"The Sobering Up Phase": Why Ted Oakley Says A 15% Sell-Off Is Possible
Summary
Market Volatility: The guest reiterates a “sobering up” phase with elevated layoffs and margin pressure, warning of a volatile second year in the presidential cycle.
Energy Rotation: Bullish on Energy given low index ownership and solid cash yields, expecting attractive total returns over the next two years despite potential short-term oil pullbacks.
Natural Gas: Favors natural gas across producers and infrastructure, citing strong multi‑year demand tailwinds and attractive economics.
Midstream MLPs: Highlights pipeline MLPs for 7–8% yields, inflation-linked cash flow growth, and high barriers to new pipeline construction.
Defensive Income: Prefers large-cap Pharmaceuticals and select Consumer Staples (e.g., BMY, GSK, PFE; CPB, CL) for 5–6% dividends and resilience in drawdowns.
Precious Metals: Took profits in gold, silver, and miners after strong runs but maintains a long-term bullish view on the multi‑year commodity cycle, planning to add on weakness.
Tech/AI Check: Reduced exposure to mega-cap tech (MSFT, GOOGL, AAPL) amid an AI capex ROI reality check; cites Oracle as an example of balance-sheet leverage risk.
Global/Energy Names: Mentions holdings like Petrobras, Suncor, and NESR while noting Venezuela’s limited near-term supply impact.
Transcript
Welcome back. I'm Jeremy Saffron. Well, here's a quote for you. Paying a$120 for a dollar doesn't make much sense. Now, those were the words of my guest Ted Oakley right here back in September. And while the rest of Wall Street was chasing the rally, he warned of what he was calling a sobering up phase, a moment when market valuations would have to reconcile with the real economy. Now, today that forecast is being tested in real time. Job jobless claims have spiked to a winter high to over 231,000. Meanwhile, tech stocks have surrendered a trillion dollars in value over the last week. And in a massive liquidity flush, we've seen silver plunge about 15% intraday and Bitcoin surrender that $70,000 mark. Now, the bullish consensus is fracturing. And the question investors need to answer today is quite simple. Is this just a sharp correction or is this the sobering up process officially underway? Now, my guest today manages money through four decades of cycles. Huge, high netw worth money. His work isn't just about predicting daily moves, but managing long-term risk. Ted Oakley is a founder and managing partner over at Oxbow Advisors. And in September, he told us to be cautious. And over a quarter million of you were interested in his thoughts. So, today we brought him back to help us interpret the damage. Ted, welcome back to Kiko. Great to see you. >> Thanks, Jeremy. Good to see you. >> Uh, I was just reviewing that tape before coming to air here from September. You and I were talking and and you you argued that Wall Street operates in an ivory tower, right? While the real consumer is in a world of kind of hurt and a little bit more pain here. And today the data seems to be aligning with that. We got jobless claims 231 exceeding estimates. We've seen layoff announcements from Amazon, UPS, even the Dow hitting their highest January levels since 2009. In terms of those layoffs, uh Jen, I mean, you warmed of that sobering up phase with the consumer showing these cracks. How do you interpret this week's action? I don't want to be too scary, but I mean, is this, you know, the market finally pricing in the economic reality or is this just short-term volatility? >> Well, probably Jeremy, some of both, I would imagine. You know, uh, we got we, if you look at things, if you look at particularly the big stocks, you know, they're not any higher. In fact, they're lower than they were, most of them with the exception of a couple uh, in October. And so, you know, you've drifted since. And I think there is a changing of the guard, but also from an economic standpoint, >> I believe I'm right on this that January had more layoffs uh for the month. You have to go all the way back to like 2009. >> Yeah. >> Uh to to see that. And so yeah, and they're starting to it's it's weakening. We see it in different places. I don't know how weak it gets uh but it's certainly weakening. Saw yesterday where Washington Post laid off a lot. Yeah, I mean that's just one of many, but u that that seems to be the thing. You know what happens when these companies and I think a lot of these companies they when they can't produce any more organic profit by producing a product etc etc the last thing they do is they cut cost and I I think that's the stage of the market that's why you've got the market extended. Um you know this selling could be a 10 or 15% selloff wouldn't surprise me. Uh I think sometime this year you'll hit a high though and you'll have something uh off of that high that would be stronger because people are just sort of waiting to buy the dip. >> Yeah. >> But me this second year of a presidential term is really not a good year. You know the average since 1970 is 1%. But they've also had some very steep selloffs in the middle of the year. And I wouldn't be surprised this year is not any different. >> Interesting. Uh, you know, I was going to say, but the the bullish argument this morning is that, you know, it's kind of transitionary. We've heard it driven by winter storms rather than that structural weakness. And I mean, Ted, you kind of brought it up there. When you look at those hiring freezes, the credit card delinquencies, do you see weather or do you see that fundamental change in the consumer strength? >> Well, I think they're they're as far as they can get. I mean, they can't borrow any more money and kind of the way they go. I grew up without any money. So, I kind of know the way that goes is they'll take debt against cars, debt against houses, debt against things. They'll debt against credit card. The last thing they do is, you know, they'll do buy now, pay later, and then they'll do um they'll do, you know, where you go up and take your credit, your check, and get money on that payday loans. That's what we're down to now. These people are really, really stretched. Uh and and that's sort of the system the way it is. I don't think Wall Street's aware of it. Yeah, >> cuz you open up the Wall Street every day and some investment banks paid the highest bonuses ever. >> So, um it's a bifrogated situation for sure. I don't I don't know if it if it comes to fruition this year, but I think in the future it does that that that changes. >> Yeah. Let's talk a little bit about the AI reality check here because I can't help but notice the Mag 7 as I look at down at the screen. I mean, you also express skepticism about profit margins. I mean, we're seeing Alphabet double its capex for AI to 180 billion, yet the stock struggling to hold gains. I guess my question is, you know, are we witnessing an ROI reality check? Is the market starting to demand proof of returns before rewarding that kind of level of spending? >> Well, I think Jeremy, that's part of it, but I think the biggest thing is you took these these big stocks that are really cash generators e easily. They didn't, you know, their products were software and systems, things that, you know, you didn't have to put a lot of capex into, not anything like where the and so what you did is you took cash generating machines and you turned them into capital investment machines which lever the balance sheets a lot and is even even leveraging it more. And so all of a sudden people are like, man, I don't know. They're going to be using all their money for something else. And I don't think they'll be the kind kind of companies we want on like they were before. And I think that's what people looking at. >> Yeah. It's such an interesting one when you put it into that perspective because I mean what we're witnessing is quite huge. I mean investors used to pay a premium for that. Uh you know, we've heard a little bit about that reinvestment going in. I I think we've all seen those memes. Is that the end of this? >> Well, it could be. I mean, look at Oracle. You know, the the day they made an announcement here some months ago, they were up 30% one day. >> Well, since that time, I mean, they have murdered the stock down at another low today. It's it's that kind of thing when they keep on taking on debt when it's it' be almost like you had a good company. They were producing a lot of cash. You took a lot of cash out of that company and for whatever reason you decide in that company you're going to go take on a lot of debt >> and then all of a sudden your cash is going to pay down debt or pay off interest. Well, see that changes the complexion of the company. And I think that's what people are realizing. I don't think the public has yet, but I think every the the people that really look at it are realizing what's happening. >> Okay, I want to shift over a little bit to the volatility we're seeing on the screens today. And you know, at the time we tape this, it's important to say because it's so volatile, these numbers might be off while you watch it. But I mean, you know, usually when tech sells off, investors rotate into defensive assets like bond or, you know, bonds or gold. You those broad-based selling here. I mean, we saw silver down nearly 15 17% on that flash crash. Bitcoin broke down 45% from the highs. Even gold is under pressure. I mean, you've managed money through 87, 2000, even 08. When you see insurance assets like gold and silver correcting alongside risk assets, what does that signal to you about the liquidity in the