Title: Generational Bear Market Ahead, 35–45% Drop; Gold in 'Early Innings' | Ted Oakley & Michelle Makori Show: The Real Story with Michelle Makori (Miles Franklin Media YouTube channel) Guest: Ted Oakley — founder & managing partner, Oxbow Advisors (Austin; ~$3.2bn AUM); CFA, CFP; author of 11 books Date: 2026-08-19 URL: https://youtu.be/MevpDM_Sih8 Length: 54:23 Note: YouTube auto-transcript; fillers removed, wording otherwise verbatim (um/uh/"you know" interjections, stutters and false starts collapsed; [music]/[snorts]/[clears throat]/[laughter] cues dropped). Name fixes applied: "Michelle McCrory/McCori" = Michelle Makori; "Oxbow Advisers" = Oxbow Advisors; "Agneo Eagle" = Agnico Eagle; "Heckla/Heca" = Hecla; "Antaro" = Antero; "slumberj" = Schlumberger; "MLX" = MPLX; "Freeport McMurray" = Freeport-McMoRan; "Greg Ael" = Greg Abel; "Bergkshire Hathway" = Berkshire Hathaway; "Docusine" = DocuSign; "Pelaton" = Peloton; "bare market" = bear market; "stackflation" = stagflation; "3540%" = 35–40%; "mosfranklin.com" = milesfranklin.com. 00:00–01:35 is the episode cold-open (clips repeated later in full).
00:00 What I would expect is more of a generational bear market. Something on the order of what we would have had in 2000 or '08 or something more along the lines of 35 40 45% or something. Not because I'm a doom and gloom guy. It's just that things are so overpriced and the multiples are so high. It would be 19 years by the time we get into 2027.
00:28 So you have a whole generation that's never really seen anything really bad. I think that you are in the euphoria stage. >> But how much room does a smoker still have to run in this euphoria phase? >> We're going to hit the wall here somewhere and there's nothing they'll do about it because they will not be austere.
00:47 And if they were, it would probably throw us in a depression. >> What do you think triggers that 35–40% decline? You always think about gold as the ultimate item. If everything went bad, like if everything went bad tomorrow and you had gold, then you have something that's been down through the ages. For us, it's a currency hedge.
01:07 We think the dollar decline the rest of your life and may get into real trouble at some point. And so, gold is that ultimate really insurance policy that you'd have against that. And is there a commodity that you think has the most potential for outsized returns from him? >> This is The Real Story with Michelle Makori.
01:35 >> Hello, I'm Michelle Makori. Thank you so much for joining me here on The Real Story. If you haven't yet, please make sure to subscribe to the channel. Markets are hitting record highs even as questions mount over valuations, inflation, the economy, and geopolitical risk. So, what should investors be preparing for next? Well, joining me now is Ted Oakley.
01:58 He's the founder and managing partner of Oxbow Advisors. That's an Austin-based investment advisory firm managing around $3.2 billion in client assets. Ted is a CFA and certified financial planner with more than four decades of experience advising high-net-worth investors, entrepreneurs, and families on how to preserve and grow their wealth through changing market cycles.
02:22 Ted is also the author of 11 books on investing, wealth preservation, and intergenerational wealth, including The Psychology of Staying Rich, Stay Rich with a Balanced Portfolio, and his latest Second Generation Wealth. Ted Oakley, welcome to The Real Story. Good to have you. >> Thank you, Michelle. >> So, Ted, the S&P 500 recently hit an all-time high, slight pullback on Friday, but it's approaching 7,800, and investors appear increasingly optimistic that inflation is cooling, that the Fed will remain on hold, and that potentially the economy can avoid a
03:00 recession. Now, in one of your recent newsletters, and I enjoy reading them very much, you cited Sir John Templeton's famous line, "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria." So, we'll start off with a big question here, Ted. Where are we now? Skepticism, optimism, euphoria.
03:23 When you look at this market, what do you see, Ted? Well, Michelle, I think that you are in the euphoria stage. Typically for a bull market to really become totally mature, you have to start out with the valuation being there. Okay. And then you have retail investors, individuals come into it and then in the end you have a lot of IPOs and a lot of money starts being raised through debt offerings and stock offerings.
