The Most Overvalued Market in History, Investor are Dangerously Unprepared | Ted Oakley

Added: 2026-05-30

[00:00:00]There's just not a lot of things that are priced correctly. That that's not to say they're not good companies. See, that's where people make a mistake. I mean, Cisco and the [clears throat] first quarter of 2000 was a really good company. It was uh still is, but it was $82 a share and uh you know, two and a half years later at six. So, you have to you have to remember where you are in these pricings because it can be a really good company. even some of these AI companies doesn't mean though that's a really good price and I think that's where people make the mistake.

[00:00:40]Hey everyone, my name is Anthony Fatsies and welcome to another episode of the What the Finance Podcast. On this episode I have the pleasure of welcoming back Ted Oakley. US equity markets are sitting at some of the most extreme valuations in their history. The cape ratio is brushing 40. A handful of tech giants dominate the index and most investors today have only ever seen a bull market. My guest today has seen this movie before. Ted Oakley is the founder and managing partner of Oxbow Advisers with more than four decades advising high netw worth clients across multiple cycles. His highest conviction call for 2026 is not tech and it is not even gold. It's hard commodities and the old economy assets the market has spent the past decade ignoring. Ted, thanks so much for coming back on What the Finance.

[00:01:24]>> You Anthony, good to see you.

[00:01:26]>> Yeah, looking forward to it. It's been about a year since we last spoke and a lot's definitely changed since then.

[00:01:30]It's pretty amazing. Uh the volatility globally and the economy markets are still up and up a lot. So, I'd really be interested if you could maybe talk about your perspective on what you're currently seeing in the economy and markets.

[00:01:44]>> Well, two different, you know, they're two different things really uh in the economy itself. you know, a lot of areas are in the US at least and I think around the world are somewhat in a recession.

[00:01:57]Uh, but on the stock market side, it's all about this AI. You they're chasing all of this AI info. Uh, and that's really all they care about. So, when it's like that, you have to uh you have to make sure you you understand what your principles are for investing.

[00:02:15]uh you know, we've been around for 50 years, so we we have our principles down pretty good about what we will own and what we won't own. Uh but we had a uh had a great year last year, have a pretty good year this year. Um but uh but I think the markets are they're expensive and they're sort of down.

[00:02:36]We're sort of into a one-trick pony kind of deal, but that's just the way it is.

[00:02:41]I've seen it before.

[00:02:43]>> Yeah, definitely. And and what what do you compare it because you know you've had a 40 year 40 years experience seeing as you said you've seen everything. Um what what periods different times we'll give you an example uh in the late 70s and early 80s everything was energy. Uh, I mean we were in a commodity cycle then and everybody everybody from New York came down to Texas and bought drilling rigs and you know I started investing in oil wells and all sorts of things and and uh buying all the small Canadian oil stocks. It just it was a crazy crazy time but it was a one it was a one deal.

[00:03:22]I mean a lot of other things weren't really working in that period. They would work for a little while and then they wouldn't. Um but it was sort of an odd time. That's one time when they were really driving into the markets. Uh and then you know in in ' 87 that year uh the markets are they were really up high in mid year uh and everybody was everybody was is frothy. everybody buying the same stocks and uh by the time we got obviously to October, you know, we started breaking it down and I don't think people were quite ready for it. We had a lot of liquidity, so it was a good year for us.

[00:04:00]But um and then in uh really in all the late 2000s, that's probably where it would have stretched your patience the most because the market went straight up from you basically mid 95 to the first quarter through the first quarter of 2000 and it was really stupid, stupid pricing, stupid stocks, everything. um we were basically out of any tech stock by March of 99 and that was after it kept right on going for another year. So we had people screaming at us but we really had a great period during 2003 in that bare market. Uh had a lot of liquidity so we were ready for the blastoff. Uh and then somewhat similar, you know, in ' 07, you know, it was uh we we had a lot of liquidity uh through 07 and 08. So it set us up for a really really good 09 uh to big years. Um and um we're similar to that right now. We have about the same amount of liquidity. We have it in treasuries, but but u it's similar that now. It's not that we're trying to time the market. There's just not a lot of things that are priced correctly. That that's not to say they're not good companies.

[00:05:18]See, that's where people make a mistake.