system? Well, I I think I think the liquidity is probably okay except that what happens with people is that you had particularly in gold and silver, you you had it go up and up and up and then all of a sudden in the end you had individuals come into what I call the man on or woman on the street >> uh finally figured it out. And so that you have a push into that and that's typically the top in anything when you get right down to it. and then the rest of the market again I think you're having a changing of the guard and so people if you look at the average person they're invested in index funds S&P 500 all that sort of thing that's not working this year and it hasn't worked since October and I think that's throwing them a little bit and so they they're they're not seeing that but there's going to be a time when a different set of stocks move up I mean I mean we have some stocks that are up today But but they're not they're not in that group actually. And so that's where that that's what I think people are missing is a changing of the guard. And if you miss that then then probably in the next two or three years are going to be harder on you. Also this year is probably going to be volatile. One of the things that people in our business can't do because they've only been around 16 or 17 years is they've never learned to trade. In other words, you get a high, you take some money off. You get a low, you put some money on. And uh when you get into these volatile periods, you have to have some knowledge of that. In other words, you can't just buy a 10 exchange rated funds and hey, you say good luck. Uh we're not in that kind of year this year. I think it'd be really volatile both ways, up and down. But you can make money in it. But again, you have to own the right things at the right time. >> Yeah. What are you seeing on your green? uh are you like what where is the position going? People starting to allocate into different size. >> Well, for us and we've been doing that the last really the last five or six months. Uh we we still own we still own three of the the big you know we own we still own some of our Microsoft, Google and and Apple, but but we've cut we really cut those back. I mean to a degree but where we've owned more of is you've owned companies like you know we we bought the drugs in the last three or four months they're doing great. Uh you look at Bristol Myers and and uh Glaco Smith Klein that kind of company. We bought you know we bought a lot of income items that are doing great. Bought Campbell Soup on a 6% dividend. Those are all things that don't get hit in this kind of market. In other words, um if you own Colgate Palm Olive or C, you know, you're going to use their products. >> Uh and and we've owned it for, you know, for six months or so, but it's been good. And then Energy's been good to us. Uh still up. It's off a little bit today, but generally this year it's having a really good year. >> And um and that's kind of where we've come from. And and uh bought a couple cheap biotechs, but we it's a different kind of market. I think I think that's what will throw a lot of investors. I think, well, gosh, I mean, the S&P 500, the NASDAQ 100 has done so well. >> Yeah. >> But then all of a sudden, >> not doing so well. You >> I got to ask you about the metals. I mean, you're usually ahead of this move. We've seen those runups. I mean, we saw that run up to 55 on gold. Where where are you in the metals market? Silver, gold. Let me hear your thoughts. Well, uh, when when silver got up to 100 and higher, we we reduced that silver by probably sever 75%. >> Uh, we reduce gold a little bit, but gold is more of a long-term hold and we look at it as a currency, but we cut it back too at the high at about within about $100 of the high at about we cut back about 25%. But we in that same period when the miners were hitting highs, we cut them too. Uh we didn't come out all the way. And I always tell people, don't try to try to do everything at one time. But when you get really really expensive, uh take, you know, take some. And so our gold miners and our silver miners, we did the same thing. We still own some of them. Still own the gold. Still own a little silver. I think these things take a while though when you have a break in gold and silver like that. Usually it's a three or four month thing. That doesn't mean it doesn't go higher later in the year or next year, but you could have them go lower than people expect, you know, in a sell-off. Uh somewhat like put we don't own Bitcoin, but some, you know, I'm sure they didn't expect Bitcoin to go below 70, >> but um that's where we that's where we are on it. We we we took some super profits uh but and we still own them and they get to a certain point, you know, we feel like it's right, we'll add them back. >> Yeah, that's interesting. You know, you noted that that on 2011 multiples, gold miners were significantly undervalued and we've seen this silver's recent volatility. The miners obviously under pressure here. Um, does this level of volatility break the thesis for miners for you or or is this the type of dislocation maybe smart money waits for? >> Well, just in the short run. >> I mean, uh, you know, there's still, you know, there's still I think they've still got there's a few more years left on this. I think I don't think it's, you know, normally commodity cycles in metals and that sort of thing, you know, they're like eight or nine year cycles and you're basically on a six-year cycle. Um, so they probably they've got some more years to go, but but I here's what happens on them. Let's just say gold. Uh, I haven't seen the last price today, but say 4,900 it goes to 4,000 or 3,800. I'm sure at that price, 3,800, people would say, gosh, it's all over. We got to get out. When that would probably be the time uh they should add back to it, you know, but that's again um that's why you have a horse race. >> Yeah. Yeah. and that's what it's being called. Uh do you hear any a narrative on you know in this market we've seen these volatility on on the meadows? You hear anything on margin calls for selling this type of thing? I mean the hedge funds being called. >> Yeah, I've seen a little bit you know uh and I wondered about uh like a few day a few you know you see some of the smart move money moving around prior to all of this. >> Yeah. Um but particularly in in silver, we saw we saw some major liquidations in silver before the price broke and we knew well there's some you know there's people moving but on margin calls I haven't checked in. We we do we have a lot of custodians and so I could check back and see where it was. I would say this to you though margin margin went to an all-time high but not just an all-time high at 1.2 two trillion, but it went to an all-time high as a percent of market capitalization. That's a different story. And so, you know, they're leveraged. And of course, you got all this other leverage going out there that you can't see, but uh I'm sure there's some Yeah. >> Yeah. That's so interesting. I mean, you know, once margins roll over, earnings don't just slow, they kind of compress, as you know. So, is is that the risk markets are only starting to price now? Well, I I think it again this whole situation of where you take on that much debt, it cannot be good for those big 10 stocks for the profit margins. It's not showing up right now because everything right now is in the it's history. >> But in the future, I think people are looking at and they say they can't maintain that no matter what because it's not going those numbers are not going to stick. And so I think that's what I think that's what people are seeing, >> you know, on the silver drop. I was reading this morning, I don't know if you pay attention to this, there was reports indicating that there was kind of driven by Chinese funds halting subscriptions after premiums got too high. I mean, does that context make you view this as a buying opportunity or or kind of a sign of structural fragility out out east? >> Yeah. You know, I don't know. Oh, I just know from a technical standpoint, you know, if you have silver come back to say, >> you know, between $60 and $70, that's probably enough. I mean, you probably washed out everybody that needs to be washed out. Um, for whatever the re there's always a reason, you know, Jeremy, when you look back, there's always reason, >> but um it's usually usually the reason is they were too high. >> Yeah. Yeah. Uh let's touch on your cash position. I mean, you had about 45% roughly back in September when I talked to you. That was the contrarian call at the time, as you know, but um and I guess here's the devil's advocate question. Kevin Walsh coming in and and maybe the economy stalling, the market is sniffing out a potential pivot. If the Fed is forced to turn inflationary again to save the labor market, does holding cash become a risk to your purchasing power? Well, for us it's not so much because we we keep all those things we keep, you know, less than two years, but in the stock account we keep it less than six or nine months and it's all in treasury. So, if you're going to if you're going to have higher, you know, if if they were to inflate, you know, those rates are going to push and so we would we would correct with it. Um, I think the thing that probably bother us more is they do, you know, this financial repression where they push they buy treasuries to keep the rates down. At the same time, you're inflating. It won't show up this year. I don't think this year is going to be a big inflation year, but may go