03:56 Now it's all in place and so you certainly got all the euphoria there. >> All right, but how much room does a smoker still have to run in this euphoria phase? >> Well, we sort of thought this year that if you got it going because you're in your fourth year, that you have a decent chance at 8,000 on the S&P probably.
04:20 We don't look so much at the big macro because we buy really mostly stocks from the bottom up in bonds as well, but it wouldn't surprise me because of where you are that once these things get going momentum wise they feed on themselves and that's sort of where you are right now. >> All right.
04:40 So is that to say that you think we're heading for a correction, a bear market? We're in the euphoria part of the cycle. I get that. Give me your timeline, how you see things playing out. >> Well, I'd have to be surprised that you would do a fifth year. That would be 2027, just like the last four. I think somewhere out there you're going to have a worse period.
05:05 And it's probably something to do with the overshoot of all of this AI and data and all of this stuff that they sort of come back to Earth, so to speak. My guess is that's how it all happens. That's just a guess. I'm not much at prognosticating, but I would say that somewhere out there in the next 15 months or so, 15 18 months, you'll probably get in a situation where things don't look quite as rosy as they do now.
05:33 And I think that's when it starts to take hold probably. >> Okay. So 15 to 18 months, are you seeing a correction, a significant bear market? What are you expecting? >> Well, I hate to, it's one of those things where I get excited when prices come down, but I would say that what I would expect is more of a generational bear market.
06:01 Something on the order of what we would have had in 2000 or '08 or something more along the lines of 35 40 45% or something. Not because I'm a doom and gloom guy. It's just that things are so overpriced and the multiples are so high. If they just come back to reasonable normal multiples, they don't have to go cheap, then you have a significant level that the prices could come down and really nobody expects it.
06:33 There's hardly anybody out there looking for that. So, it has the setup for it, which would probably be a surprise to most people, and I don't look at as a negative. For us, we carry a lot of liquidity. So if we get a lot of cheap prices, we look at it as a positive because we're trying to buy things cheap.
06:53 >> Yeah. Buy low, sell high, right? Buy cheap, sell expensive. Isn't it >> the fundamental premise of investing here? So a generational bear market, 35 to 40% pullback in equities. That is what you're expecting. Just to recap. Well, eventually you'll get it because really every generation has theirs.
07:15 And if you think about it, we're 2008 to you, we'll be 19 years by the time we get into 2027. So, you have a whole generation that's never really seen anything really bad. COVID was five weeks and done. 2022 was seven or eight months. The Fed came to the rescue all the time. So, nothing bad's happened.
07:38 And everybody feels like I think that nothing bad will ever happen. And when you get to that point, usually you're closer than not to something that would change, >> right? And in your newsletter, you pointed out some striking examples of stocks that rose meteorically and then crashed.
08:00 You pointed out how Zoom rose 700% between December 2019 and October 2020 and then surrendered that entire gain by December of 2022. DocuSign went from $44 in 2019 to $36 in 2021 and then also gave all that back practically. Peloton that was a big one rising from $24 to 158 before collapsing.
08:25 So what are investors chasing today specifically that you think looks most vulnerable to that same kind of fate? >> Well, it would have to be the semiconductors because semiconductors really — and I've been around 46 or seven years on the street. So I've seen a lot of semiconductor companies going all the way back to Texas Instruments.
08:46 But semiconductors, you live by the sword and die by the sword. And what's happening is they run up all the semiconductors and everybody jumped into it. That's where all the new money went the last six months. And so my guess is that's what's happening now. That was like those others you mentioned in the long run because they moved up really big high percentages and these semiconductors can really correct on you in a big big way.
09:16 But any particular stocks in that space, any particular names? >> Well, all of the ones in the group itself. If you look at AMD and Intel and Nvidia, all of those have that same characteristic. They've been run up, a lot of money going into them pushed them much higher than they have been, and really Intel hadn't gone up much at all until this last run.
