Ted Oakley: We're Toward The End, Late Stage Market, Lemmings Everywhere
Summary
Market Cycle: Guest characterizes this as a late-stage market with frothy IPO activity and narrow leadership, urging caution and discipline.
AI Infrastructure: Rather than chasing momentum in AI equities, he prefers infrastructure inputs—especially copper and natural gas—as essential, cheaper beneficiaries of the buildout.
Commodity Supercycle: Expects a commodity-led decade as nations hoard resources (oil, fertilizer, critical minerals), pushing prices higher over time.
Gold: Bullish on gold as a reserve and currency hedge; central bank demand and fiscal deficits support further upside; added bullion and selectively re-entered miners after a pullback.
Energy: Sees energy as underowned and attractive with strong dividends; oil inventories and SPR are depleted, and majors expect higher prices, implying upside risk to oil.
Midstream Energy: Favors pipelines for defensible assets and high, tax-advantaged yields; difficult to replicate rights-of-way create durable moats.
Companies Mentioned: Discussed examples across themes including CVX, MTDR, MPLX, EPD, FCX, UNP, as well as broader market leaders like NVDA and GOOGL.
Risks: Highlights private credit vulnerabilities, heavy investor equity exposure (especially boomers), and fiscal/government credibility risks as key macro overhangs.
Transcript
Yeah, when you get these kinds of offerings, you're late stage. I have a quote that I have from Warren Buffett in 1999. When you get to the point where every single thing that people do, any kind of strategy is up, then you're probably toward the end. And then it becomes a thing where people say, and in the end, he said, in the end, he said, well, God has made us all to be rich in the market, so we need to be in. Hey everyone, welcome to another special in-person instudio episode of the Julia Lar Ro Show where we have a fan favorite friend of the show. Joining us today is Ted Oakley. He is the founder and managing partner at Oxbow Advisors. And Ted, great to see you for our second in person, but this time in New York. >> Yeah, great place you have here. >> Well, thank you so much. And um you were one of our very first in-person guests on this show. Uh we did an Austin episode a couple of years ago, which was really fun. And this audience loves having you on the show. They always say they look forward to their TED talks. [laughter] >> I hope it says I hope it could be that good. >> Oh, Ted, they're they're always great. So, let's start Ted. Um, since our last conversation, which was not that long ago, um, back in May, >> uh, what do you make of where we are in the markets? We've seen a some We saw a big IPO happen. >> Yeah. Oh, lots transpired since our last conversation, but what do you make of the markets right now today? >> Well, you know, uh, what happened on Julia is last time I told you, you know, we these second years of these presidential terms are very volatile and this one is no different really. It's been up and down all year. I wouldn't be surprised if we don't get another swoon into the summertime. But when you get into these periods where everybody's in and you start having these huge offerings, we got a couple more coming, two or three actually, >> then, you know, that's that's indicative of of times when all the money's in, you know, at some point in time, maybe not this year, but I'm just saying that's where the markets are right now. This move that we just had, this big move was all semiconductors. If you look at the MAG 7, they're basically down since October and November. only one. Google's up a little bit. Even Nvidia, same exact price it was in November today. But people don't they don't think about that. They think that, you know, everything's really roaring again. But it's really not. It's only certain segments that are roaring and then you get an issue like SpaceX and they get caught up in it. But in general though, I will tell you, I've seen a lot of IPOs. If you take a one, three, fiveyear look out on IPOs, they don't do well. About 90% of them lose money. >> So I take it, you don't play into the IPO space. >> Not at all. No. I always tell everybody told somebody last week, I said, you know, if the best in the business, Warren Buffett, everybody buys an IPO. Does that would that tell you anything at all about whether you ought to be in that marketplace or not? >> Yeah. is that so rather than playing in the IPO space you give it a few years assess whether or not you'd want to own the the >> you could own that company there's no question about it but you if you look at if you look at the companies that have come out Facebook Amazon things you know they went a lot lower you could have bought them cheap there not to say you didn't make money in them and maybe you made money years and years and years later but off higher than the IPO but the problem is you had to wait a long time if you just took the one three five if you look at it, you probably didn't. And there's all kinds of reasons that that happens, but in this case, you know, they dictated to the investment bank what they were going to have to pay, which is unheard of really, if you want to know. >> So, would you say that right now where we are, we're late stage here? >> Yeah. When you get these kinds of offerings, you're late stage. you. And that's not to say I wouldn't be surprised if we don't make a new new highs in the S&P before this year's out, but it I would tell you it has all the makings of of late stage. I have a quote uh that I have from Warren Buffett in 1999 that said that when you get to the point where every single thing that people do any kind of strategy is up in the market and that's about what it is now. any strategy you use is up, then you're probably toward the end. And then it becomes a thing where people say, and in the end, he said in the end, he said, "Well, God has made us all to be rich in the market, so we need to be in." >> When when everybody's getting in, >> everybody's in. Everybody's in now. I promise you, they're in. When somebody at Juiceeland told me, "Can you get me some SpaceX?" Then I know we're close. >> Wait, what's Juice Land? >> Juiceand is like a juice place in Austin. that you're going to get your and they're asking you. [laughter] >> Well, there you go. There's the sign right there. Um Ted, I've heard you refer to this as a a lemmings market. Is that the metaphor? >> Well, you know, that's a myth really. Lemmings, they limmings don't really they don't really exist. The myth was they would run each other off a cliff. It but it's mythical, but it means something. Well, usually if you say somebody has a limming, they're followers, you know, and that's really what that means. The myth was that they ran each other off the cliff and all died together in the water, but that was, you know, that's a mythical thing, but but but if you hear people talk about it in conversation and they use that term, >> that's what it feels >> that means it's followers >> and that's what it feels like right now. >> Oh yeah, it feels that. >> You've been in the business for 49 years. Yeah. >> Have you seen this movie before? Does it >> numerous times? >> Okay. >> Different ways, different things, but they're all sort of the same. Yeah. >> Mhm. >> Yeah. >> You think it's more exacerbated or >> uh not always. Uh I'll give you an example. Back in the early 80s when you had when oil and gas was the hottest thing going, it was 35% of the S&P >> oil and gas. So every time a little oil and gas company hit an oil well that stock would go up five, six, 700% in a month or two. It's crazy. And uh you know I saw it though with the drug stocks between 85 and 95. Saw it with obviously all the tech stocks. Uh really saw it with real estate >> in 06 and 07. >> Yeah. I mean, we had people that just buying condos like like they were flowers, you know, and uh Yeah. It comes and goes. >> Yeah. So, a lot of folks are caught up with like all the new IPOs in the markets and you look at the markets as an investor. >> Are you waiting for something? Are you sitting and waiting? Like, what are you doing right now? or are you finding opportunities like you said there's maybe little pockets of >> Yeah, I mean the last time I talked to you I mentioned that probably gold had a bit to go. >> It was around 4600 or something I think at the time. Well, that happened and in the last few days we've been we've been adding. >> Okay. So you're back, you're adding back to gold because I think I remember you had trimmed some. >> We trimmed it in the very first few weeks of the year. >> And since that time, those minor stocks are down 30%. A lot. So we added back some miners, added back some gold bullion itself, but energy is cheap. You know, we got num numerous stocks that we like. You know, Union Pacific, Sony, Cortiva, just Archer Daniels. There's a lot of companies we like. They just happen to be in the AI. Now, in the AI side, the way we go at it is we own a lot of copper >> and we own natural gas because if you really believe the AI narrative, if that's what you think, then you're going to have to have a lot of copper and you're going to have to have a lot of natural gas. >> They need those materials to do the buildout. All that infrastructure. >> Those companies are cheap. >> Yeah. on a relative basis. We own like Antar we own seven and a half times earnings. Think about that. [laughter] >> Huh. That's an interesting way of playing it. Um why why go that route? What was the what's the reason why? Um >> well, we look at companies based on fundamentals. We're really not trying to get in an area or do some macro look at something. It has to be on the company. Mhm. >> If we determine that that company can make a lot of money over the next 5 years and we can buy it at a discount now, a lot of our companies we own, we've owned 15, 20 years, but if we can buy that at a discount now, then we want to own that company. And that keeps the downside from hurting us much. Because if you're buying these companies on the cheap side and they have good numbers, the odds of a company going against you, I'm not saying none of them will. Surely some of them will, but if the odds of that are very low, then you're you're putting the odds in your favor by buying a really good fundamental company. Um, and I can't see if you take SpaceX for example at 92 times sales. I mean, you can't you can't make any fundamental sense out of that. That that's not the kind of thing we would look at because you'd never get your money back realistically. And I and that's the kind of thing that we look at. So, we look at companies that we know that you can own. You know, you if you own the own company, you probably do pretty well. >> Gold has been one of the few standout assets of the last few years, reaching new record highs as investors respond to rising fiscal deficits, [music] geopolitical uncertainties, and growing demand from central banks worldwide. But here's something most people still overlook. Price appreciation isn't the only way to benefit from owning gold. What if your gold didn't just sit in a vault, but actually generated a return? With monetary medals, you can earn a yield on gold, paid in gold, without [music] having to sell. Instead of earning in dollars that can be eroded by inflation or policy changes, you can earn more ounces of gold. That means your gold holdings are growing in real terms, [music] not just nominal ones. Earning gold offers a fundamentally different approach. 