#390 Ted Oakley: "It's Not a Normal Market" — A Generational Bear Could Cut Stocks 40%

In this episode, Ted Oakley, founder and managing partner of Oxbow Advisors with 49 years in the business, returns to discuss his latest letter, "Stick to Your Principles," and why he believes today's market is anything but normal. He warns that 10-12 companies now make up half the S&P 500, speculation via leveraged ETFs is in the billions, and stocks are roughly three standard deviations above the norm — a setup he says could eventually correct 40% or more in a generational bear market. Oakley explains why investor complacency is the biggest mistake he sees, with three-quarters of all financial assets in stocks and Americans over 70 owning a third of the market. He shares where he's finding value now — energy names like Northern Oil & Gas, Kimbell Royalty, and Antero, plus beaten-down gold miners like Agnico Eagle — and recounts the hard lesson he learned chasing hot oil stocks in the late 1970s. His biggest worry: unsustainable government debt. His surprising source of optimism: a severe downturn, which he views as the buying opportunity of a generation.

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Links:

Oxbow Advisors: https://oxbowadvisors.com/

YouTube: https://www.youtube.com/@OxbowAdvisors

X: https://x.com/Oxbow_Advisors

Book: https://www.amazon.com/Second-Generation-Wealth-What-Want/dp/1966629168

Timestamps:

0:00 – Introduction: Ted Oakley of Oxbow Advisors returns

0:53 – Semiconductors dominating the market; 10-12 companies are half the S&P

2:10 – "The Gambler": leveraged ETFs and speculation in the billions

3:16 – How leveraged ETFs amplify volatility

4:25 – A market high that "sticks for a while" coming in the next 6-12 months

5:41 – Risk/reward has flipped: 6-8% upside vs. 25% downside

6:38 – A generational bear market could mean a 40-45% correction

8:04 – Investor complacency: 75% of financial assets in stocks, an all-time high

9:26 – Oxbow's positioning: ~60/40 stocks and short-term treasuries

11:04 – The bond market: a possible trade in long-dated treasuries, but not worth the risk

12:19 – Cooler CPI and why inflation could fall further on oil prices

13:36 – What oil industry insiders are saying about drilling and cash flows

14:54 – Everyone's bearish on oil — Ted sees $100+ within 18 months

16:26 – What Ted's buying: Northern Oil & Gas, Kimbell Royalty, Antero, NESR

19:22 – Gold miners cheap after 35-40% correction; Agnico Eagle is Oxbow's top holding

21:09 – Momentum players washing out of gold sets up the next move

22:45 – "Stick to Your Principles": valuation discipline and why pros abandon it

24:16 – Ted's own lesson: getting burned in the late-'70s oil boom

26:00 – The Intel example: sold in '99, took 26 years to hit a new high

27:50 – Why hot IPOs disappoint (SpaceX down 30% from IPO)

29:27 – The boomer risk: over-70s own a third of all stocks

32:04 – Biggest risk: unsustainable government debt and interest costs

33:33 – Why Ted is optimistic about a downturn: liquidity to buy the sale