09:42 But if you take all the stocks for example in the SMH and pull those out and go look at the graphs on them, you'll see where they've all gone to new highs. Something like that, just that group up 20%. And usually that's a sign that you probably don't have a lot more to go >> in the group >> in the group specifically.
10:05 But yet you still think that we're going to have a broader market sell off, that generational bear market. What triggers it? Is it a downturn in the AI sector? What do you think triggers that 35–40% decline? >> Well, I think what happens is, and again, I'm not sitting around in a doom and gloom mode waiting for the sky to fall.
10:28 That's not what I'm saying here. What I'm saying is that you need to be careful about what you own or what you buy because if you're not and you get caught up in all these areas where the multiples are really high, like if you look at the earnings that are showing on the hyperscalers, the number of them and everything, and then you back out all the debt they've taken in and what's all of the depreciation and things are going to show up over the next two or three years.
10:53 I don't think those earnings will hold up. In other words, I don't think what you look at 24 months from now will be the same as it is today. And a good example of that was Cisco back in late '99, early 2000. They thought everybody was going to buy these routers and the whole world was going to change and you had everybody talking about putting so much fiber in the ground and that sort of thing.
11:21 All that stuff got overbuilt and so you looked up in 2002 and all of a sudden people like, hey gosh, it's not happening like we thought it was, and so everything corrects back to another level. I would see something similar to that happening with what's going on in the AI look because we have so much speculative activity in that group and nobody seems to be thinking ahead so to speak in this group.
11:50 >> And I hear that and we have had some irrational exuberance, if you will, in that group. I know you specifically mentioned that you sold Intel in the spring of 1999 after it had risen 400% over four years. And then you watched it rise another 100%, correct me if I'm wrong, before peaking in 2000.
12:11 And then it took 26 years to regain that level. So, you have to know when to sell. I hear that. But selling early can often be just as bad. I'll give you a personal example. I bought Nvidia very, very early. I was very early to that trade. I sold it after at 4x and I was like, 4x, that's good. Let's not be greedy.
12:32 I didn't sell all of it, though. And then I went on to have that meteoric rise, right? >> So, how do you know when to sell taking some profit off the table and not miss out on some tremendous upside? Well, Michelle, first of all, I wouldn't be too hard on myself if I had a 4x. So, that's good. But I'll give an example.
12:55 Now, we've owned Microsoft for a number of accounts quite close to 15 years. Okay. What we're seeing in the Microsoft look right now is not great. And so, on this little runup we've had in the last month, we're actually selling Microsoft. Okay. Now, I will say some accounts have it so low that we can't sell all of it for taxes.
13:21 We're kind of working through that. But the point is if we do the valuation numbers on something and we look out and we say, these valuation numbers going to come back in, they're going to come back in here, and if they do, that stock's going to be cheaper.
13:41 Now, we may be wrong. Again, I've been in this business a long time. I've been wrong a number of times. That's how you learn things. But that's how we get to the point of deciding when to sell. And sometimes — now we've sold Microsoft really all the way up two or three or four times, just little bits at a time.
14:02 But this time we basically decided to sell it all. For us it looks like the valuation doesn't hold the price. That's why we sell it. And that's how we come up with that. >> Well, look, valuations have always been the biggest indicator for legendary investors like Warren Buffett, right? He famously spent the last several years sitting on an enormous pile of cash at Berkshire Hathaway in large because he simply wasn't finding enough opportunities at valuations that he considered attractive that he said
14:36 make sense. Yeah, >> Berkshire was a net seller of stocks for 14 consecutive quarters. By the end of the first quarter of this year, its cash and short-term investments had climbed to a record of roughly $397 billion. And that was widely seen as Buffett sending a pretty strong signal about valuations in the US stock market.
14:56 But now something has changed. In the second quarter, Berkshire bought about 23.5 billion worth of stocks, sold just 3.7 billion. So it's now a net buyer of roughly 20 billion, ending that 14 quarter streak of net selling, getting back into the market right now. Granted, this is important. This is happening under Greg Abel who took over from Buffett at the beginning of this year.