the other way. But I think next year you have to be on the look for it. And it won't be as easy. You know, it won't be as easy as he thinks it is. I mean, that's a big machine, a lot of debt, 39 trillion, and you start moving it around and you got people overseas that don't I mean, it's just a lot to do. So, I doubt if it'll be as easy as they think. >> Yeah. Yeah. When those effects do show up, Ted, I mean, what what's the pressure point? Is it just inflation reacelerating or is it the dollar or something, you know, and credit breaking? >> Well, it's probably both. I I think you're right on the I think private credit has a lot private I think private equity and private credit both to only you know we do a lot of business with uh people have a lot of money and family offices and I notice that they feel like they've got on some private equity private credit but they never get any money out of it and if you ask them what the returns are just somebody sent them a piece of paper but I think that whole industry is going to go through some trouble uh when people finally wake up and say, "You know what? Uh, they overpaid for all this stuff and now I can't get my money out." And the same way it goes for people overseas that are saying, "Well, the dollar is going to go down." And our markets, foreign markets did better in 25. And if they do better in 26, um, and the dollar happens to be going down, I don't know if it will, but if it happened to be, they're going to sell they're going to sell the US because of the dollar. And they own a lot of US. I mean 60% of their portfolios in the in the world are in the US. >> Let's talk about allocation from a kind of I mean you're a value investor as you know you look for mispriced assets. In our last discussion you kind of brought it up here. You made that strong case for energy. I mean you cited that free cash flow of 8 to 11%. I mean we know the historical playbook says recession equals oil crash. But if the labor market is signaling deflation, walk me through the energy thesis. Is the supply constraint strong enough to kind of offset, you know, the potential of demand shock? What are your thoughts? >> Well, I think the best people in the industry, and I think we're in touch with them, would tell you that that we're not in a is this idea about this super oil glut is just not done right right now. It's not correct. And a lot of what you see by the IEA and all that group, they they produce things that are not necessarily uh what we think are correct. And yeah, and we said it then when I talked to you, you might have to go through a soft period for a while where oil goes back to 50 or 55 or something goes lower, but you're getting enough money. I mean, the average dividends we get all this stuff is like >> 7%, six and a half, seven. And so you you know you you can wait on it and then um and then at some point and we feel like this over the next two years you're going to really be handsomely rewarded for that because energy is only 2.7 2.8% of the S&P 500. I remember when it was 30. >> Yeah. Yeah. No kidding. So, I mean, the market believes that that glut exists, even if it's wrong, that perception could still, you know, keep pressure on these energy equities in the near term. >> Well, it could, but you have to remember, Jeremy, nobody owns them. >> Yeah. >> That the the idea that oil is going to go down with recessions and there's too much oil. There's not a person investing that doesn't know that. >> Yeah. >> So, if they're if they know that, in our opinion, okay, they're already out. there was they they made their call and said, "We're not going to own energy." Um maybe the best call was uh I don't know was a month ago or something, five weeks ago, Jim Kramer said, "Oh, you got to stay away from oil. We we actually like that." >> So you went in, you did the famous Kramer put and uh I mean, you know what, in our last interview, you specifically mentioned natural gas pipelines for yield, too. I mean, with the data center energy demand story, all this stuff we're hearing, is natural gas becoming the defensive play within the energy sector. >> Well, natural gas is is probably our favorite >> for on both sides on the producers and also on the pipelines. On the pipelines, you know, if you like re real estate, if people really like real estate, they'll like the MLPS because, you know, they you you don't pay much current income just like real estate. Uh but your cash flow goes up every year. They increase those. And right now, if you just average those out right now, they're probably somewhere between seven and eight. And uh and they're just they're great things to own over time. I'm talking about the pipelines. And of course, they're going to be full up. You you go try to get the easement, put on another pipeline in this country. It's impossible. And then um and then on the production side, it's just that gas um you know, it's gone up obviously because of the cold weather, but in the long run on the next two or three years, natural gas should should be a place that does well. >> Interesting. Venezuela, were you watching that? I mean, not necessarily on what took place, but does that change any thesis in terms of the supply and demand narrative on oil? >> Not really. Uh, you know, if you look at it, it would almost be like going into a foreign land where they had never drilled drilled a well. >> Yeah. >> So, you got to start all over. Basically, they they've ruined all the production in that country. And you look at companies like Exxon and the others and they said, "Look, we're not going down there. We've already, you know, we've already lost a lot of money and we know what's going to happen. You'll change you'll change regimes in the US and then they'll change regimes and they'll take all our money again." Yeah. >> And so I I don't think that'll happen. >> Yeah, that's an interesting one. And I know that you speak to people actively, you know, involved in management. So we can kind of keep it there for people to understand what your thoughts are. Um, all right, we can move on here. I mean, it's an interesting one because we got to talk a little bit about the Fed. I mean, we had that major shift coming. Kevin Worsh nominated to succeed Jerome Powell. I mean, the market views him as a hawk, but President Trump has stated that he would not have nominated him if he had planned to hike rates. So, I mean, how do you view that dynamic? I mean, who wins the battle? Is it the central bank or mandate or or just keep low low rates? What are your thoughts? >> Yeah. Well, I'll tell you, Jeremy, I hope I never hear anybody say this again because I've always heard this that the Federal Reserve is not political. There's nothing more untrue, by the way, than that. They're all political because they get appointed by a president >> and so they're naturally political. Whether he does with it, I don't know. I don't know the man. I don't know what he does with it. I think to be careful though, I don't think you can own 20 and 30year treasures. I just don't think that's going to work for you here. And it's already showing up. Um whether you know and that's just one vote. You have to remember uh you have to have a majority of votes to do those things. And that's one vote is all that is. And I'm not wouldn't be surprised if a lot of people buck the system and say, "No, we're not, you know, we're we're not going to take those rates down as low as you want them." Yeah, I mean some macro investors I was on X this morning tit and they argue that Japan may effectively cap how high global rates can go pushing you know because there's pushing those rates too far. I mean it destabilizes the global markets as you know. Do you see foreign stress not US inflation but foreign stress is maybe a factor that ultimately forces policy change? That's a hard question because I don't I don't know all of the countries and what they're thinking about what's going into it. >> That Japanese yen trade's getting a bit worse. >> Yeah. Like for example, you know, you you I think people probably misjudge that, you know, >> as far as what was going on with the yen and the dollar and uh but then there's other things too. You know, there's probably two or three countries now in Europe that are are eventually going to go back to a sovereign country, get out of the EU. I could see that happening in the next 5 to 10 years. And if it does, that changes. They go back to their currencies. Um there's a lot of things go into that, but I don't think that foreign countries are going to continue to Well, they've been decreasing their buying of treasuries anyway, but I think they'll continue to do it. >> Yeah. I mean, you warned about this, right? You said last time the BRICS nations are lining up against the US dollar. How does a US investor protect themselves when volatility is increasingly driven by you know global capital flows like the unwinding we we saw in Asia rather than domestic fundamentals? >> Well, the only way you can protect yourself against that I I think is now for us we own quite a bit of foreign uh equities and in foreign income items as well. But I think for the individual investor because they probably wouldn't know that is that, you know, I don't think there's anything wrong with them keeping a lot of money uh iced really in in in treasuries. I I I just think for the time being that that's ought to be your play if you're going to have liquidity. And then if you get a spot where the world is shaking things up a lot, you know, use it to your benefit. Mhm. Those 20, 30 years you're talking