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Well, we also think that the next 10 years is going to be more of a commoditybased market. >> If you look at what's going on in the world, we've gone from really uh countries that are globally getting along to countries that are globally not getting along. So, what they've all started doing is hoarding their raw materials. All of them hoard them now. Like, we're going to keep our oil. We're going to keep our fertilizer. We're going to keep our critical minerals. They're all doing that now. And so to bring those out to bring them out, you can buy them, the price is going to have to go up. >> So interesting. So commoditiesbased take early innings of a super cycle there. >> Yeah. Something like that. Because what happens is if you look at if you look at iron, copper, okay. Gold, silver, all any a lot of the metals involved. And we we own tungsten for example. I'll give you an example. Friday I think it was China told Japan we're and they control most of the tungsten we're not going to sell you more tungsten. Now we own Elante which is a really good tungsten company with super numbers that are coming on earnings wise. And so those kind of companies where they're not you know if you look at natural gas and now we have oil in the US but it's the tanks are low right now. A lot of things are lower than people expect. We're not necessarily out of the woods here >> and all this stuff. So yeah, I think commodities will be much better. That's not all we own, but you need some of them. >> So the commodity supercycle early innings, but it's not just driven by energy or is it primarily driven by energy? >> No, it's everything. >> It's everything. Okay. >> If you look at critical minerals for example, China controls probably 85% of the critical minerals in the world. US we have very few critical minerals >> like for example we have you you don't know what antimony is but antimony is used to when you when you have explosives or bombs and all that anything in defense use antimony >> we have one sort of just now cranked up antimony mine in the US now we own a little company in Australia that has a great gold mine and and has 20% antimony see things like that critical minerals that you don't think about. But there's >> there's probably 25 or 30 critical minerals >> that are critical for all these different things. >> That's just one thing. But then copper, you know, to get a copper mine up and going and producing is really hard. >> Expensive. I've heard that. >> And so, you know, we own Freeport Macaran, but we own copper outright as well. Um, it just it just looks I know it'll come and go some, but if you look at the next to us the next 8 to 10 years, it's going to pay you to have some some of that. Not saying that whole portfolio, but you need to look at it. >> It's a really good point, Ted. Um, you mentioned oil energy. You you you're from Texas. Well, you live in Texas. I know you're originally from Georgia, but you live in Texas. You are a Texan. And gosh, I imagine you're very plugged into the energy world down there. What What's the story in the oil industry that people don't quite understand right now? >> Well, I know a lot of people in the in the business, you know, uh I wouldn't say I mean, I know a lot about the business, but I'm not in the business. And so, the people, >> you know, a lot of people in the business. >> Yeah. And they would when I have questions, they can answer them for me, for example. But here's what's in that business. That business changed a lot. when you started drilling horizontally because those wells are really expensive to drill. Used to when you drill a vertical well, it was fairly cheap to drill. You went down and see if you find it. Well, now you drill horizontal and it costs a lot more to drill it, but you make a lot more out of it. And I don't think people realize no matter what the oil and get oil price is, they're not going to do like they would have done maybe 30 or 40 years ago and go out and start drilling a bunch of wells, okay? They've learned a lot about how to bring it on systematically. And I think I think people forget about that. I think if you saw most of the majors though and listen to them, listen to guy from Chevron, people at Exxon, they'll tell you they expect the oil to go to like 150. And I there's various reasons for that but we've used a lot see a lot of oil was stored in tanks and we also we pull down the strategic reserve so far now they were basically used it all and then in the tanks we've gotten down to where the you know you store a lot in the tanks but when you bring storage down and get to that lower say 10% or so it causes trouble. We got sludge. You have different things. We're we're low on the tanks now, too. So, it's not like it's not like we're going to turn on the faucet tomorrow because our reserves are low right now. And so, I know there are we're bringing this in, the straights are open, everything's going to be great. I would not use that in my mind to think oil is going back to $40 or $50. So, >> just don't think it'll happen. >> Right. Okay. So, as we're recording today, the the reports are um this memo of memorandum of understanding signed by the US in Iran. >> Yeah. >> Straight reopening, but that doesn't matter so much like it's not going to Do you think investors are misinterpreting or not reading it right or >> Oh, I don't I think investors now have seen so much coming out of Washington that that they think it's just another deal where they think they've got a deal. Maybe they have a deal, maybe it works. You know, they got what they've done is they've signed an MOU, but they have 60 days to talk about it. >> Well, obviously Iran's not going to do some of these things. And anyway, it's I think people have lost faith in all of that. >> Um, do you think oil's going higher? >> Well, it could go some lower here just because the momentum people trade it, >> but there are less bulls. So, if you go look at the sentiment numbers on oil, the bullish numbers are so low now, it's incredible. Nobody's bullish on oil. >> A few people who come on this show are, but >> they are. They have been probably, but if you just look at the overall trading, CTAs, all that. They're they're really they're not bullish at all. >> Uh because they think they think that once these traits are open, they come back, everything will go back to normal in a month or so or whatever. We just don't think that happens. Wouldn't that also kind of reinforce that other trend of like make sure you have your supply chains right or make sure you have all of your materials? >> Well, it's good a good case is China. >> We didn't realize at the time, but China was already storing oil. They didn't get hurt too much in this deal >> because they thought ahead. See, and they they they were storing oil. So, they didn't have they didn't have they didn't have the trouble with the shipments. Uh and we underest we underestimate them in many ways but that's just another way we underestimate them >> but here in the US like our stores are really depleted and >> well where yeah our storage is you know storage >> because you have a lot of oil that's out on tankers but you know we but if you think about what got knocked off per day and millions of barrels a day you don't just get over that in two weeks. I mean, it's gonna take a while. Um, >> I just think if you look, we liked energy even before all this happened. >> Oh, yes. I we did talk about that. Yeah. >> Because it was it was cheap and it's still pretty cheap. Really? Energy is cheap. You get great dividends in energy. You can get six, seven, 8%. I mean, a lot of them even the biggies are like four and a half or so, five. So, people I think miss the boat on that. >> Yeah. And I think you like uh Chevron is one of them. One of the things you like. We we like Chevron. We like little company called Matador. >> Matador. Yep. >> It's a great small company. A lot of things going on at that company. Like the pipelines, MLX, um Enterprise Products, but you know, those are paying seven or 8%. Which you're it's not currently taxed. And so it's it's good stuff. You you've also talked about um wanting to own the full well to the end in the energy chain. >> Well, uh you want to own the producer. >> Okay. >> But then you want to own the midstream too where they carry it because that's if you think about a gas pipeline or oil pipeline. Think about if you had to go get an easement today of 1500 miles in the US. That'd be like trying to get a new railway for 1500. you couldn't do it. >> Oh, I can only imagine. >> Very, very, very hard to do. So, >> when you own these pipelines, you really own something that's it's like the railroads today. Like we own Union Pacific. >> It's getting we're trying to they're trying to merge it with Norfolk and Southern. If they do it, it will be fantastic. But you can't replace that really. That's the thing. Can't replace it. So, >> that that those pi pipelines are that way. >> Yeah, you can't replace. I also imagine just trying to build it again. Just the push back you get. Oh, I can only imagine. >> Um, okay. You've said energy is dramatically underowned by most investors. >> Do you think what do you think would bring more attention to the sector >> price? Yeah. If the price, you know, what what'll happen is >> it'll be it would be like uh if you notice the last four months of the year last year with gold miners and gold and silver. >> Yeah. Yeah. How the retail and everybody stormed into >> they kind of meme'd a bit. >> They did. >> Yeah. >> Same way with oil. If oil goes to 150 or higher over the course of the next year or so, they'll be right back into they'll do the same thing. They'll start buying. They'll go after the companies, go after the oil itself. It'll be a chase. You know, everybody chases now >> and so they'll chase it. >> Huh. Okay. Um, we will watch that. Um gold. You mentioned gold. Um what's okay what for you is the story with gold. Why what's your thesis for wanting to own gold? Does it have to do with like debasement of the currency? What's or the >> the biggest thing is currency reserve? If you look at if you look at what you can hold in currency reserve worldwide. Okay. Gold has now replaced the treasury. And it's because the people don't own the treasury. you 40 trillion in debt when they know we can't pay it back and we're going to have to inflate our way out of it probably. And so they're saying, you know what, I'm going to take that currency reserve. We're going to