[00:05:21]I mean, Cisco and the first [clears throat] quarter of 2000 was a really good company. It was uh still is, but it was $82 a share and uh you know, two and a half years later, it's six. So, you have to you have to remember where you are in these pricings because it can be a really good company. even some of these AI companies doesn't mean though that's a really good price and I think that's where people make the mistake. Sorry to go on so long.

[00:05:51]>> No, it's really insightful to to hear that and I you know you describe as you said is overvalued. I think the cape ratio is brushing 40. Um it it does seem like is there any value out there that you're you're seeing or it's just everything's overvalued and you're >> Well, no. I think uh energy is underpriced. I really do. You know, that's one of our big positions is on energy. We own the producers. We own the pipelines.

[00:06:15]Um, you know, uh, we really brought the whole group on, you know, some of the service companies, couple of drillers, but that whole group is undervalued.

[00:06:25]They were undervalued before it even went to 80 or 90. Uh, and they're still undervalued relative to what you get. I mean, that's where you can get some of the best dividends.

[00:06:35]And you have to remember as a percentage of the S&P 500 energy is only 3%.

[00:06:41]You know, uh it's like tech is like I don't know 34% 35. Uh I remember when energy was 30. So you see they don't own these stocks. And I think the only thing left for them to do is if it continues to be positive is to buy them. And so you got you got all the right setup. You got a cheap group of stocks, pay a good dividend, and they're not owned by a lot of people. So, you're in that position.

[00:07:12]>> Okay. And you and this you had this conviction before the recent crisis that we saw in the Middle East and this massive increase in in oil prices or is this something after when Yeah. When the really bullish?

[00:07:23]>> We own, you know, we own uh we we just think we're in a commodity cycle for the next 10 years and so we own a lot of other things too. I mean well iron and copper you know a lot of lot of gold m you know gold miners gold silver I mean different things but uh but fertilizer uh a lot of you know you know critical minerals different things but just feel like we're in some egg stocks we just feel like we're more of a uh more of a commodity cycle the next 10 years than people think we are.

[00:07:55]>> Yeah. And what's your hypothesis around that? because it's uh I know a lot of people have that sort of similar thinking of the super >> well you know Anthony if you took the Bloomberg commodity index and you just overlaid it with overlaid it with a consumer price index you would see that um from the low you know we had consumer prices at nothing you know five years ago really I mean it's not very high but if you overlay those two they tend to go hand inand over time and we feel like we're in a in a period where the next, you know, decade will be more of a higher inflationary time. Um for one reason we we think these governments that have all this all this paper that they're all they're highly in debt for not just the US uh but everybody else that you know they they'll have to inflate most of the time and keep the rates low in order to basically financially repress to get out of that. I think that's the only way they get out of it. So that's sort of the big picture for us. But we look at it by company by company. But that's what that's how we look at it.

[00:09:07]>> Yeah. Okay. Makes sense. And you know, you mentioned iron, uh, you know, energy. Any any other commodities that you're watching or you think all of them will potentially benefit?

[00:09:15]>> Well, uh, obviously oil and natural gas, you know, you know, natural gas we think is it's right in there with oil. But there again, u you have to look at where where there's going to be shortages in general. copper, you know, to a degree, iron, a lot of the critical minerals, uh, you know, we own tungsten, we own all of mo, you know, a lot of number of fertilizer companies. Um, and so, uh, we have sort of across the board, we own a couple of agricultural company because in inflationary periods and we feel like that that's another reason we own so much fertilizer.

[00:09:56]All those things worked really well and in those kinds of periods, but uh yeah, we own we own a little bit of a lot of those things. Uh they paid off well for us last year and so far this year really if you want to know.

[00:10:09]>> Yeah, definitely. Yeah, it it makes a lot of sense. As you said, some of them are there's going to be more supply constraints than uh than others. I know for before this, you know, Iran crisis, oil was at 60 and there was an expectation there was actually going to be quite a large over supply. is very much I imagine based on the current timing and >> and and the current market.

[00:10:29]>> We never agreed with the IEA. I feel like they've made some very very poor um uh predictions about oil and they're usually not they're not usually don't come true. So, we don't use their stuff at all. But we felt like that oil was not near as um as as as there was not near as much oil in in late 24 and 25 early 25 that people thought there was.