about, I mean, a lot of debt, 39 trillion, huh? >> Well, I I don't think people understand how much a trillion dollars is. Uh we had that in our last new L newsletter, but if you spend $100,000 an hour, >> hundred,000 an hour, it would take you over,00 years to spend a trillion dollars. One trillion. And so, uh, and I know Washington and the and the legislature, you know, they they don't know anything about debt, they don't care. Um, and that's the wall you're going to hit here. And I don't I think the best of people, what may be the Kevin Warish or best of who, whoever, you know, they're up against a big big tsunami here. So, um, no matter what they want to do, it'll be hard to do. >> If you're sitting on cash right now, I mean, where are you finding value? I mean, we talked about it a little bit, but just in layman terms, I mean, where should investors look today when they look up at a red screen? Well, if if they'll look closely, the things that are not uh that are going to do better, we think in in the and they've been doing better for the last two or three months, >> you know, if you look at um if you look at the drugs for example that not Lily, Lily's run away with everything, but if you look at uh Glacos Smith Klein and Fizer, those kind, you know, they're paying 5% dividends, 6% dividends. But then you look on the consumer side, you know, you got like a like we own a camel soup we bought a few weeks ago at a 6% dividend. Th those kinds of stocks that you and then and then energy, you know, we've um we bought our oils are are yielding really nicely. We we own uh Petro Brazil, we own we own a number of companies in the US, but um that's where we see those are the best buys. In other words, it's not in it's not in what you were seeing before because of the the changing on the guard that I talked about. You're going to have to go out and find companies, you know, that are are a little bit different. You know, they're they're all standby companies. I know it sounds kind of stodgy. Uh but that's that's that's the kind of thing that's working right now. >> Yeah. Yeah. You looking at Canadian oil and gas, too, or you kind of staying away a little bit more of an easy tailwind in the US at the moment? Well, uh, in the stock account, we own Suncor, but but, um, but I I wouldn't I would not have a problem, I guess. Um, a company we've always wanted we've wanted to own, but it's a little bit too expensive. It's coming down in price. We don't own it, would be in the the uranium area, Cam Camco, right? uh we made a lot of money and it's been a good company but uh got past a point we were willing to pay for it but it may get back in the zone but we wouldn't we wouldn't have a problem with uh Canadian oil and gas on the larger companies know but there's there's plenty to buy and then we we own we've made a lot of money we have a company called um national uh national energy resources reunited and it's NESR and we go we bought it last year and they do nothing but uh they're the slumber of the Mid East for example US company out of Houston done really really well for us. Things like that you have to find that u or you're not going to get in an index you know or and I think that's I think Jeremy that's what will throw people this year hey my index is not making me a lot of money. >> Yeah. Yeah. Interesting that you look at that. I mean, you know, if you're invested in an index, you're typically not going and you're looking at meme stocks, right? You're not looking for that that value. Um, okay. Well, let's close on a personal note. We're kind of going back to your book, Second Generation Wealth, because I mean, we have younger viewers who may have taken significant losses in this speculative assets recently, obviously, in this market, and you've always said that you need to hit the wall to kind of build character. I'm curious. I mean, if you were advising a young investor today who's looking at a steep draw down, what's the first step they need to take to kind of stabilize their position? >> Well, I think the young people, what they can't they don't do, it's not that they can't do it, but they don't do is they don't separate speculative money from investment money. >> And so, they they throw it all one direction. And so, they throw it all speculative. and you you can see it now in in in gaming and betting and all the betting portals you can go to. Uh I think that's what they they're missing and they they they'll have to learn somewhere that there's an investment side that they need to learn which is putting money back, buying the right things, giving it some time, you know, because you don't you don't get rich overnight. And uh they're going to have to learn that particular thing. But right now, um, they're probably suffering quite a bit because a lot of them M stocks, a lot of, like you say, Bitcoin, but look at the other coins, though. There, >> if you talk about Bitcoin, go down the list of the top 100, there's so much money been lost in that group. And um, you know, a lot of young people just didn't, hey, I don't need to sell it because I know it's going higher. Well, that's not a good excuse. >> Yeah. A lot of people didn't even know what margin was while they were stretching out those calls. Yeah, I mean they, you know, they they got caught up in some of these stocks, MSTR, all that sort of stuff. And um those those are not good business models. You want to buy a company that makes monies, has a product, produces a lot of free cash flow, pays you some money, reinvest some money, just like you buy a private business. That's what we look at. >> Yeah. Hey, does this market volatility, you know, kind of reinforce your rule about not revealing family wealth to children too early? Oh yeah. Yeah. I I don't I don't believe in that. I People still espouse that. They still, oh, we got to get them in here when they're teenagers and let them know about the family wealth. I'm like, gosh, you got to be kidding me. I said, you know what you need to do if you have well, you know, if you have more than 50 or 100 million, what you need to do is not let them know that, okay? You take away every bit of their ambition because it's all of a sudden what I need to do in I'm rich. I'm gonna be rich. And so, you don't want that with a kid. You want them to stand on their own two feet. Make them work for it. You know, put them on the street. I I say that to everybody. You know, give them 60 days of of help after they get out of college and the next ticket is on yours. Um I know that sounds hard, but I know for a fact personally, and I've seen other people, it works. You just got to put them out there and say, "It's time to go to work." >> Yeah. Well said. And you do have a book for that, too. We'll put it up on the screen. Okay, we'll wrap up here, but I mean looking at the remainder of 2026 and we got a little bit of time out. I mean, what what do you think is maybe one risk or even one opportunity that you think the market is not correctly pricing in for the second half of the year? >> Well, I wouldn't be surprised, Jeremy, if there's not two or three times this year that you can buy and sell this market. And I again I don't think the average investor is good at this but I think there'll be uh two or three ups and downs so to speak and and maybe the market only ends up 6% for the year but in the middle of the year it was down 25 or something. You you've got to be ready for that sort of thing because these second years of these presidential terms are very poor >> and they have a lot of volatility. I could give you the numbers on it, but I will tell you historically, they're the worst. And if you look back from here, for example, look at 22, big sell-off, 18 sell off. And you just keep on I could take you all the way back. And uh you got to be that's what I think you need to be ready for this year. You need right now, you need some you need some powder, some some clean powder so you can use it later on. >> That's interesting you say that. I mean, I talked to a lot of people that go, "Oh, it's just going to be, you know, their bull thesis is that the money printer's got to go." I mean, it's midterms. We got to get them in. So, it's just going to keep going. But I guess that level up and down, like you said, that volatility is to be expected. Historically, that's happened. >> Well, yes, but it's historically the volatility is much higher in the second year >> and a lot of them end up okay. It's just that during the year there will be a couple of times when you get these sell offs like this sell-off that just started here. Yeah, it wouldn't surprise me for that to go to 10 or 15% at least >> and then shake people up a little bit then go up again and then come down. That's the kind of thing you get in these second years and you just have to be you have to be a stock picker really. You have to know when when to buy things and and what to own and I I again I think for the individual investors this is going to be a harder year for them. Yeah. All right, Ted Oakley, always the voice of reason. Thank you for the wisdom today as always. We appreciate your time. Uh, a lot of insight to unpack there as I slowly change my portfolio. No, I'm just kidding. Thanks, Ted. Appreciate your time, huh? >> All right. Thanks, Jeremy. >> All right. Appreciate it. All right. A silvering up. That's the phrase to watch. As Ted notes, volatility does create opportunity, but only for those with the discipline to wait for it. Thanks for watching KCO News. I'm Jeremy Staff. Be sure to subscribe. We'll see you next time. Heat. Heat.