instead of putting it our reserve we get in a dollar. We're going to buy gold. You can have the dollar and you have the treasury. We'll take the gold. So a lot of countries are buying gold. Now you had got some selling I think during this whole problem in the Middle East. I think some of those were selling Turkey. Some were selling some gold. But that tells us that gold will probably have a number of more years to go and a good bit higher before it's all over with. It's it's corrected. Remember, it went from 5,500 to 4,000. This is just two days ago now. >> Yeah. >> So, uh and that's why we started buying again. Uh the miners bought a silver miner, too. But we we put that money back on. >> Yeah. I guess you mentioned it's become the treasury. You're talking about like all of the central banks around the world wanting to just >> Well, countries countries. Yeah. They like if you trade and you ended up and you say, "I ended up with excess dollars, currency reserve. I don't want the dollars." Okay. >> You take the dollars and we're going to take we're going to we're going to buy gold and that's what we're going to hold. >> And it's paid off for them. Think about it. And gold's really paid off for them the last three years to do that. And so I think they'll continue to do it. >> Yeah. I Yeah. I kind of wonder like once you It feels like before gold was like okay some gold bugs would talk about it but it feels like it's become much more mainstream. >> Well, I I think it's become a I think it's become a currency hedge. In other words, if you if you look at us and we have one strategy called a conservative fixed income. It's mostly treasuries, right? And a little bit of >> short duration, but we own four to 5% gold in there. because you we look at that as a currency hedge. In other words, all the gold has gone up over we've owned it quite a while but any new account we get it as well because we looked at that to say okay look two three four years out it should keep on going because you're going to have more buyers for it >> right is part of that though for you Ted is does that have to do with our fiscal picture here in the US like our debt situation >> well a lot yeah because you know you think about it >> I think I mentioned this to you before but if took the amount of gold to buy a new home >> 20 years ago. Okay, >> that same gold today would buy a home three times that price today. >> Same amount. >> Same amount. >> Wow. >> And you'd have money left over. See, so people forget about gold is meant to be held, not traded a lot. You know, we don't really trade the bullion much. We add to it. Now, we trade we do trade the gold miners. Well, we traded those in early January cuz they were too expensive and of course they corrected 35%. But uh >> you hold on to your bullion. >> Yeah. >> And you like y'all do like to do the physical the physical gold. Um so I just some folks have different ways of wanting to express how they like to hold gold. Some people do the ETFs, some people do the physical. >> Well, we we we like to buy uh we'll buy it on the exchange if it's convertible to physical. >> We we you want to buy we don't want to buy something where we can convert it out if we wanted to. Okay. >> Um for most people, they're not going to go down and buy you, you know, you could take a cigar box and put a lot of gold in it dollar-wise. >> Yeah. [laughter] You know, and people don't realize how much of gold is >> Yeah. I think some people still think an ounce of gold is just Yeah. >> like definitely pack it. >> Like like my wife's jewelry, for example. >> Mhm. >> For I thought it cost a lot at the time, but if you look at it today, it really costs a lot. I mean, it you know, it it she won't sell it. That's unfortunate. [laughter] >> Don't Well, I agree with her. It's sentimental more than anything, right? Um and valuable. Um that's funny. How about um what do you make? We've talked about the state of the economy. What do you make of the economy today? What's your assessment? >> Well, we do have an elite, non- elite economy. You know, I I grew up really poor. So, I know what goes around with these people at the low end and and they're in a lot of pain right now. They just they're just barely barely barely making it. Um, and they're having to do all sorts of things to make it. I mean, a lot of the people that work for me in other jobs besides Oxbow, uh, other companies and different things I have, uh, I really have to reach down and help them out because we pay them a lot, but they're hurting, you know, already. And we try to do as much as we can for them because I can tell there's a lot of pain going on there that they they they didn't opt for. So, so you have this bifrocated look here and it's almost like everybody at the top and I have to put myself in that category. But the point is everybody at the top I don't think they think about the rest of the economy and in the end that's not good for an economic look because if you don't have a really strong middle class you're going to blow up eventually you the whole thing craters on you. Yeah. You can't, if you think about it today, everything is about the stock market. Everything is about money and the stock market. The economy runs off the stock market. People are spending money off the stock market. So, if you think about it, the next time you have sort of a generational bare market, all those people are going to be down there with the others because they're going to, you know, they haven't they haven't really made a really what I consider a great linear group economically to really pick things up because there's no middle class. >> And like they'll if that if we do see that generational bare market, that's where we will see some sort of central bank intervention too, >> probably. But usually they don't do any good in a bad bare market. Yeah, >> they they it's too late. >> Do you think the the investor costs would get hurt in like a bare market or >> Sure they would. >> Yeah. >> Yeah. Your next you know when you have a when you have a true bare market, you know, you're going to lose 40 or 50% in the averages. And so a lot of people are not expecting that. If you look at if you look at baby boomers today, they're just they're brain dead. They're they they have so much in the market >> that you can't convince them to take any out and their percentages are super high. They own more stocks. We've got numbers going back to 1949. They own more stocks than they ever have as a percentage >> than Yeah. >> Well, financial assets and so >> way over invested. >> Oh, yeah. Way over. Way over. >> When when Okay, let's say we actually have a lot of boomers who watch this show. >> Yeah. >> How should a boomer be invested? What is a smart They've made their money. >> Yeah. What's a smart way to >> Well, they need to think about it like this. Okay, if okay, let's say that something happened where it couldn't make any money for like four years in the market and it actually went down over a long period of time. I'll take 2000 example 2003 market went down 55%. Okay, S&P if you if you take that group of people and say, "Okay, if if that happened today, how would you feel about everything?" Okay. >> And would you have enough liquidity so that you could live your lifestyle and do what you want to do during those periods? And I just think today they don't have I think they have too much. Uh I think they they've [snorts] gotten sort of brain fogged on this thing that you know nothing ever happens really bad >> or it always comes back. They were probably in their 40s when the dot bubble burst. >> They were different when you're in your 70s. >> Yeah. >> Average baby boomer and that period was 45. >> Okay. >> Average today is 72. But here's the thing. 10 years from now they'll be 82. >> Mhm. >> Well, the life expectancy right now if you're probably 72 is probably 85, 86. I'm not saying they're all going to die at 85. >> A lot of things happen though. >> You get sick. You have afflictions. One of the spouses gets really sick. You can't go to the places you used to go to with all your real estate because you really you can't physically do it or don't want to do it. >> I see this in our investors. And if you're not set up so that you can go to sleep at night and think, okay, a good part of what I have, let's say a number 40%, 35, whatever you want to pull is what I call bulletproof, then you're in a pickle because if you're coming into a super bare market and you're 85 or 90% in stocks, you got nowhere to hide. >> Yeah. >> You know, and you're not at that age where you can go back and wait on it. You At 80 years old, you can't wait on the next bull market. You're the next bull market, you may not be here. >> And you don't know what it's like when everybody else starts selling. If all the boomers have >> Well, and all the 401ks, too. See, see, everybody's in. So, uh, right now you have more people in the market than at any other time since I've been in the business. Percentage-wise, everybody's in. Just go to somebody in the 401k and ask them, "What are you investing?" I'm I'm in the market, you know, and it's it's been good to them. That's why you can't uh you can't make the argument because they're like, uh, you know, you're just a negative person. Well, I'm not negative. We own stocks, but it depends on where you are in your life. Yeah. If you're 30 years old, >> yeah, >> let it rip. >> It's okay. Let it rip. you know, but I mean at that age and I think that's snuck up on the baby boomers and they've gotten used to, you know, a lot of have a lot of do-it-yourselfers and that sort of thing. Looks real easy to them till they start losing money. >> Yeah. >> And then I just think there'll be socially problems with that too. >> Yeah. That would be like retirement crisis almost. If you have a lot of people lose a lot of money at that age, there'll be some depression in there. I promise you, mental depression, because they'll think, [snorts] gosh, you know, just a few years ago, I had X. Now I only have 70% X or whatever. You can't those are not things you get over easily. >> And of course, no one wants to think about those scenarios, but you have to think about them. You have to think about them. >> Well, you should. If nothing else, you got to remember what Warren Buffett says, which is number one thing you want to do is not lose money. >> Yeah. And then you don't want to forget that either. >> You can make, you know, I can show you where you can make 15% a year for five years in a row, great return. And you get in the six year of the bare market and your return goes to zero. >> Yeah. >> Cumulative. >> Oh [sighs] gosh. >> Yeah. Yeah. Is it cuz everyone's just chasing returns rather than like just do something that's like little just some sort of sustainable not high like swing for the fences returns but just something >> No, I think they're all caught up now exchange rated funds. They don't they don't really look at >> the market of stocks like buying companies like we do. I think they look at