15:22 So Buffett does still remain the chairman. But how do you read, because is Abel seeing opportunities that Buffett wasn't willing to pursue? Does this tell us something about valuations today that we just simply can't look at it through the same lens, that we need a different approach? Because is there a risk in being too cautious and sitting on cash for too long while markets just continue to move higher and higher? >> Well, I don't know much about Abel and I certainly don't know
15:52 much about Mr. Buffett other than in fact I followed him for many years and I will tell you there was so many articles that came out in 1999 that said the guy's washed up because they weren't participating in the high-tech and all that move and they just weren't in that. Well, actually from about 2000 on that showed the reason why you would own Berkshire Hathaway, and to me it's not a big deal for them to spend 23 billion whatever, is only about 5%, a little over 5% of their cash. And that's not a lot. I
16:28 mean, if you think about it, they have a lot of cash left. So, I don't think they're crazy bullish or anything. If they were, they'd spend a lot more than 23 billion. I think that's just a personal opinion. I have no insight to anything other than just looking from the outside.
16:46 >> I'd like to just take a quick moment and extend a big thank you to all of you for watching. If you enjoy these conversations, please subscribe to the channel and share our content. Remember that you can also find full episodes on Apple Podcasts and Spotify. Every subscription, every like, every share, every comment helps us reach more people, and I'm truly very grateful for your support.
17:12 I'd also like to thank my partners at Miles Franklin Precious Metals. For nearly four decades, Miles Franklin has been one of the most respected and trusted names in precious metals. Now, if you've been watching this show for a while, you know we spend a lot of time talking about rising debt, inflation, the longer-term risks facing the global financial system.
17:32 And against that backdrop, we're seeing growing interest in physical gold and silver as hard assets that can help diversify a portfolio and preserve purchasing power. And of course, it's not just individual investors. As we know, central banks around the world have been record buyers of gold in recent years, adding it to their reserves.
17:53 Now, unlike many financial assets, physical gold is a tangible hard asset that you can own outright with no counterparty risk. And that is part of what has allowed gold to serve as a store of value across generations for thousands of years. So, if you would like to learn more and explore a precious metal strategy tailored to your circumstances, there's a very experienced team at Miles Franklin happy to answer all of your questions and you can reach them at info@mfranklin.com.
18:23 Now, back to my conversation with Ted Oakley. >> No, I'm just bringing it up as a point and I like to play devil's advocate. It's the first time I've interviewed you, but my style is to just always challenge positions even if I agree with them. But let me give you the counterargument for why this market could just continue going higher, >> perhaps for quite some time.
18:46 Firstly, >> investors have essentially been programmed now to buy the dip. Every major pullback over the past 15 years has ultimately become another buying opportunity. So the moment the market weakens, investors rush in, well, because they're afraid of missing that rebound, right? And then secondly, we have the enormous growth in passive investing when we're talking about trillions of dollars flowing into index funds and ETFs a lot of times through just automatic contributions like 401ks, retirement plans, passive pension
19:19 allocations, robo advisor, investors just buying ETFs directly. So much of that money is not making a judgment about whether an individual stock is cheap or expensive. It's not looking at the fundamentals. It's a different type of investing philosophy. It's allocated according to an index. And because most major indices are weighted by market cap, the larger a company becomes, the greater its weighting, the more of each new dollar flowing into the index it receives, so forth and so on.
19:47 Giving the background to our viewers here. And obviously critics say that this has created a self-reinforcing market increasingly driven by flows and momentum rather than traditional analysis of what the underlying businesses are actually worth. I'm not saying that it's the right approach. It's just the approach that seems to be in place now.
20:06 You've got corporate buybacks added to that, also supporting stock prices. And then you've got the basic question, where else does the money go? Because we've got inflation. So, you don't want to sit in cash. Cash carries an inflation risk. Long-term bonds, I don't think anybody wants a 30-year bond right about now. They remain very vulnerable.
20:26 >> So, even if investors recognize that stocks are expensive and they're overvalued and price to earning ratios are completely dislocated from reality, there's still where else am I going to put my money? And equities still seem to be the most attractive place to put that.