"The Sobering Up Phase": Why Ted Oakley Says A 15% Sell-Off Is Possible
Summary
Transcript
Welcome back. I'm Jeremy Saffron. Well, here's a quote for you. Paying a$120 for a dollar doesn't make much sense. Now, those were the words of my guest Ted Oakley right here back in September. And while the rest of Wall Street was chasing the rally, he warned of what he was calling a sobering up phase, a moment when market valuations would have to reconcile with the real economy. Now, today that forecast is being tested in real time. Job jobless claims have spiked to a winter high to over 231,000. Meanwhile, tech stocks have surrendered a trillion dollars in value over the last week. And in a massive liquidity flush, we've seen silver plunge about 15% intraday and Bitcoin surrender that $70,000 mark. Now, the bullish consensus is fracturing. And the question investors need to answer today is quite simple. Is this just a sharp correction or is this the sobering up process officially underway? Now, my guest today manages money through four decades of cycles. Huge, high netw worth money. His work isn't just about predicting daily moves, but managing long-term risk. Ted Oakley is a founder and managing partner over at Oxbow Advisors. And in September, he told us to be cautious. And over a quarter million of you were interested in his thoughts. So, today we brought him back to help us interpret the damage. Ted, welcome back to Kiko. Great to see you. >> Thanks, Jeremy. Good to see you. >> Uh, I was just reviewing that tape before coming to air here from September. You and I were talking and and you you argued that Wall Street operates in an ivory tower, right? While the real consumer is in a world of kind of hurt and a little bit more pain here. And today the data seems to be aligning with that. We got jobless claims 231 exceeding estimates. We've seen layoff announcements from Amazon, UPS, even the Dow hitting their highest January levels since 2009. In terms of those layoffs, uh Jen, I mean, you warmed of that sobering up phase with the consumer showing these cracks. How do you interpret this week's action? I don't want to be too scary, but I mean, is this, you know, the market finally pricing in the economic reality or is this just short-term volatility? >> Well, probably Jeremy, some of both, I would imagine. You know, uh, we got we, if you look at things, if you look at particularly the big stocks, you know, they're not any higher. In fact, they're lower than they were, most of them with the exception of a couple uh, in October. And so, you know, you've drifted since. And I think there is a changing of the guard, but also from an economic standpoint, >> I believe I'm right on this that January had more layoffs uh for the month. You have to go all the way back to like 2009. >> Yeah. >> Uh to to see that. And so yeah, and they're starting to it's it's weakening. We see it in different places. I don't know how weak it gets uh but it's certainly weakening. Saw yesterday where Washington Post laid off a lot. Yeah, I mean that's just one of many, but u that that seems to be the thing. You know what happens when these companies and I think a lot of these companies they when they can't produce any more organic profit by producing a product etc etc the last thing they do is they cut cost and I I think that's the stage of the market that's why you've got the market extended. Um you know this selling could be a 10 or 15% selloff wouldn't surprise me. Uh I think sometime this year you'll hit a high though and you'll have something uh off of that high that would be stronger because people are just sort of waiting to buy the dip. >> Yeah. >> But me this second year of a presidential term is really not a good year. You know the average since 1970 is 1%. But they've also had some very steep selloffs in the middle of the year. And I wouldn't be surprised this year is not any different. >> Interesting. Uh, you know, I was going to say, but the the bullish argument this morning is that, you know, it's kind of transitionary. We've heard it driven by winter storms rather than that structural weakness. And I mean, Ted, you kind of brought it up there. When you look at those hiring freezes, the credit card delinquencies, do you see weather or do you see that fundamental change in the consumer strength? >> Well, I think they're they're as far as they can get. I mean, they can't borrow any more money and kind of the way they go. I grew up without any money. So, I kind of know the way that goes is they'll take debt against cars, debt against houses, debt against things. They'll debt against credit card. The last thing they do is, you know, they'll do buy now, pay later, and then they'll do um they'll do, you know, where you go up and take your credit, your check, and get money on that payday loans. That's what we're down to now. These people are really, really stretched. Uh and and that's sort of the system the way it is. I don't think Wall Street's aware of it. Yeah, >> cuz you open up the Wall Street every day and some investment banks paid the highest bonuses ever. >> So, um it's a bifrogated situation for sure. I don't I don't know if it if it comes to fruition this year, but I think in the future it does that that that changes. >> Yeah. Let's talk a little bit about the AI reality check here because I can't help but notice the Mag 7 as I look at down at the screen. I mean, you also express skepticism about profit margins. I mean, we're seeing Alphabet double its capex for AI to 180 billion, yet the stock struggling to hold gains. I guess my question is, you know, are we witnessing an ROI reality check? Is the market starting to demand proof of returns before rewarding that kind of level of spending? >> Well, I think Jeremy, that's part of it, but I think the biggest thing is you took these these big stocks that are really cash generators e easily. They didn't, you know, their products were software and systems, things that, you know, you didn't have to put a lot of capex into, not anything like where the and so what you did is you took cash generating machines and you turned them into capital investment machines which lever the balance sheets a lot and is even even leveraging it more. And so all of a sudden people are like, man, I don't know. They're going to be using all their money for something else. And I don't think they'll be the kind kind of companies we want on like they were before. And I think that's what people looking at. >> Yeah. It's such an interesting one when you put it into that perspective because I mean what we're witnessing is quite huge. I mean investors used to pay a premium for that. Uh you know, we've heard a little bit about that reinvestment going in. I I think we've all seen those memes. Is that the end of this? >> Well, it could be. I mean, look at Oracle. You know, the the day they made an announcement here some months ago, they were up 30% one day. >> Well, since that time, I mean, they have murdered the stock down at another low today. It's it's that kind of thing when they keep on taking on debt when it's it' be almost like you had a good company. They were producing a lot of cash. You took a lot of cash out of that company and for whatever reason you decide in that company you're going to go take on a lot of debt >> and then all of a sudden your cash is going to pay down debt or pay off interest. Well, see that changes the complexion of the company. And I think that's what people are realizing. I don't think the public has yet, but I think every the the people that really look at it are realizing what's happening. >> Okay, I want to shift over a little bit to the volatility we're seeing on the screens today. And you know, at the time we tape this, it's important to say because it's so volatile, these numbers might be off while you watch it. But I mean, you know, usually when tech sells off, investors rotate into defensive assets like bond or, you know, bonds or gold. You those broad-based selling here. I mean, we saw silver down nearly 15 17% on that flash crash. Bitcoin broke down 45% from the highs. Even gold is under pressure. I mean, you've managed money through 87, 2000, even 08. When you see insurance assets like gold and silver correcting alongside risk assets, what does that signal to you about the liquidity in the system? Well, I I think I think the liquidity is probably okay except that what happens with people is that you had particularly in gold and silver, you you had it go up and up and up and then all of a sudden in the end you had individuals come into what I call the man on or woman on the street >> uh finally figured it out. And so that you have a push into that and that's typically the top in anything when you get right down to it. and then the rest of the market again I think you're having a changing of the guard and so people if you look at the average person they're invested in index funds S&P 500 all that sort of thing that's not working this year and it hasn't worked since October and I think that's throwing them a little bit and so they they're they're not seeing that but there's going to be a time when a different set of stocks move up I mean I mean we have some stocks that are up today But but they're not they're not in that