it and say, "Yeah, I'm going to buy the S&P and buy the NASDAQ. I'm going to buy this or that or the other." And they think that's that's cool. Well, I don't have to pay any tax on it and it's the way to go. But see, those are the ones that will get you, you know, um I know you interviewed Mike Green. Those are the ones. Yeah, they'll get belted one of these days. >> Let's see. What did he say? He was in studio recently that we are >> gosh, I want to say we're at 55% past. We're 55 and 60. >> Yeah. Yeah, we're we're we're close. >> Yeah, we're definitely >> to the where you turn and go the other way. And Mike's he's smart guy. Uhhuh. a good interview you did with him and so much >> he >> but yeah >> that there's a lot of things in the market right now that are you just got to think you know you got to think >> yeah you kind of alluded to some of the social issues and more of the social fabric and >> the middle class today is it is it pretty much do you think it's gone or it's just at risk of being gone? Well, if you think about it, if you have two people and they make 120 grand, let's say >> 100 120 grand, >> and they've got a couple of kids and couple of cars, house, they're not really making much. In fact, they're probably not saving anything. >> Mhm. >> And that's statistically that that that bleeds out. You see it in the statistics. They can't I think 58% of the people in the country can't raise a,000 bucks. That's not good. You know, in the long run, it's not good. But nobody really cares. I think at Oxbow, I think we pay our people as well as anybody and we make sure we do. Two things. I want them to be happy. But the other thing is I want them to make a lot of money because I need them live a good life, >> you know, and there's a reason for that. If I always say, you have happy employees, you you'll have a happy company, then you'll have happy customers. >> Yeah. Um, do you worry though about the direction that we're headed? Like we've talked about the eyeshaped economy. I don't know who coined it. I want to say it was Adam Tiger. >> I think it was Peter. It's Peter Booker. Peter, I know Peter pretty well. And he uh he he coined it. And he's but he's right. >> Yeah, >> he's right. It's it's just a little bit up here at the top. Everybody else is is down here. >> And I wonder if it's exacerbated by if you open TW if you're are you on Twitter or X? You open it's it's all stock market all day. It's a lot of twit >> or you open Instagram and it's everyone's told elaborate vacations or things. I don't I don't even post it's all about money and what you've seen, you know, I think >> and I I think it has an impact on the young people particularly. >> They're they can't have that right now. And so uh you see them sort of going in a different direction in many cases. I I you know I I think there's a lot of good young people, but they're having a tough time because of the way things are structured right now. >> Yeah. Um Ted, I mentioned actually a couple things. There's something I wanted to ask you last time and I didn't get to ask you, so I'm going to shift topics. Um what's the biggest risk for you right now that isn't getting enough attention? >> You mean me personally? Well, >> it doesn't have to be you personally, but >> No, what you mean the biggest risk? >> Yeah. What do you see as the biggest risk right now >> for the country or for the investors? Anything? >> For both. >> I I think the biggest risk right now is is the government because we have a government that nobody believes in either party. >> I mean, if you ask the average investor, they'll tell you they don't believe in our government. They just they just don't think they're effective and they they don't have any respect for them. Number one, and then we have them spending all this money and nobody cares either party, nobody cares about spending. And somewhere down the line somewhere that will come home. And when it does, and it it may be 10 years, I don't know what the time frame is, but I know when it does, it won't it won't be a good look because it probably will mean some sort of yield cur curve control to let their inflation run while or something along that line. I don't think you can get out of it. Either that or you just keep on printing and you inflate, inflate, inflate. >> Yeah. Another reason to own commodities, by the way. >> Yeah, there you go. >> But um that would be that would be the biggest risk I think people don't understand in the country. >> Oh, pretty soon the interest on our debt's going to be >> the biggest. >> Well, we give away a lot of money and we don't have any, you know, you got you saw what happened during Doge. >> Mhm. >> They they they didn't have a chance at cutting cutting it. And yet there's so many things that we spend money on we shouldn't be spending. >> Yeah. >> But nobody has even faith in anybody. That's my point. I know. >> I'll tell you what um gets me and I was talking to my husband about this. We were driving to the airport is um when you see people who go into office to serve and it should be in my opinion you go to serve and they come out so wealthy >> from trading stocks or it's like they have millions of dollars in net worth and that that to me just doesn't feel [clears throat] right. Um something's wrong. >> Well, couple of things. Number one, you limit the term. Mhm. >> I know a lot of people wouldn't believe that, but to me, look, you're going in and you're going to stay x amount of years. That's all you get. >> And the second thing is if you don't balance a budget, then you're out next year. >> Yeah. Could [laughter] fire them like they would fire an in like somebody would fire an investor for not >> Exactly. >> being a fiduciary. >> See, that would never fly because it's too common sense. >> That's great. Actually, I like that common sense, Ted. Um, I also didn't ask you about, this is another random one on shift topics, private credit. Is that still an issue, do you think? And >> oh, I think it's a big issue. Yeah. >> Yeah. If you look >> just in the last couple of weeks, I mean, they've had bigger troubles uh with people, you know, getting redemptions and that sort of thing. Private credit is another Wall, you know, Wall Street will sell you anything you will buy. >> If you'll buy it, they'll sell it to you. They don't care. And uh look at SpaceX. But on the private credit side, if you you know owning a bank, like I own part of a bank uh I did, we sold it in December. But if you look at it, why would you if you want to borrow money as a company, why would you pay private credit 11 12 or 11 and 3/4% when I could borrow at the bank for maybe 6 and 3/4, 6 and 1/2? >> That see does that make no because you have to though? >> Because the bank won't lend. it because they know you're not good. >> Exactly. So, this idea that we have some great companies in there. Yeah. You may have a few, >> but I would say more than likely you've got a lot of leverage and you have a lot of poor companies that can't pay it off or won't pay it off. You're going to have defaults. And it's another thing much like private equity was dreamed up on Wall Street. And I think a lot of these family offices and big pension plans and all of that, they all have a piece of private equity and private credit. I think in the end it'll be like hedge funds were 20 years ago. They'll look up and say, "You know what? I could have made more money in the market." >> Yeah. >> Than I could have done doing that. But see, these consultants and Wall Street, they come along and they'll they sell them anything, but they buy it. >> People ever try to sell you anything >> all the time. [laughter] >> But I cut them off, though. >> I'm sure you do. They call they I want to come by and see you. We have >> We have the greatest private credit fund. I want to come back and see you at the private equity. We're doing X. And when you dig into it though, the fees, uh, the markup that everything is not there's nothing in there you would want. Uh, I mean, I tell everybody if you really want to invest in a company, go find somebody you know that's really successful and ask them if you can buy a piece of their company >> private. >> You know, um, a lot of the folks who invest with you, this this would be my last question, Matt. um who invested with you, they have sold businesses. >> Yeah. Oh yeah. >> We just saw a lot of new millionaires mentioned with SpaceX IPO who were employees. Um what's your advice to someone who comes into like a lot of money like that right away? Like what do you tell that person? >> Well, the SpaceX group is different from a business owner that sells a business. A business owner that's had a business for 20 or 25 years, more than likely he and his spouse have worked hard at that business. They've been in debt. they've had to work and and just slave to get it where it is, then sell it for a lot of money. So, they have a different kind of respect for the money. A lot of the people there in SpaceX, in my opinion, just happen to be at the right place, right time. So, all of a sudden, I got a hundred million bucks. I say, "Okay, and they'll probably believe the hype that I got to stay in this because it's going to make me a billion." Mhm. >> But I had this same thing go on in 989 that in 90 1998 999 where we had people that would get 30 40 million as a piece of a public company. We would say to them young people just take enough of that to to make your life the rest of your life great. If you want to ride with the rest of it that's okay. We saw so much of that go to zero and go so far down. And I think they need to think about this. Number one, give some to charity. Okay? Do yourself some good. >> Give some to charity. And number two, take some money out and ice it for your life. Okay? So that no matter what happens to SpaceX, hope it and hope it's the worst sale you ever made in your life, okay? And then keep the rest of it. And if it goes up, that's great. But you know what? If it didn't, I'm set for life. >> You have something set aside. That's good advice. Um Ted, parting thoughts? anything that you like to leave this audience to think about? Anything I didn't ask you? The floor is all yours. >> Well, you know, you have a great show and I've always been impressed with your success for sure. So, you always have the best questions. I think people need to get back to basics. I'm going to my market letter in July will be entitled, you know, stick with your principles. If you have principles about investing and you know how to invest, don't let this hype that's hanging around right now throw you off. I've seen that happen in all my decades. I've seen it happen a lot of times and people will say, "Gosh, I wish I hadn't done that. I knew what to do." Okay, just remember that. >> Stick to your principles. Ted Oakley, founder of Oxbow Advisors, thank you so much for being so generous with your time, all of your knowledge, your wisdom, and for stopping by in studio. So much fun. Really appreciate you, Ted. >> You bet. Thank you Julia.