20:48 So I guess the question is why couldn't that combination of passive flows, automatic contributions, this dip buying mentality, corporate buybacks, and just a lack of compelling alternatives just continue to drive this market higher and higher and higher and higher. >> Well, I understand what you're saying. It's interesting.
21:09 My friend Mike Green, who probably does much passive work, >> I've interviewed him. Yes, >> I'm sure you have. I've interviewed him before and Mike's short guy, but he talks about the fact that you're within about five to 7% of passive to where it turns the other way. In other words, if everybody owns the same thing and then you turn the other way — and see, I think a lot of it has to do with demographics in terms of a lot of the baby boomers getting older and that sort of thing.
21:43 Eventually they sort of turned this stock thing around. What doesn't make any sense to me, and we won't do this, I will tell you Michelle, is everybody can be paying anything they want for anything but if we look at it and we think it's stupid, we're not going to do it. I've been down this road before.
22:03 I've been through a lot of bull and bear markets. And what happens at the end of these bull markets is people do crazy things and they pay crazy prices. A real good example is the real estate market 2021. They were paying all these stupid prices for things and generally now those prices have come off. See, they were too expensive at the time.
22:28 And so when we look at something and we look at it and say, well, I can't make any sense out of that. Like if we're sitting at a 42 CAPE ratio right now, which has gone up every month for four months in a row, that's about as expensive as you ever get. That doesn't say you couldn't get more expensive. You certainly could. But just because they do something, >> if you're really managing money the right way, you have to look at that and say, "We're not going to do that because that doesn't make any sense.
22:56 " And I think a lot of these people that are doing that, if you ask them, if you sat them down and said, "What are you doing?" They can't explain it to you. They can say, "Well, I've done well in the S&P and the NASDAQ, so I just keep on buying it." I know, but why? And do you know what you really own in those? You know how many stocks really affect that S&P? You've got the top 50 stocks in the S&P are like almost 80% of the value.
23:22 Well, you're not really as diversified as you think you are. And I think people, it'll go on and on and on. I don't know how far it goes, but I know for us, if I can't buy the valuation, right, we're just not going to buy it. And if we get left behind to a degree — and by the way, we haven't really been left that far behind.
23:45 Then that's just the way it'll be because we're in the business of protecting capital and we're just not going to put people's capital out there when we don't think it's the right thing to do. >> Right. And look, you and Michael Green do make a point that passive investing has driven things up dramatically higher, but when that flips, that's also a very strong force that can just drag certain stocks and certain sectors down dramatically.
24:10 So, given this environment, this backdrop, how are you positioning your client capital? Where are you seeing opportunities? How much liquidity are you maintaining? What's your positioning right now? Well, we have three strategies, but the primary two that are involved in stocks, we're carrying about 45 to 50% treasuries, short-term treasuries, less than two-year maturities in both of those.
24:37 Okay, they've done well this year, actually. But we own the things we think are undervalued. We put a lot of money back into really gold and silver and the miners and the metals over the last six weeks. We came out of a lot of that stuff at the end of '25, early '26, but man it really got cheap again.
25:01 In the last two months all of that got really cheap. So we've added back to all of those positions. We have fairly large positions in energy and then we have probably 40 other stocks that are diversified amongst really a lot of different industries but all of them have a fundamental basis to it that we like.
25:29 We've recently added Bookings, a company we like, Mastercard, Visa, but we think people need a component of hard assets in their portfolio because we really feel like the next 10 years is going to be a period where you have more inflation and just look at these governments, our government and what goes on there, and I think you have to have more hard assets to offset that because we're probably going back into more of a commodity period.
26:00 And if we do that, we own a lot of different commodities. We own iron and we own silver. We own fertilizer, farm type companies, that sort of. We're really pretty diversified in that area. But all that stuff looks good to us. We think we make good money on that this year so far, and I think we'll continue to do that by the end of the year.
26:26 All right, let's focus on arguably my favorite hard asset and that is gold. Do you think that gold has bottomed at around 4,000? What's your outlook on gold? >> Well, what happened Michelle was if you looked at everybody that follows gold, and this went on really for the last three months.