group actually. And so that's where that that's what I think people are missing is a changing of the guard. And if you miss that then then probably in the next two or three years are going to be harder on you. Also this year is probably going to be volatile. One of the things that people in our business can't do because they've only been around 16 or 17 years is they've never learned to trade. In other words, you get a high, you take some money off. You get a low, you put some money on. And uh when you get into these volatile periods, you have to have some knowledge of that. In other words, you can't just buy a 10 exchange rated funds and hey, you say good luck. Uh we're not in that kind of year this year. I think it'd be really volatile both ways, up and down. But you can make money in it. But again, you have to own the right things at the right time. >> Yeah. What are you seeing on your green? uh are you like what where is the position going? People starting to allocate into different size. >> Well, for us and we've been doing that the last really the last five or six months. Uh we we still own we still own three of the the big you know we own we still own some of our Microsoft, Google and and Apple, but but we've cut we really cut those back. I mean to a degree but where we've owned more of is you've owned companies like you know we we bought the drugs in the last three or four months they're doing great. Uh you look at Bristol Myers and and uh Glaco Smith Klein that kind of company. We bought you know we bought a lot of income items that are doing great. Bought Campbell Soup on a 6% dividend. Those are all things that don't get hit in this kind of market. In other words, um if you own Colgate Palm Olive or C, you know, you're going to use their products. >> Uh and and we've owned it for, you know, for six months or so, but it's been good. And then Energy's been good to us. Uh still up. It's off a little bit today, but generally this year it's having a really good year. >> And um and that's kind of where we've come from. And and uh bought a couple cheap biotechs, but we it's a different kind of market. I think I think that's what will throw a lot of investors. I think, well, gosh, I mean, the S&P 500, the NASDAQ 100 has done so well. >> Yeah. >> But then all of a sudden, >> not doing so well. You >> I got to ask you about the metals. I mean, you're usually ahead of this move. We've seen those runups. I mean, we saw that run up to 55 on gold. Where where are you in the metals market? Silver, gold. Let me hear your thoughts. Well, uh, when when silver got up to 100 and higher, we we reduced that silver by probably sever 75%. >> Uh, we reduce gold a little bit, but gold is more of a long-term hold and we look at it as a currency, but we cut it back too at the high at about within about $100 of the high at about we cut back about 25%. But we in that same period when the miners were hitting highs, we cut them too. Uh we didn't come out all the way. And I always tell people, don't try to try to do everything at one time. But when you get really really expensive, uh take, you know, take some. And so our gold miners and our silver miners, we did the same thing. We still own some of them. Still own the gold. Still own a little silver. I think these things take a while though when you have a break in gold and silver like that. Usually it's a three or four month thing. That doesn't mean it doesn't go higher later in the year or next year, but you could have them go lower than people expect, you know, in a sell-off. Uh somewhat like put we don't own Bitcoin, but some, you know, I'm sure they didn't expect Bitcoin to go below 70, >> but um that's where we that's where we are on it. We we we took some super profits uh but and we still own them and they get to a certain point, you know, we feel like it's right, we'll add them back. >> Yeah, that's interesting. You know, you noted that that on 2011 multiples, gold miners were significantly undervalued and we've seen this silver's recent volatility. The miners obviously under pressure here. Um, does this level of volatility break the thesis for miners for you or or is this the type of dislocation maybe smart money waits for? >> Well, just in the short run. >> I mean, uh, you know, there's still, you know, there's still I think they've still got there's a few more years left on this. I think I don't think it's, you know, normally commodity cycles in metals and that sort of thing, you know, they're like eight or nine year cycles and you're basically on a six-year cycle. Um, so they probably they've got some more years to go, but but I here's what happens on them. Let's just say gold. Uh, I haven't seen the last price today, but say 4,900 it goes to 4,000 or 3,800. I'm sure at that price, 3,800, people would say, gosh, it's all over. We got to get out. When that would probably be the time uh they should add back to it, you know, but that's again um that's why you have a horse race. >> Yeah. Yeah. and that's what it's being called. Uh do you hear any a narrative on you know in this market we've seen these volatility on on the meadows? You hear anything on margin calls for selling this type of thing? I mean the hedge funds being called. >> Yeah, I've seen a little bit you know uh and I wondered about uh like a few day a few you know you see some of the smart move money moving around prior to all of this. >> Yeah. Um but particularly in in silver, we saw we saw some major liquidations in silver before the price broke and we knew well there's some you know there's people moving but on margin calls I haven't checked in. We we do we have a lot of custodians and so I could check back and see where it was. I would say this to you though margin margin went to an all-time high but not just an all-time high at 1.2 two trillion, but it went to an all-time high as a percent of market capitalization. That's a different story. And so, you know, they're leveraged. And of course, you got all this other leverage going out there that you can't see, but uh I'm sure there's some Yeah. >> Yeah. That's so interesting. I mean, you know, once margins roll over, earnings don't just slow, they kind of compress, as you know. So, is is that the risk markets are only starting to price now? Well, I I think it again this whole situation of where you take on that much debt, it cannot be good for those big 10 stocks for the profit margins. It's not showing up right now because everything right now is in the it's history. >> But in the future, I think people are looking at and they say they can't maintain that no matter what because it's not going those numbers are not going to stick. And so I think that's what I think that's what people are seeing, >> you know, on the silver drop. I was reading this morning, I don't know if you pay attention to this, there was reports indicating that there was kind of driven by Chinese funds halting subscriptions after premiums got too high. I mean, does that context make you view this as a buying opportunity or or kind of a sign of structural fragility out out east? >> Yeah. You know, I don't know. Oh, I just know from a technical standpoint, you know, if you have silver come back to say, >> you know, between $60 and $70, that's probably enough. I mean, you probably washed out everybody that needs to be washed out. Um, for whatever the re there's always a reason, you know, Jeremy, when you look back, there's always reason, >> but um it's usually usually the reason is they were too high. >> Yeah. Yeah. Uh let's touch on your cash position. I mean, you had about 45% roughly back in September when I talked to you. That was the contrarian call at the time, as you know, but um and I guess here's the devil's advocate question. Kevin Walsh coming in and and maybe the economy stalling, the market is sniffing out a potential pivot. If the Fed is forced to turn inflationary again to save the labor market, does holding cash become a risk to your purchasing power? Well, for us it's not so much because we we keep all those things we keep, you know, less than two years, but in the stock account we keep it less than six or nine months and it's all in treasury. So, if you're going to if you're going to have higher, you know, if if they were to inflate, you know, those rates are going to push and so we would we would correct with it. Um, I think the thing that probably bother us more is they do, you know, this financial repression where they push they buy treasuries to keep the rates down. At the same time, you're inflating. It won't show up this year. I don't think this year is going to be a big inflation year, but may go the other way. But I think next year you have to be on the look for it. And it won't be as easy. You know, it won't be as easy as he thinks it is. I mean, that's a big machine, a lot of debt, 39 trillion, and you start moving it around and you got people overseas that don't I mean, it's just a lot to do. So, I doubt if it'll be as easy as they think. >> Yeah. Yeah. When those effects do show up, Ted, I mean, what what's the pressure point? Is it just inflation reacelerating or is it the dollar or something, you know, and credit breaking? >> Well, it's probably both. I I think you're right on the I think private credit has a