[00:10:57]And uh and you know that's that's that's another reason I own stocks because if you know more than the other person then you're probably going to do okay.

[00:11:08]>> Yeah. Exactly. That's a that's a great point. And as you said, the IIA have sort of backtracked quite a lot recently about the need for more investment in production because there's going to be, you know, large larger decline rates moving forward. So yeah.

[00:11:21]>> Yeah, we got to remember um we we pulled a lot of oil out of the system now and we we got to supply all the strategic re strategic supplies in all these countries, not just the US that has to go back in, you know. I mean, there's there's a lot of reasons for it, but we really we feel like it'll have another it'll have the rest of the year will be a good year for him.

[00:11:49]And, you know, maybe that maybe that's wrong. I don't know. But that's that's what makes a horse race, Anthony.

[00:11:54]>> Yeah, exactly. No, I I agree. As you said, there's a even if even if the straight opens tomorrow, everyone's going to have their own strategic reserves. They're all going to new country's going to make their own.

[00:12:04]They're going to sort of try to make sure that it doesn't happen again. So there's definitely going to be this inflated demand for at least another six 12 months.

[00:12:12]>> Well, I think a lot of them will hoard it, though. I mean, you know, they they look at it this way and think, hey, you know, next time we're going to have a we're going to have a strategic supply.

[00:12:21]We're going to let this happen again.

[00:12:23]We'll see. But I think that's the way that's the way it'll go.

[00:12:26]>> That'll be the smart thing to do. Let's hope let's hope they follow that. Um and then yeah so we mentioned AI and you see it as potentially you know valuations are extremely high um especially with the um what you're seeing. So I guess once the capex investment stop that's when is that when you sort of expect to see a market decrease or how are you analyzing it? I'll tell you, I look at it a lot like uh Fiverr was black fiber back in the tech days. Like the whole thing in the tech days was we're going to lay all this fiber, black fiber for the internet.

[00:13:00]And all of those companies really really went high. Uh and everybody that supplied those companies went high. But when it was all said and done, they created so much black fiber that I don't know that we still used it all today. Um and so they overplayed it, you know, and so though then they realized the stocks realized that and then two or three years later here they come fading back and I assume the same thing will happen with all these artificial intelligence stocks u that they will they will they will over capitalize it you'll have too much. I'm not certain that anybody could tell you or me how much if all these companies that purport to be AI specific and this that and the other. I don't know that anybody could tell us that if all of those I can't see all of those companies making money. Okay. Yeah, there'll be some and they come out of it just like there were in the internet days that you want to own, but uh I can't see all of them making money. And I think you'll look up one of these days and they'll say, "Oh gosh, we uh our capacity is so high now. We're going to have to lower the prices." It's that that that's just the way that's the way business works. And especially Wall Street, man, they can throw a lot of money at something. They never think about it. They just they just they're just there for the ride. uh anyway they can make money that's what they do and so uh it'll be interesting to see how it all pans out in two or three years.

[00:14:36]>> Yeah, definitely their business models currently that obviously extremely loss making. They're trying to increase the prices but already it's sort of coming up against the customers not wanting to pay that. So already these uh >> I guess uh yeah challenges for for those companies that's before they go public at trillion dollar valuations.

[00:14:55]Well, you know, one one of the things about these new issues, space, you know, SpaceX and Enthropic, Open AI and all, you know, these companies by and large not make any money. See, but they'll be including the averages because the S&P changed the rules now.

[00:15:12]You don't have to have eight quarters of profit. They're just going to throw anybody in because of the size. And I think that's going to really hurt the small investor because they're still buying the the indexes, exchange traded funds, and I I don't I don't think they have a clue as to how they're deteriorating those particular groups uh at the same time. But, you know, it's just it's part of the process after you've been in a bull market for a long time. All the crazy stuff, Anthony, happens at the end. And that just tells you it's sign of the times. We're probably close to the end. Hey everyone, thanks again for listening and sorry for interrupting.

[00:15:50]The podcast has always been about the guests and trying to better understand this crazy world we live in and the geopolitical, macroeconomic, and financial trends that are shaping it. To try and delve deeper into these challenges that we're facing in the world, I've recently started the Substack. My first piece, Reset and Reorder, looked at the strings that bind everything together and what's led us to the situation where we are today. The Mechantalist restoration has really delved deeper into China. the mechanous reemergence and what this means for trade globally and everyone in between.