26:49 The first time it came down to 4,000, it came back and forth to 4,000 probably four or five times. I'm sure you know that, but just the audience, it came four or five times and every time everybody that was writing about it, the main thrust for them was, it's come down there but we really think it'll have one more tick down to — some people using 3500, 3600, whatever — but everybody was in that camp, it's going to have a little bit more before it's bottomed. Well, they didn't get that, by the way, and all hot money that had
27:24 been in that stuff got rung out between really February and about six or eight weeks ago. And so now gold hit that 4,000 one more time, went down to about 3950, but that's all in that period there was when we were really trying to put a lot on because our idea was, look, I don't know if it's going to go $200 $300 more down or not, I just know it's cheap now. And so I think they missed it. But I don't think they missed it if they'll think about it because I really feel like you've got a long way to go. You're
27:59 in the early innings on gold and silver, but particularly the gold miners. And I think people need to realize that's probably behind them now. Now maybe not. Maybe we go down make a new low. It's okay with us if we do because we think we got all this stuff at the right price.
28:19 But it looks as though to me, just personal opinion only, that you've already had your low in gold this year. >> Okay. So, sounds like you're comfortable calling 4,000 as a bottom level here. How are you buying gold? Physical gold, gold ETFs, gold miners, royalty companies, where are you putting >> We have a broad mix, I will tell you.
28:48 Now, if someone tells us they want to buy physical gold, we'll point them a couple different directions, but mainly in the accounts, we're going to own one or two of the exchange traded funds on gold. On the miners, we have a wide array. The biggest one we like is Agnico Eagle. The smallest one we like is Equinox.
29:08 And then in between we have a lot, we have all of the — not all of them but most of the big royalty companies. We have Royal Gold. We have Wheaton. Wheaton is in there. Franco-Nevada. And then we own the biggest silver company is Hecla that we own, a miner there.
29:30 So we've got a big — oh, we own Alamos, by the way. Another good company, another good gold miner. And all of those have already done well off the lows here and I think they'll continue to do that, but we like the group. As always you can be wrong and you could go back down and make a new low.
29:51 If you did we would probably buy some more of it, but I just feel it looks like to me that that low's already been made. >> Okay. What about silver? Because silver has been heartbreaking for many investors this year with a breach of triple digits, 120, and then falling back down. I think it's at around $64 as we speak.
30:15 Do you feel comfortable calling any kind of — and I know you're not a technical analyst, I get that — but do you feel comfortable giving a bottom for silver? What's your outlook there? Well, I will tell you, Michelle, we got a lot of heat because in the very last week of '25 and then in '26 when silver went over 100, we sold it all.
30:41 But boy, we got a lot of heat because it went up so much. It was up 212% or something just in '25. But it was time to go. We really felt like it had gotten too much at one time. And so we came back into it — we don't have a lot of profit in it. Probably three or four bucks, maybe five in here, but we've added to it.
31:03 Added some more actually yesterday. And we're not near as big in that as we are gold. But I really feel like it will follow along. And the only other thing we own — and we own Hecla on the mining side for silver — but I think you can buy silver, too. I think the same thing that applies to silver applies to gold.
31:26 >> All right. What about copper? Because copper's had a great run. I think you also hold Freeport-McMoRan, and I'm assuming that's primarily a copper >> portfolio. It's one of those. We split it between Southern Copper and Freeport. Those two. A lot of people always talk about Freeport, but Southern Copper is really good company.
31:47 We haven't added much to that because copper's at a high. >> Mhm. >> We own those and we haven't sold them or anything. And supply demand wise, we'll keep them, but they're in a different mold than gold and silver and a number of the other metals because they stayed up. They stayed at that high and then made new highs.
32:12 And so we never added those any more than we already had. >> So Ted, you said go into hard assets because you're fearful amongst other things about inflation. What's your outlook there? What do you expect from the Fed? The latest economic data was a little bit mixed, right? We had CPI cooling, well it rose just 0.1% in July, easing to 3.
32:39 4% year-over-year. PPI was unchanged for the month, still up 4.7% over the past year. And we will go under the assumption that we can take government data at face value here. Of course, many viewers would say that these figures do not accurately reflect inflation, but we'll go with that for the sake of this question.