Ted Oakley: We're Toward The End, Late Stage Market, Lemmings Everywhere
Summary
Transcript
Yeah, when you get these kinds of offerings, you're late stage. I have a quote that I have from Warren Buffett in 1999. When you get to the point where every single thing that people do, any kind of strategy is up, then you're probably toward the end. And then it becomes a thing where people say, and in the end, he said, in the end, he said, well, God has made us all to be rich in the market, so we need to be in. Hey everyone, welcome to another special in-person instudio episode of the Julia Lar Ro Show where we have a fan favorite friend of the show. Joining us today is Ted Oakley. He is the founder and managing partner at Oxbow Advisors. And Ted, great to see you for our second in person, but this time in New York. >> Yeah, great place you have here. >> Well, thank you so much. And um you were one of our very first in-person guests on this show. Uh we did an Austin episode a couple of years ago, which was really fun. And this audience loves having you on the show. They always say they look forward to their TED talks. [laughter] >> I hope it says I hope it could be that good. >> Oh, Ted, they're they're always great. So, let's start Ted. Um, since our last conversation, which was not that long ago, um, back in May, >> uh, what do you make of where we are in the markets? We've seen a some We saw a big IPO happen. >> Yeah. Oh, lots transpired since our last conversation, but what do you make of the markets right now today? >> Well, you know, uh, what happened on Julia is last time I told you, you know, we these second years of these presidential terms are very volatile and this one is no different really. It's been up and down all year. I wouldn't be surprised if we don't get another swoon into the summertime. But when you get into these periods where everybody's in and you start having these huge offerings, we got a couple more coming, two or three actually, >> then, you know, that's that's indicative of of times when all the money's in, you know, at some point in time, maybe not this year, but I'm just saying that's where the markets are right now. This move that we just had, this big move was all semiconductors. If you look at the MAG 7, they're basically down since October and November. only one. Google's up a little bit. Even Nvidia, same exact price it was in November today. But people don't they don't think about that. They think that, you know, everything's really roaring again. But it's really not. It's only certain segments that are roaring and then you get an issue like SpaceX and they get caught up in it. But in general though, I will tell you, I've seen a lot of IPOs. If you take a one, three, fiveyear look out on IPOs, they don't do well. About 90% of them lose money. >> So I take it, you don't play into the IPO space. >> Not at all. No. I always tell everybody told somebody last week, I said, you know, if the best in the business, Warren Buffett, everybody buys an IPO. Does that would that tell you anything at all about whether you ought to be in that marketplace or not? >> Yeah. is that so rather than playing in the IPO space you give it a few years assess whether or not you'd want to own the the >> you could own that company there's no question about it but you if you look at if you look at the companies that have come out Facebook Amazon things you know they went a lot lower you could have bought them cheap there not to say you didn't make money in them and maybe you made money years and years and years later but off higher than the IPO but the problem is you had to wait a long time if you just took the one three five if you look at it, you probably didn't. And there's all kinds of reasons that that happens, but in this case, you know, they dictated to the investment bank what they were going to have to pay, which is unheard of really, if you want to know. >> So, would you say that right now where we are, we're late stage here? >> Yeah. When you get these kinds of offerings, you're late stage. you. And that's not to say I wouldn't be surprised if we don't make a new new highs in the S&P before this year's out, but it I would tell you it has all the makings of of late stage. I have a quote uh that I have from Warren Buffett in 1999 that said that when you get to the point where every single thing that people do any kind of strategy is up in the market and that's about what it is now. any strategy you use is up, then you're probably toward the end. And then it becomes a thing where people say, and in the end, he said in the end, he said, "Well, God has made us all to be rich in the market, so we need to be in." >> When when everybody's getting in, >> everybody's in. Everybody's in now. I promise you, they're in. When somebody at Juiceeland told me, "Can you get me some SpaceX?" Then I know we're close. >> Wait, what's Juice Land? >> Juiceand is like a juice place in Austin. that you're going to get your and they're asking you. [laughter] >> Well, there you go. There's the sign right there. Um Ted, I've heard you refer to this as a a lemmings market. Is that the metaphor? >> Well, you know, that's a myth really. Lemmings, they limmings don't really they don't really exist. The myth was they would run each other off a cliff. It but it's mythical, but it means something. Well, usually if you say somebody has a limming, they're followers, you know, and that's really what that means. The myth was that they ran each other off the cliff and all died together in the water, but that was, you know, that's a mythical thing, but but but if you hear people talk about it in conversation and they use that term, >> that's what it feels >> that means it's followers >> and that's what it feels like right now. >> Oh yeah, it feels that. >> You've been in the business for 49 years. Yeah. >> Have you seen this movie before? Does it >> numerous times? >> Okay. >> Different ways, different things, but they're all sort of the same. Yeah. >> Mhm. >> Yeah. >> You think it's more exacerbated or >> uh not always. Uh I'll give you an example. Back in the early 80s when you had when oil and gas was the hottest thing going, it was 35% of the S&P >> oil and gas. So every time a little oil and gas company hit an oil well that stock would go up five, six, 700% in a month or two. It's crazy. And uh you know I saw it though with the drug stocks between 85 and 95. Saw it with obviously all the tech stocks. Uh really saw it with real estate >> in 06 and 07. >> Yeah. I mean, we had people that just buying condos like like they were flowers, you know, and uh Yeah. It comes and goes. >> Yeah. So, a lot of folks are caught up with like all the new IPOs in the markets and you look at the markets as an investor. >> Are you waiting for something? Are you sitting and waiting? Like, what are you doing right now? or are you finding opportunities like you said there's maybe little pockets of >> Yeah, I mean the last time I talked to you I mentioned that probably gold had a bit to go. >> It was around 4600 or something I think at the time. Well, that happened and in the last few days we've been we've been adding. >> Okay. So you're back, you're adding back to gold because I think I remember you had trimmed some. >> We trimmed it in the very first few weeks of the year. >> And since that time, those minor stocks are down 30%. A lot. So we added back some miners, added back some gold bullion itself, but energy is cheap. You know, we got num numerous stocks that we like. You know, Union Pacific, Sony, Cortiva, just Archer Daniels. There's a lot of companies we like. They just happen to be in the AI. Now, in the AI side, the way we go at it is we own a lot of copper >> and we own natural gas because if you really believe the AI narrative, if that's what you think, then you're going to have to have a lot of copper and you're going to have to have a lot of natural gas. >> They need those materials to do the buildout. All that infrastructure. >> Those companies are cheap. >> Yeah. on a relative basis. We own like Antar we own seven and a half times earnings. Think about that. [laughter] >> Huh. That's an interesting way of playing it. Um why why go that route? What was the what's the reason why? Um >> well, we look at companies based on fundamentals. We're really not trying to get in an area or do some macro look at something. It has to be on the company. Mhm. >> If we determine that that company can make a lot of money over the next 5 years and we can buy it at a discount now, a lot of our companies we own, we've owned 15, 20 years, but if we can buy that at a discount now, then we want to own that company. And that keeps the downside from hurting us much. Because if you're buying these companies on the cheap side and they have good numbers, the odds of a company going against you, I'm not saying none of them will. Surely some of them will, but if the odds of that are very low, then you're you're putting the odds in your favor by buying a really good fundamental company. Um, and I can't see if you take SpaceX for example at 92 times sales. I mean, you can't you can't make any fundamental sense out of that. That that's not the kind of thing we would look at because you'd never get your money back realistically. And I and that's the kind of thing that we look at. So, we look at companies that we know that you can own. You know, you if you own the own company, you probably do pretty well. >> Gold has been one of the few standout assets of the last few years, reaching new record highs as investors respond to rising fiscal deficits, [music] geopolitical uncertainties, and growing demand from central banks worldwide. But here's something most people still overlook. Price appreciation isn't the only way to benefit from owning gold. What if your gold didn't just sit in a vault, but actually generated a return? With monetary medals, you can earn a yield on gold, paid in gold, without [music] having to sell. Instead of earning in dollars that can be eroded by inflation or policy changes, you can earn more ounces of gold. That means your gold holdings are growing in real terms, [music] not just nominal ones. Earning gold offers a fundamentally different approach. You're not just preserving wealth, you're increasing your exposure to a hard asset over time. So, [music] you're earning additional ounces of gold while still benefiting from any potential price appreciation. It's a way to make gold a productive asset, not just a defensive one. As more investors turn to gold for wealth preservation and portfolio diversification, a natural question follows. If you're going to own gold, why not earn gold while you own it? Thousands of investors are already earning a yield in physical gold and silver through monetary medals. You can learn more at monetary-medals.com/julia. Now back to the rest of the episode. [music] I guess what the