[00:16:20]If you're interested, I'll put the link down description. Otherwise, thanks so much for watching and let's get back to the show. Yeah, definitely. That's really interesting. As you said, it's a sort of exit liquidity for these uh venture capital and these Wall Street to uh the index and if they're they're highly overvalued. So, if they and the extremely large portion of it as well.

[00:16:40]So, once they their price goes down, it's really going to it's actually going to drag.

[00:16:44]Well, if you take SpaceX and if comes out of what they're talking, you trades like that, then it's one of those stocks that should be a big piece of the S&P. It's not making any money. Uh, in other words, people don't look the reason we buy individual companies is because we know those companies. We know how much money they make. We know how much cash flow they have. We know how much debt they have. And we say, "Okay, look, if we could buy the whole company, we would, okay, and we hold them, we try to hold them a long time, and we just think that's a better approach to investing. You want to buy a stock like it's a business and not chase what everybody else is chasing just because you want to go to a dinner party and say, "I own this stock." You know, it doesn't make any sense.

[00:17:35]>> Yeah, great point. So, what are your current thoughts on bonds? And I guess it sounds like you think that they're probably not the best place to park your money, especially if the government goes down this route.

[00:17:43]>> Well, we we haven't owned any long bonds uh in a long time. I'm I'm talking about six or seven years. I mean, uh at the end of that at that low in 2020 at that low, the 10 year was half a point or whatever it was. I mean, it was over. Um, and now since that time we've run these huge deficits, but we said all along to people, you can't own 20, we really don't feel I mean, you can if you want to, but I'm just saying it doesn't make a smart move to own 20 and 30-year uh, US treasuries. And the reason it doesn't is because uh, you're swimming against the tide. You got, you know, rates up, inflation up. And if you look back in the last seven years, for example, Anthony, nobody has made any money on anything 10 years and above.

[00:18:40]And for us, we keep all our treasuries basically. We got a couple a little bit that's out uh 30 months or something, but most of ours is probably in that 18month and less range. We do a lot in three months to nine months. You just we just don't feel like you can own that own that long-term treasury. And if you do on it, you've lost money. Just like all of these bond funds, you know, they haven't done well at all, but people stay in them. It's surprising to us, but you know, they stay in.

[00:19:11]>> Yeah. They've been horrible investments.

[00:19:12]And you see them continuing to go in that trajectory, the the end of the I guess 40 year, you know, secular bull market and bonds is over.

[00:19:20]>> Yeah. You all along the way, you have trades, you know, you you have it it trades against the tra trend. In other words, you'll have a trade in here for some where the interest rates go down some and you could have traded that long-term bond. We're not uh we're not good enough to do that. But but I think that happens. The rates go down the long-term bonds do well for a little while, not long, and then it comes back and they do even worse the next time. Uh that's what happened during all the 70s.

[00:19:50]And I I I think you'll do that again.

[00:19:52]So, I just think people need to be aware of that and and and keep your money out of that long that long-term paper.

[00:19:59]>> Yeah, great point. Um, one thing that we haven't talked about is precious metals, which was, you know, did extremely well last year and, uh, sort of been a bit sideways the start of this year. What are your what are your thoughts on that?

[00:20:07]Are you are you bullish, bearish? Any thoughts? Well, you know, uh, we own, you know, I I want to preface that by saying we own gold, bullion, a number of gold miners, royalty companies, uh, a tiny bit of silver. But what happened last year, the last two weeks of the year, in the first week of the new year, we cut back uh on taking we took some profit. We didn't get out, but we took profits in some of the gold miners. We sold completely out of silver when it went on 100 or above.

[00:20:42]Um and uh we just cut them back, you know, because they were real expensive.

[00:20:48]You know, gold went to 5,500. And what happened is you you had that last three or four months of last year, you had a lot of what I call momentum money that started chasing gold and silver.