lot private I think private equity and private credit both to only you know we do a lot of business with uh people have a lot of money and family offices and I notice that they feel like they've got on some private equity private credit but they never get any money out of it and if you ask them what the returns are just somebody sent them a piece of paper but I think that whole industry is going to go through some trouble uh when people finally wake up and say, "You know what? Uh, they overpaid for all this stuff and now I can't get my money out." And the same way it goes for people overseas that are saying, "Well, the dollar is going to go down." And our markets, foreign markets did better in 25. And if they do better in 26, um, and the dollar happens to be going down, I don't know if it will, but if it happened to be, they're going to sell they're going to sell the US because of the dollar. And they own a lot of US. I mean 60% of their portfolios in the in the world are in the US. >> Let's talk about allocation from a kind of I mean you're a value investor as you know you look for mispriced assets. In our last discussion you kind of brought it up here. You made that strong case for energy. I mean you cited that free cash flow of 8 to 11%. I mean we know the historical playbook says recession equals oil crash. But if the labor market is signaling deflation, walk me through the energy thesis. Is the supply constraint strong enough to kind of offset, you know, the potential of demand shock? What are your thoughts? >> Well, I think the best people in the industry, and I think we're in touch with them, would tell you that that we're not in a is this idea about this super oil glut is just not done right right now. It's not correct. And a lot of what you see by the IEA and all that group, they they produce things that are not necessarily uh what we think are correct. And yeah, and we said it then when I talked to you, you might have to go through a soft period for a while where oil goes back to 50 or 55 or something goes lower, but you're getting enough money. I mean, the average dividends we get all this stuff is like >> 7%, six and a half, seven. And so you you know you you can wait on it and then um and then at some point and we feel like this over the next two years you're going to really be handsomely rewarded for that because energy is only 2.7 2.8% of the S&P 500. I remember when it was 30. >> Yeah. Yeah. No kidding. So, I mean, the market believes that that glut exists, even if it's wrong, that perception could still, you know, keep pressure on these energy equities in the near term. >> Well, it could, but you have to remember, Jeremy, nobody owns them. >> Yeah. >> That the the idea that oil is going to go down with recessions and there's too much oil. There's not a person investing that doesn't know that. >> Yeah. >> So, if they're if they know that, in our opinion, okay, they're already out. there was they they made their call and said, "We're not going to own energy." Um maybe the best call was uh I don't know was a month ago or something, five weeks ago, Jim Kramer said, "Oh, you got to stay away from oil. We we actually like that." >> So you went in, you did the famous Kramer put and uh I mean, you know what, in our last interview, you specifically mentioned natural gas pipelines for yield, too. I mean, with the data center energy demand story, all this stuff we're hearing, is natural gas becoming the defensive play within the energy sector. >> Well, natural gas is is probably our favorite >> for on both sides on the producers and also on the pipelines. On the pipelines, you know, if you like re real estate, if people really like real estate, they'll like the MLPS because, you know, they you you don't pay much current income just like real estate. Uh but your cash flow goes up every year. They increase those. And right now, if you just average those out right now, they're probably somewhere between seven and eight. And uh and they're just they're great things to own over time. I'm talking about the pipelines. And of course, they're going to be full up. You you go try to get the easement, put on another pipeline in this country. It's impossible. And then um and then on the production side, it's just that gas um you know, it's gone up obviously because of the cold weather, but in the long run on the next two or three years, natural gas should should be a place that does well. >> Interesting. Venezuela, were you watching that? I mean, not necessarily on what took place, but does that change any thesis in terms of the supply and demand narrative on oil? >> Not really. Uh, you know, if you look at it, it would almost be like going into a foreign land where they had never drilled drilled a well. >> Yeah. >> So, you got to start all over. Basically, they they've ruined all the production in that country. And you look at companies like Exxon and the others and they said, "Look, we're not going down there. We've already, you know, we've already lost a lot of money and we know what's going to happen. You'll change you'll change regimes in the US and then they'll change regimes and they'll take all our money again." Yeah. >> And so I I don't think that'll happen. >> Yeah, that's an interesting one. And I know that you speak to people actively, you know, involved in management. So we can kind of keep it there for people to understand what your thoughts are. Um, all right, we can move on here. I mean, it's an interesting one because we got to talk a little bit about the Fed. I mean, we had that major shift coming. Kevin Worsh nominated to succeed Jerome Powell. I mean, the market views him as a hawk, but President Trump has stated that he would not have nominated him if he had planned to hike rates. So, I mean, how do you view that dynamic? I mean, who wins the battle? Is it the central bank or mandate or or just keep low low rates? What are your thoughts? >> Yeah. Well, I'll tell you, Jeremy, I hope I never hear anybody say this again because I've always heard this that the Federal Reserve is not political. There's nothing more untrue, by the way, than that. They're all political because they get appointed by a president >> and so they're naturally political. Whether he does with it, I don't know. I don't know the man. I don't know what he does with it. I think to be careful though, I don't think you can own 20 and 30year treasures. I just don't think that's going to work for you here. And it's already showing up. Um whether you know and that's just one vote. You have to remember uh you have to have a majority of votes to do those things. And that's one vote is all that is. And I'm not wouldn't be surprised if a lot of people buck the system and say, "No, we're not, you know, we're we're not going to take those rates down as low as you want them." Yeah, I mean some macro investors I was on X this morning tit and they argue that Japan may effectively cap how high global rates can go pushing you know because there's pushing those rates too far. I mean it destabilizes the global markets as you know. Do you see foreign stress not US inflation but foreign stress is maybe a factor that ultimately forces policy change? That's a hard question because I don't I don't know all of the countries and what they're thinking about what's going into it. >> That Japanese yen trade's getting a bit worse. >> Yeah. Like for example, you know, you you I think people probably misjudge that, you know, >> as far as what was going on with the yen and the dollar and uh but then there's other things too. You know, there's probably two or three countries now in Europe that are are eventually going to go back to a sovereign country, get out of the EU. I could see that happening in the next 5 to 10 years. And if it does, that changes. They go back to their currencies. Um there's a lot of things go into that, but I don't think that foreign countries are going to continue to Well, they've been decreasing their buying of treasuries anyway, but I think they'll continue to do it. >> Yeah. I mean, you warned about this, right? You said last time the BRICS nations are lining up against the US dollar. How does a US investor protect themselves when volatility is increasingly driven by you know global capital flows like the unwinding we we saw in Asia rather than domestic fundamentals? >> Well, the only way you can protect yourself against that I I think is now for us we own quite a bit of foreign uh equities and in foreign income items as well. But I think for the individual investor because they probably wouldn't know that is that, you know, I don't think there's anything wrong with them keeping a lot of money uh iced really in in in treasuries. I I I just think for the time being that that's ought to be your play if you're going to have liquidity. And then if you get a spot where the world is shaking things up a lot, you know, use it to your benefit. Mhm. Those 20, 30 years you're talking about, I mean, a lot of debt, 39 trillion, huh? >> Well, I I don't think people understand how much a trillion dollars is. Uh we had that in our last new L newsletter, but if you spend $100,000 an hour, >> hundred,000 an hour, it would take you over,00 years to spend a trillion dollars. One trillion. And so, uh, and