesses with durable competitive advantages, sound economics, and prices that leave room for unexpected setbacks. St. James continues to emphasize patience, valuation discipline, and a sufficient margin of safety.
For a closer look at the firm’s stock selections, explore its top five holdings in 2026.
Download St. James Investment Company’s Q3 2026 investor letter here.