[00:21:03]And they didn't really think about price. they just wanted to buy it. And they ran the miners up the same way. So, we took some out and felt like we would go through a six or eight month period where they'd have to digest that, probably sell back and you'd have to go low enough to get rid of those momentum players. Now, we're in the process of it, but it wouldn't surprise me for us to go a little lower on gold, but we'll add them back at some point in time. Uh but I think if you you know you're sitting if you were to have a break now to 4,000 or 3,800 or something like that I think you'd take your momentum players in the in the gold area the or the miners I think they'd be gone and that's probably a spot right there where you'd really want to increase your gold and your minor ownership. Now that may not happen. If it doesn't, we still own them. Uh, and still own gold. We didn't sell sell sell hardly any of the gold bullion. We keep it, but we sold, you know, cut back on the miners, cut the silver. Uh, and you'll see us add back.

[00:22:16]If we get a chance, we'll add them back here and may add them back anyway. But I'd like to see what we're going to get here in this consolidation. Have you been surprised they haven't acted to this geopolitical situation or do you think it's all just as you said it's almost front runner and then it's been digesting the that front run early last year >> I think uh one of the things happens there's two two or three things happening here uh a couple of central banks had to sell gold for liquidity in this whole straits of horm still deal a couple couple of those central banks sold some gold to raise money uh I don't think it'll But that that happened. Secondly, a number of your gold buyers if rates go up, they tend to back out of the market a little there. They've seen it before where rates go up a lot and gold will it won't f you know it won't follow like it normally does. And but but it does it catches up though. Here's the point. You know, it came way off in ' 08 and it was one of the last things to do go down in ' 08 and early one of the very last things you usually get in a bare market.

[00:23:27]They'll get around to everything eventually, but and they did. But there again, it was back at a new high, you know, a year later. So, I I think we're similar to that now. You just have to see how far this consolidation goes. If I didn't own any of it and I were somebody, sure, I'd buy some. But, uh, but we own them, you know. So, we we'll take our spots here.

[00:23:48]>> Okay. And then and then let's say for the you know if if we do get a market correction what would you be watching to then decide to to get back in? Is it just that valuation metrics? Is it >> Yeah, we're Yeah, we're company by company then. You know we screen about 400 companies and if you know you know I don't know when this if it's going to happen. It'll happen sometime. I mean, every eight or 10 years you get these um you get this selling and uh it you know it and they're pretty good sales in the market and I think you have that's what you hold your cash for.

[00:24:30]But if we were to get a tremendous selloff and we we screen about 400 companies, we'd probably be pretty pretty fully invested or 95% anyway because we would find things then to own and uh we we'd use them in the marketplace and we and we'd have a chance at a pretty good diversified look at it too because most things would come down in price.

[00:24:51]>> Yeah, super interesting. So Ted, thanks so much for your time. We've covered quite a lot today. Uh but my last question is what is one message you want people to take away from the conversation?

[00:25:00]Well, if I were recommending anything to people, it would be this, and that is most people today, particularly people over 65, um, they have too much stock, uh, relative to their total assets. So, you know, they're feeling pretty smug because their stocks at a new high, their real estate, residential real estate, you know, is is stayed high. It's not doing so well, but they're they're thinking it is. Um, and so they're pretty smug about it all, but if they really take a look at it, they probably should have a little less stock uh and a few more treasuries. And I that's what I would leave with them.

[00:25:40]>> Yeah, great great message to take away.

[00:25:41]So, thanks again for your time and thanks for coming back on. Um, if anyone want to find out more about your work and what you do, where would the best place for that be?

[00:25:48]>> Well, Anthony, the best place is just go to our website. It's oxbowadvisors.com.

[00:25:53]I mean, we're real simple and real transparent. I mean everything we do really is there. You you'll see it. So um certainly feel feel free to go there.

[00:26:04]That's the best place.

[00:26:06]>> Perfect. I'll put that in description below. But thanks again for your time.

[00:26:10]>> You bet. Good to see you, Anthony.

[00:26:12]>> Hey everyone. Thank you so much for listening. Really appreciate your support and I hope you found amazing value out of this interview. If you really enjoyed it, would appreciate if you liked and subscribe or share. Uh it really helps with the podcast. We're still trying to expand, get to more people to help make sure that everyone understands and decode what's really happening in the world of finance, investing, macroeconomics, and geopolitics. If you enjoyed this one, then you might enjoy this other interview as well. So really appreciate it and thank