I know Washington and the and the legislature, you know, they they don't know anything about debt, they don't care. Um, and that's the wall you're going to hit here. And I don't I think the best of people, what may be the Kevin Warish or best of who, whoever, you know, they're up against a big big tsunami here. So, um, no matter what they want to do, it'll be hard to do. >> If you're sitting on cash right now, I mean, where are you finding value? I mean, we talked about it a little bit, but just in layman terms, I mean, where should investors look today when they look up at a red screen? Well, if if they'll look closely, the things that are not uh that are going to do better, we think in in the and they've been doing better for the last two or three months, >> you know, if you look at um if you look at the drugs for example that not Lily, Lily's run away with everything, but if you look at uh Glacos Smith Klein and Fizer, those kind, you know, they're paying 5% dividends, 6% dividends. But then you look on the consumer side, you know, you got like a like we own a camel soup we bought a few weeks ago at a 6% dividend. Th those kinds of stocks that you and then and then energy, you know, we've um we bought our oils are are yielding really nicely. We we own uh Petro Brazil, we own we own a number of companies in the US, but um that's where we see those are the best buys. In other words, it's not in it's not in what you were seeing before because of the the changing on the guard that I talked about. You're going to have to go out and find companies, you know, that are are a little bit different. You know, they're they're all standby companies. I know it sounds kind of stodgy. Uh but that's that's that's the kind of thing that's working right now. >> Yeah. Yeah. You looking at Canadian oil and gas, too, or you kind of staying away a little bit more of an easy tailwind in the US at the moment? Well, uh, in the stock account, we own Suncor, but but, um, but I I wouldn't I would not have a problem, I guess. Um, a company we've always wanted we've wanted to own, but it's a little bit too expensive. It's coming down in price. We don't own it, would be in the the uranium area, Cam Camco, right? uh we made a lot of money and it's been a good company but uh got past a point we were willing to pay for it but it may get back in the zone but we wouldn't we wouldn't have a problem with uh Canadian oil and gas on the larger companies know but there's there's plenty to buy and then we we own we've made a lot of money we have a company called um national uh national energy resources reunited and it's NESR and we go we bought it last year and they do nothing but uh they're the slumber of the Mid East for example US company out of Houston done really really well for us. Things like that you have to find that u or you're not going to get in an index you know or and I think that's I think Jeremy that's what will throw people this year hey my index is not making me a lot of money. >> Yeah. Yeah. Interesting that you look at that. I mean, you know, if you're invested in an index, you're typically not going and you're looking at meme stocks, right? You're not looking for that that value. Um, okay. Well, let's close on a personal note. We're kind of going back to your book, Second Generation Wealth, because I mean, we have younger viewers who may have taken significant losses in this speculative assets recently, obviously, in this market, and you've always said that you need to hit the wall to kind of build character. I'm curious. I mean, if you were advising a young investor today who's looking at a steep draw down, what's the first step they need to take to kind of stabilize their position? >> Well, I think the young people, what they can't they don't do, it's not that they can't do it, but they don't do is they don't separate speculative money from investment money. >> And so, they they throw it all one direction. And so, they throw it all speculative. and you you can see it now in in in gaming and betting and all the betting portals you can go to. Uh I think that's what they they're missing and they they they'll have to learn somewhere that there's an investment side that they need to learn which is putting money back, buying the right things, giving it some time, you know, because you don't you don't get rich overnight. And uh they're going to have to learn that particular thing. But right now, um, they're probably suffering quite a bit because a lot of them M stocks, a lot of, like you say, Bitcoin, but look at the other coins, though. There, >> if you talk about Bitcoin, go down the list of the top 100, there's so much money been lost in that group. And um, you know, a lot of young people just didn't, hey, I don't need to sell it because I know it's going higher. Well, that's not a good excuse. >> Yeah. A lot of people didn't even know what margin was while they were stretching out those calls. Yeah, I mean they, you know, they they got caught up in some of these stocks, MSTR, all that sort of stuff. And um those those are not good business models. You want to buy a company that makes monies, has a product, produces a lot of free cash flow, pays you some money, reinvest some money, just like you buy a private business. That's what we look at. >> Yeah. Hey, does this market volatility, you know, kind of reinforce your rule about not revealing family wealth to children too early? Oh yeah. Yeah. I I don't I don't believe in that. I People still espouse that. They still, oh, we got to get them in here when they're teenagers and let them know about the family wealth. I'm like, gosh, you got to be kidding me. I said, you know what you need to do if you have well, you know, if you have more than 50 or 100 million, what you need to do is not let them know that, okay? You take away every bit of their ambition because it's all of a sudden what I need to do in I'm rich. I'm gonna be rich. And so, you don't want that with a kid. You want them to stand on their own two feet. Make them work for it. You know, put them on the street. I I say that to everybody. You know, give them 60 days of of help after they get out of college and the next ticket is on yours. Um I know that sounds hard, but I know for a fact personally, and I've seen other people, it works. You just got to put them out there and say, "It's time to go to work." >> Yeah. Well said. And you do have a book for that, too. We'll put it up on the screen. Okay, we'll wrap up here, but I mean looking at the remainder of 2026 and we got a little bit of time out. I mean, what what do you think is maybe one risk or even one opportunity that you think the market is not correctly pricing in for the second half of the year? >> Well, I wouldn't be surprised, Jeremy, if there's not two or three times this year that you can buy and sell this market. And I again I don't think the average investor is good at this but I think there'll be uh two or three ups and downs so to speak and and maybe the market only ends up 6% for the year but in the middle of the year it was down 25 or something. You you've got to be ready for that sort of thing because these second years of these presidential terms are very poor >> and they have a lot of volatility. I could give you the numbers on it, but I will tell you historically, they're the worst. And if you look back from here, for example, look at 22, big sell-off, 18 sell off. And you just keep on I could take you all the way back. And uh you got to be that's what I think you need to be ready for this year. You need right now, you need some you need some powder, some some clean powder so you can use it later on. >> That's interesting you say that. I mean, I talked to a lot of people that go, "Oh, it's just going to be, you know, their bull thesis is that the money printer's got to go." I mean, it's midterms. We got to get them in. So, it's just going to keep going. But I guess that level up and down, like you said, that volatility is to be expected. Historically, that's happened. >> Well, yes, but it's historically the volatility is much higher in the second year >> and a lot of them end up okay. It's just that during the year there will be a couple of times when you get these sell offs like this sell-off that just started here. Yeah, it wouldn't surprise me for that to go to 10 or 15% at least >> and then shake people up a little bit then go up again and then come down. That's the kind of thing you get in these second years and you just have to be you have to be a stock picker really. You have to know when when to buy things and and what to own and I I again I think for the individual investors this is going to be a harder year for them. Yeah. All right, Ted Oakley, always the voice of reason. Thank you for the wisdom today as always. We appreciate your time. Uh, a lot of insight to unpack there as I slowly change my portfolio. No, I'm just kidding. Thanks, Ted. Appreciate your time, huh? >> All right. Thanks, Jeremy. >> All right. Appreciate it. All right. A silvering up. That's the phrase to watch. As Ted notes, volatility does create opportunity, but only for those with the discipline to wait for it. Thanks for watching KCO News. I'm Jeremy Staff. Be sure to subscribe. We'll see you next time. Heat. Heat.