regular AI trade is a momentum trade. >> Totally. >> But this is also a way of playing it >> but going about it from you know copper natural gas. Yes. Well, we also think that the next 10 years is going to be more of a commoditybased market. >> If you look at what's going on in the world, we've gone from really uh countries that are globally getting along to countries that are globally not getting along. So, what they've all started doing is hoarding their raw materials. All of them hoard them now. Like, we're going to keep our oil. We're going to keep our fertilizer. We're going to keep our critical minerals. They're all doing that now. And so to bring those out to bring them out, you can buy them, the price is going to have to go up. >> So interesting. So commoditiesbased take early innings of a super cycle there. >> Yeah. Something like that. Because what happens is if you look at if you look at iron, copper, okay. Gold, silver, all any a lot of the metals involved. And we we own tungsten for example. I'll give you an example. Friday I think it was China told Japan we're and they control most of the tungsten we're not going to sell you more tungsten. Now we own Elante which is a really good tungsten company with super numbers that are coming on earnings wise. And so those kind of companies where they're not you know if you look at natural gas and now we have oil in the US but it's the tanks are low right now. A lot of things are lower than people expect. We're not necessarily out of the woods here >> and all this stuff. So yeah, I think commodities will be much better. That's not all we own, but you need some of them. >> So the commodity supercycle early innings, but it's not just driven by energy or is it primarily driven by energy? >> No, it's everything. >> It's everything. Okay. >> If you look at critical minerals for example, China controls probably 85% of the critical minerals in the world. US we have very few critical minerals >> like for example we have you you don't know what antimony is but antimony is used to when you when you have explosives or bombs and all that anything in defense use antimony >> we have one sort of just now cranked up antimony mine in the US now we own a little company in Australia that has a great gold mine and and has 20% antimony see things like that critical minerals that you don't think about. But there's >> there's probably 25 or 30 critical minerals >> that are critical for all these different things. >> That's just one thing. But then copper, you know, to get a copper mine up and going and producing is really hard. >> Expensive. I've heard that. >> And so, you know, we own Freeport Macaran, but we own copper outright as well. Um, it just it just looks I know it'll come and go some, but if you look at the next to us the next 8 to 10 years, it's going to pay you to have some some of that. Not saying that whole portfolio, but you need to look at it. >> It's a really good point, Ted. Um, you mentioned oil energy. You you you're from Texas. Well, you live in Texas. I know you're originally from Georgia, but you live in Texas. You are a Texan. And gosh, I imagine you're very plugged into the energy world down there. What What's the story in the oil industry that people don't quite understand right now? >> Well, I know a lot of people in the in the business, you know, uh I wouldn't say I mean, I know a lot about the business, but I'm not in the business. And so, the people, >> you know, a lot of people in the business. >> Yeah. And they would when I have questions, they can answer them for me, for example. But here's what's in that business. That business changed a lot. when you started drilling horizontally because those wells are really expensive to drill. Used to when you drill a vertical well, it was fairly cheap to drill. You went down and see if you find it. Well, now you drill horizontal and it costs a lot more to drill it, but you make a lot more out of it. And I don't think people realize no matter what the oil and get oil price is, they're not going to do like they would have done maybe 30 or 40 years ago and go out and start drilling a bunch of wells, okay? They've learned a lot about how to bring it on systematically. And I think I think people forget about that. I think if you saw most of the majors though and listen to them, listen to guy from Chevron, people at Exxon, they'll tell you they expect the oil to go to like 150. And I there's various reasons for that but we've used a lot see a lot of oil was stored in tanks and we also we pull down the strategic reserve so far now they were basically used it all and then in the tanks we've gotten down to where the you know you store a lot in the tanks but when you bring storage down and get to that lower say 10% or so it causes trouble. We got sludge. You have different things. We're we're low on the tanks now, too. So, it's not like it's not like we're going to turn on the faucet tomorrow because our reserves are low right now. And so, I know there are we're bringing this in, the straights are open, everything's going to be great. I would not use that in my mind to think oil is going back to $40 or $50. So, >> just don't think it'll happen. >> Right. Okay. So, as we're recording today, the the reports are um this memo of memorandum of understanding signed by the US in Iran. >> Yeah. >> Straight reopening, but that doesn't matter so much like it's not going to Do you think investors are misinterpreting or not reading it right or >> Oh, I don't I think investors now have seen so much coming out of Washington that that they think it's just another deal where they think they've got a deal. Maybe they have a deal, maybe it works. You know, they got what they've done is they've signed an MOU, but they have 60 days to talk about it. >> Well, obviously Iran's not going to do some of these things. And anyway, it's I think people have lost faith in all of that. >> Um, do you think oil's going higher? >> Well, it could go some lower here just because the momentum people trade it, >> but there are less bulls. So, if you go look at the sentiment numbers on oil, the bullish numbers are so low now, it's incredible. Nobody's bullish on oil. >> A few people who come on this show are, but >> they are. They have been probably, but if you just look at the overall trading, CTAs, all that. They're they're really they're not bullish at all. >> Uh because they think they think that once these traits are open, they come back, everything will go back to normal in a month or so or whatever. We just don't think that happens. Wouldn't that also kind of reinforce that other trend of like make sure you have your supply chains right or make sure you have all of your materials? >> Well, it's good a good case is China. >> We didn't realize at the time, but China was already storing oil. They didn't get hurt too much in this deal >> because they thought ahead. See, and they they they were storing oil. So, they didn't have they didn't have they didn't have the trouble with the shipments. Uh and we underest we underestimate them in many ways but that's just another way we underestimate them >> but here in the US like our stores are really depleted and >> well where yeah our storage is you know storage >> because you have a lot of oil that's out on tankers but you know we but if you think about what got knocked off per day and millions of barrels a day you don't just get over that in two weeks. I mean, it's gonna take a while. Um, >> I just think if you look, we liked energy even before all this happened. >> Oh, yes. I we did talk about that. Yeah. >> Because it was it was cheap and it's still pretty cheap. Really? Energy is cheap. You get great dividends in energy. You can get six, seven, 8%. I mean, a lot of them even the biggies are like four and a half or so, five. So, people I think miss the boat on that. >> Yeah. And I think you like uh Chevron is one of them. One of the things you like. We we like Chevron. We like little company called Matador. >> Matador. Yep. >> It's a great small company. A lot of things going on at that company. Like the pipelines, MLX, um Enterprise Products, but you know, those are paying seven or 8%. Which you're it's not currently taxed. And so it's it's good stuff. You you've also talked about um wanting to own the full well to the end in the energy chain. >> Well, uh you want to own the producer. >> Okay. >> But then you want to own the midstream too where they carry it because that's if you think about a gas pipeline or oil pipeline. Think about if you had to go get an easement today of 1500 miles in the US. That'd be like trying to get a new railway for 1500. you couldn't do it. >> Oh, I can only imagine. >> Very, very, very hard to do. So, >> when you own these pipelines, you really own something that's it's like the railroads today. Like we own Union Pacific. >> It's getting we're trying to they're trying to merge it with Norfolk and Southern. If they do it, it will be fantastic. But you can't replace that really. That's the thing. Can't replace it. So, >> that that those pi pipelines are that way. >> Yeah, you can't replace. I also imagine just trying to build it again. Just the push back you get. Oh, I can only imagine. >> Um, okay. You've said energy is dramatically underowned by most investors. >> Do you think what do you think would bring more attention to the sector >> price? Yeah. If the price, you know, what what'll happen is >> it'll be it would be like uh if you notice the last four months of the year last year with gold miners and gold and silver. >> Yeah. Yeah. How the retail and everybody stormed into >> they kind of meme'd a bit. >> They did. >> Yeah. >> Same way with oil. If oil goes to 150 or higher over the course of the next year or so, they'll be right back into they'll do the same thing. They'll start buying. They'll go after the companies, go after the oil itself. It'll be a chase. You know, everybody chases now >> and so they'll chase it. >> Huh. Okay. Um, we will watch that. Um gold. You mentioned gold. Um what's okay what for you is the story with gold. Why what's your thesis for wanting to own gold? Does it have to do with like debasement of the currency? What's or the >> the biggest thing is currency reserve? If you look at if you look at what you can hold in currency reserve worldwide. Okay. Gold has now replaced the treasury. And it's because the people don't own the treasury. you 40 trillion in debt when they know we can't pay it back and we're going to have to inflate our way out of it probably. And so they're saying, you know what, I'm going to take that currency reserve. We're going to instead of putting it our reserve we get in a dollar. We're going to buy gold. You can have the dollar and you have the treasury. We'll take the gold. So a lot of countries are buying gold. Now you had got some selling I think during this whole problem in the Middle East. I think some of those were selling Turkey. Some were selling some gold. But that tells us that gold will probably have a number of more years to go and a good bit higher before it's all over with. It's it's corrected. Remember, it went from 5,500 to 4,000. This is just two days ago now. >> Yeah. >> So, uh and that's why we started buying again. Uh the miners bought a silver miner, too. But we we put that money back on. >> Yeah. I guess you mentioned it's become the treasury. You're talking about like all of the central banks around the world wanting to just >> Well, countries countries. Yeah. They like if you trade and you ended up and you say, "I ended up with excess dollars, currency reserve. I don't want the dollars." Okay. >> You take the dollars and we're going to take we're going to we're going to buy gold and that's what we're going to hold. >> And it's paid off for them. Think about it. And gold's really paid off for them the last three years to do that. And so I think they'll continue to do it. >> Yeah. I Yeah. I kind of wonder like once you It feels like before gold was like okay some gold bugs would talk about it but it feels like it's become much more mainstream. >> Well, I I think it's become a I think it's become a currency hedge. In other words, if you if you look at us and we have one strategy called a conservative fixed income. It's mostly treasuries, right? And a little bit of >> short duration, but we own four to 5% gold in there. because you we look at that as a currency hedge. In other words, all the gold has gone up over we've owned it quite a while but any new account we get it as well because we looked at that to say okay look two three four years out it should keep on going because you're going to have more buyers for it >> right is part of that though for you Ted is does that have to do with our fiscal picture here in the US like our debt situation >> well a lot yeah because you know you think about it >> I think I mentioned this to you before but if took the amount of gold to buy a new home >> 20 years ago. Okay, >> that same gold today would buy a home three times that price today. >> Same amount. >> Same amount. >> Wow. >> And you'd have money left over. See, so people forget about gold is meant to be held, not traded a lot. You know, we don't really trade the bullion much. We add to it. Now, we trade we do trade the gold miners. Well, we traded those in early January cuz they were too expensive and of course they corrected 35%. But uh >> you hold on to your bullion. >> Yeah. >> And you like y'all do like to do the physical the physical gold. Um so I just some folks have different ways of wanting to express how they like to hold gold. Some people do the ETFs, some people do the physical. >> Well, we we we like to buy uh we'll buy it on the exchange if it's convertible to physical. >> We we you want to buy we don't want to buy something where we can convert it out if we wanted to. Okay. >> Um for most people, they're not going to go down and buy you, you know, you could take a cigar box and put a lot of gold in it dollar-wise. >> Yeah. [laughter] You know, and people don't realize how much of gold is >> Yeah. I think some people still think an ounce of gold is just Yeah. >> like definitely pack it. >> Like like my wife's jewelry, for example. >> Mhm. >> For I thought it cost a lot at the time, but if you look at it today, it really costs a lot. I mean, it you know, it it she won't sell it. That's unfortunate. [laughter] >> Don't Well, I agree with her. It's sentimental more than anything, right? Um and valuable. Um that's funny. How about um what do you make? We've talked about the state of the economy. What do you make of the economy today? What's your assessment? >> Well, we do have an elite, non- elite economy. You know, I I grew up really poor. So, I know what goes around with these people at the low end and and they're in a lot of pain right now. They just they're just barely barely barely making it. Um, and they're having to do all sorts of things to make it. I mean, a lot of the people that work for me in other jobs besides Oxbow, uh, other companies and different things I have, uh, I really have to reach down and help them out because we pay them a lot, but they're hurting, you know, already. And we try to do as much as we can for them because I can tell there's a lot of pain going on there that they they they didn't opt for. So, so you have this bifrocated look here and it's almost like everybody at the top and I have to put myself in that category. But the point is everybody at the top I don't think they think about the rest of the economy and in the end that's not good for an economic look because if you don't have a really strong middle class you're going to blow up eventually you the whole thing craters on you. Yeah. You can't, if you think about it today, everything is about the stock market. Everything is about money and the stock market. The economy runs off the stock market. People are spending money off the stock market. So, if you think about it, the next time you have sort of a generational bare market, all those people are going to be down there with the others because they're going to, you know, they haven't they haven't really made a really what I consider a great linear group economically to really pick things up because there's no middle class. >> And like they'll if that if we do see that generational bare market, that's where we will see some sort of central bank intervention too, >> probably. But usually they don't do any good in a bad bare market. Yeah, >> they they it's too late. >> Do you think the the investor costs would get hurt in like a bare market or >> Sure they would. >> Yeah. >> Yeah. Your next you know when you have a when you have a true bare market, you know, you're going to lose 40 or 50% in the averages. And so a lot of people are not expecting that. If you look at if you look at baby boomers today, they're just they're brain dead. They're they they have so much in the market >> that you can't convince them to take any out and their percentages are super high. They own more stocks. We've got numbers going back to 1949. They own more stocks than they ever have as a percentage >> than Yeah. >> Well, financial assets and so >> way over invested. >> Oh, yeah. Way over. Way over. >> When when Okay, let's say we actually have a lot of boomers who watch this show. >> Yeah. >> How should a boomer be invested? What is a smart They've made their money. >> Yeah. What's a smart way to >> Well, they need to think about it like this. Okay, if okay, let's say that something happened where it couldn't make any money for like four years in the market and it actually went down over a long period of time. I'll take 2000 example 2003 market went down 55%. Okay, S&P if you if you take that group of people and say, "Okay, if if that happened today, how would you feel about everything?" Okay. >> And would you have enough liquidity so that you could live your lifestyle and do what you want to do during those periods? And I just think today they don't have I think they have too much. Uh I think they they've [snorts] gotten sort of brain fogged on this thing that you know nothing ever happens really bad >> or it always comes back. They were probably in their 40s when the dot bubble burst. >> They were different when you're in your 70s. >> Yeah. >> Average baby boomer and that period was 45. >> Okay. >> Average today is 72. But here's the thing. 10 years from now they'll be 82. >> Mhm. >> Well, the life expectancy right now if you're probably 72 is probably 85, 86. I'm not saying they're all going to die at 85. >> A lot of things happen though. >> You get sick. You have afflictions. One of the spouses gets really sick. You can't go to the places you used to go to with all your real estate because you really you can't physically do it or don't want to do it. >> I see this in our investors. And if you're not set up so that you can go to sleep at night and think, okay, a good part of what I have, let's say a number 40%, 35, whatever you want to pull is what I call bulletproof, then you're in a pickle because if you're coming into a super bare market and you're 85 or 90% in stocks, you got nowhere to hide. >> Yeah. >> You know, and you're not at that age where you can go back and wait on it. You At 80 years old, you can't wait on the next bull market. You're the next bull market, you may not be here. >> And you don't know what it's like when everybody else starts selling. If all the boomers have >> Well, and all the 401ks, too. See, see, everybody's in. So, uh, right now you have more people in the market than at any other time since I've been in the business. Percentage-wise, everybody's in. Just go to somebody in the 401k and ask them, "What are you investing?" I'm I'm in the market, you know, and it's it's been good to them. That's why you can't uh you can't make the argument because they're like, uh, you know, you're just a negative person. Well, I'm not negative. We own stocks, but it depends on where you are in your life. Yeah. If you're 30 years old, >> yeah, >> let it rip. >> It's okay. Let it rip. you know, but I mean at that age and I think that's snuck up on the baby boomers and they've gotten used to, you know, a lot of have a lot of do-it-yourselfers and that sort of thing. Looks real easy to them till they start losing money. >> Yeah. >> And then I just think there'll be socially problems with that too. >> Yeah. That would be like retirement crisis almost. If you have a lot of people lose a lot of money at that age, there'll be some depression in there. I promise you, mental depression, because they'll think, [snorts] gosh, you know, just a few years ago, I had X. Now I only have 70% X or whatever. You can't those are not things you get over easily. >> And of course, no one wants to think about those scenarios, but you have to think about them. You have to think about them. >> Well, you should. If nothing else, you got to remember what Warren Buffett says, which is number one thing you want to do is not lose money. >> Yeah. And then you don't want to forget that either. >> You can make, you know, I can show you where you can make 15% a year for five years in a row, great return. And you get in the six year of the bare market and your return goes to zero. >> Yeah. >> Cumulative. >> Oh [sighs] gosh. >> Yeah. Yeah. Is it cuz everyone's just chasing returns rather than like just do something that's like little just some sort of sustainable not high like swing for the fences returns but just something >> No, I think they're all caught up now exchange rated funds. They don't they don't really look at >> the market of stocks like buying companies like we do. I think they look at it and say, "Yeah, I'm going to buy the S&P and buy the NASDAQ. I'm going to buy this or that or the other." And they think that's that's cool. Well, I don't have to pay any tax on it and it's the way to go. But see, those are the ones that will get you, you know, um I know you interviewed Mike Green. Those are the ones. Yeah, they'll get belted one of these days. >> Let's see. What did he say? He was in studio recently that we are >> gosh, I want to say we're at 55% past. We're 55 and 60. >> Yeah. Yeah, we're we're we're close. >> Yeah, we're definitely >> to the where you turn and go the other way. And Mike's he's smart guy. Uhhuh. a good interview you did with him and so much >> he >> but yeah >> that there's a lot of things in the market right now that are you just got to think you know you got to think >> yeah you kind of alluded to some of the social issues and more of the social fabric and >> the middle class today is it is it pretty much do you think it's gone or it's just at risk of being gone? Well, if you think about it, if you have two people and they make 120 grand, let's say >> 100 120 grand, >> and they've got a couple of kids and couple of cars, house, they're not really making much. In fact, they're probably not saving anything. >> Mhm. >> And that's statistically that that that bleeds out. You see it in the statistics. They can't I think 58% of the people in the country can't raise a,000 bucks. That's not good. You know, in the long run, it's not good. But nobody really cares. I think at Oxbow, I think we pay our people as well as anybody and we make sure we do. Two things. I want them to be happy. But the other thing is I want them to make a lot of money because I need them live a good life, >> you know, and there's a reason for that. If I always say, you have happy employees, you you'll have a happy company, then you'll have happy customers. >> Yeah. Um, do you worry though about the direction that we're headed? Like we've talked about the eyeshaped economy. I don't know who coined it. I want to say it was Adam Tiger. >> I think it was Peter. It's Peter Booker. Peter, I know Peter pretty well. And he uh he he coined it. And he's but he's right. >> Yeah, >> he's right. It's it's just a little bit up here at the top. Everybody else is is down here. >> And I wonder if it's exacerbated by if you open TW if you're are you on Twitter or X? You open it's it's all stock market all day. It's a lot of twit >> or you open Instagram and it's everyone's told elaborate vacations or things. I don't I don't even post it's all about money and what you've seen, you know, I think >> and I I think it has an impact on the young people particularly. >> They're they can't have that right now. And so uh you see them sort of going in a different direction in many cases. I I you know I I think there's a lot of good young people, but they're having a tough time because of the way things are structured right now. >> Yeah. Um Ted, I mentioned actually a couple things. There's something I wanted to ask you last time and I didn't get to ask you, so I'm going to shift topics. Um what's the biggest risk for you right now that isn't getting enough attention? >> You mean me personally? Well, >> it doesn't have to be you personally, but >> No, what you mean the biggest risk? >> Yeah. What do you see as the biggest risk right now >> for the country or for the investors? Anything? >> For both. >> I I think the biggest risk right now is is the government because we have a government that nobody believes in either party. >> I mean, if you ask the average investor, they'll tell you they don't believe in our government. They just they just don't think they're effective and they they don't have any respect for them. Number one, and then we have them spending all this money and nobody cares either party, nobody cares about spending. And somewhere down the line somewhere that will come home. And when it does, and it it may be 10 years, I don't know what the time frame is, but I know when it does, it won't it won't be a good look because it probably will mean some sort of yield cur curve control to let their inflation run while or something along that line. I don't think you can get out of it. Either that or you just keep on printing and you inflate, inflate, inflate. >> Yeah. Another reason to own commodities, by the way. >> Yeah, there you go. >> But um that would be that would be the biggest risk I think people don't understand in the country. >> Oh, pretty soon the interest on our debt's going to be >> the biggest. >> Well, we give away a lot of money and we don't have any, you know, you got you saw what happened during Doge. >> Mhm. >> They they they didn't have a chance at cutting cutting it. And yet there's so many things that we spend money on we shouldn't be spending. >> Yeah. >> But nobody has even faith in anybody. That's my point. I know. >> I'll tell you what um gets me and I was talking to my husband about this. We were driving to the airport is um when you see people who go into office to serve and it should be in my opinion you go to serve and they come out so wealthy >> from trading stocks or it's like they have millions of dollars in net worth and that that to me just doesn't feel [clears throat] right. Um something's wrong. >> Well, couple of things. Number one, you limit the term. Mhm. >> I know a lot of people wouldn't believe that, but to me, look, you're going in and you're going to stay x amount of years. That's all you get. >> And the second thing is if you don't balance a budget, then you're out next year. >> Yeah. Could [laughter] fire them like they would fire an in like somebody would fire an investor for not >> Exactly. >> being a fiduciary. >> See, that would never fly because it's too common sense. >> That's great. Actually, I like that common sense, Ted. Um, I also didn't ask you about, this is another random one on shift topics, private credit. Is that still an issue, do you think? And >> oh, I think it's a big issue. Yeah. >> Yeah. If you look >> just in the last couple of weeks, I mean, they've had bigger troubles uh with people, you know, getting redemptions and that sort of thing. Private credit is another Wall, you know, Wall Street will sell you anything you will buy. >> If you'll buy it, they'll sell it to you. They don't care. And uh look at SpaceX. But on the private credit side, if you you know owning a bank, like I own part of a bank uh I did, we sold it in December. But if you look at it, why would you if you want to borrow money as a company, why would you pay private credit 11 12 or 11 and 3/4% when I could borrow at the bank for maybe 6 and 3/4, 6 and 1/2? >> That see does that make no because you have to though? >> Because the bank won't lend. it because they know you're not good. >> Exactly. So, this idea that we have some great companies in there. Yeah. You may have a few, >> but I would say more than likely you've got a lot of leverage and you have a lot of poor companies that can't pay it off or won't pay it off. You're going to have defaults. And it's another thing much like private equity was dreamed up on Wall Street. And I think a lot of these family offices and big pension plans and all of that, they all have a piece of private equity and private credit. I think in the end it'll be like hedge funds were 20 years ago. They'll look up and say, "You know what? I could have made more money in the market." >> Yeah. >> Than I could have done doing that. But see, these consultants and Wall Street, they come along and they'll they sell them anything, but they buy it. >> People ever try to sell you anything >> all the time. [laughter] >> But I cut them off, though. >> I'm sure you do. They call they I want to come by and see you. We have >> We have the greatest private credit fund. I want to come back and see you at the private equity. We're doing X. And when you dig into it though, the fees, uh, the markup that everything is not there's nothing in there you would want. Uh, I mean, I tell everybody if you really want to invest in a company, go find somebody you know that's really successful and ask them if you can buy a piece of their company >> private. >> You know, um, a lot of the folks who invest with you, this this would be my last question, Matt. um who invested with you, they have sold businesses. >> Yeah. Oh yeah. >> We just saw a lot of new millionaires mentioned with SpaceX IPO who were employees. Um what's your advice to someone who comes into like a lot of money like that right away? Like what do you tell that person? >> Well, the SpaceX group is different from a business owner that sells a business. A business owner that's had a business for 20 or 25 years, more than likely he and his spouse have worked hard at that business. They've been in debt. they've had to work and and just slave to get it where it is, then sell it for a lot of money. So, they have a different kind of respect for the money. A lot of the people there in SpaceX, in my opinion, just happen to be at the right place, right time. So, all of a sudden, I got a hundred million bucks. I say, "Okay, and they'll probably believe the hype that I got to stay in this because it's going to make me a billion." Mhm. >> But I had this same thing go on in 989 that in 90 1998 999 where we had people that would get 30 40 million as a piece of a public company. We would say to them young people just take enough of that to to make your life the rest of your life great. If you want to ride with the rest of it that's okay. We saw so much of that go to zero and go so far down. And I think they need to think about this. Number one, give some to charity. Okay? Do yourself some good. >> Give some to charity. And number two, take some money out and ice it for your life. Okay? So that no matter what happens to SpaceX, hope it and hope it's the worst sale you ever made in your life, okay? And then keep the rest of it. And if it goes up, that's great. But you know what? If it didn't, I'm set for life. >> You have something set aside. That's good advice. Um Ted, parting thoughts? anything that you like to leave this audience to think about? Anything I didn't ask you? The floor is all yours. >> Well, you know, you have a great show and I've always been impressed with your success for sure. So, you always have the best questions. I think people need to get back to basics. I'm going to my market letter in July will be entitled, you know, stick with your principles. If you have principles about investing and you know how to invest, don't let this hype that's hanging around right now throw you off. I've seen that happen in all my decades. I've seen it happen a lot of times and people will say, "Gosh, I wish I hadn't done that. I knew what to do." Okay, just remember that. >> Stick to your principles. Ted Oakley, founder of Oxbow Advisors, thank you so much for being so generous with your time, all of your knowledge, your wisdom, and for stopping by in studio. So much fun. Really appreciate you, Ted. >> You bet. Thank you Julia.