32:58 At the same time, the economy unexpectedly lost 23,000 jobs in July versus expectations for roughly 80,000 new jobs. May and June were revised downwards by a combined 103,000 jobs. Now, markets initially bounced on this because bad news was still seen as good news in terms of the Fed at least.
33:17 But what does all of this tell you about the direction of the US economy and what does this mean for the Fed, do you think? Well, I think Michelle, when we're looking at hard assets, we're thinking a much bigger picture. We look at it like — and you can have all these oscillations that are going on with the Fed and inflation and different things, but what we look at is this.
33:40 Okay, we're sitting here with 40 trillion in debt that we cannot get out of in any ordinary way. In other words, we're running quickly into the wall, within about five years of where we're going to be with what you spend on Medicare, Medicaid, Social Security, and you're going to be to a point to where everything you spend that on in terms of taxes.
34:10 In other words, we're going to hit the wall here somewhere and there's nothing they'll do about it because they will not be austere. And if they were, it would probably throw us in a depression. So, we just feel like one of the few ways out of that is much like after World War II, that you'll end up in more of a stealth inflation.
34:31 You won't be able to see it. It's kind of like it is now. >> Your inflation is out there and the Fed's sort of hanging back. They're talking it up or down or whatever, but it's still there. And so maybe you go through a period of disinflation for a little while when economy's messed up or something.
34:48 But in general, looking out over a five, seven, eight year period, >> we just feel like you're going to have to have some hard assets to offset this stuff because prices will generally go higher and higher and higher. And again, on the world front, because we're in a multipolar world and everybody's hoarding their assets.
35:10 And for us, that means that some of the assets you want to own are probably other countries have more of them than we do. And I just think in general, I think we'll be back to a time when you need to own some hard assets if you plan on trying to make it through the next 10 years unscathed, I should say. >> What hard asset do you think has the most upside potential? Well, real estate is always a good asset to own from a hard asset standpoint because it does usually reflect inflation. Now, a lot of people
35:45 talk about farmland, but our farmland in the US is really expensive. Well, like you can buy farmland in Brazil per acre, 20% of what you pay in the US per acre. And farms, everybody talking about farmland, but I don't look at that as a hard asset you want to own. But I do look at all the metals, all the critical minerals.
36:09 I look at everything, all of the things that you can really touch and feel. But I'd put real estate in there, too. I think you >> you have to look at real estate, but also oil and gas is in that category. >> And all of those things together, they come at you from different categories, but you put them all together and that's a good mix to hold the next seven or eight years.
36:34 >> And is there a commodity that you think has the most potential for outsized returns from him? >> Well, if you look, for example, if you look at uranium, I'm going to use as an example. Now, we own some uranium. The US uses about 50 million pounds of uranium a year. We produce somewhere between two and a half and three.
37:01 Now you think about a demand supply curve that's out of balance. Think about that, and you'd have to think, okay, and there's numerous things like that, by the way. But that's just one of them. But a lot of the critical minerals are like that, but uranium's like that. I think you'll find in some respects that a lot of energy is like that depending on what happens going on the world front, but I think generally you're going to come back to metals and critical minerals where they have a lot
37:36 of upside because we don't have a lot of them is what it amounts to. >> Okay. With regards to the war in Iran, the geopolitical front, do you think markets are sufficiently pricing that in? I know you're not a geopolitical analyst, per se, but how do you see that playing out? >> Well, I suppose, Michelle, I'm like most people.
38:01 I look at that and I think, I don't know what to think. >> Every day they show up and say, well, it's all fixed, and tomorrow it's not. And I know they just came out the last two days said, "Oh, we're getting ready to really do a massive beat up on them in terms of economics." And maybe they do, maybe they don't.
38:22 And I'm probably like everybody else in that. I don't know. But I do feel like — and what I see, and we own a couple companies in that area — that what would happen is there's going to be so much destruction that's happened that it's going to take quite a while to get back to where we would have been say a year ago.
38:43 And I think people forget about that. So I'm not real optimistic on the fact that we just show up and it's business as usual again. >> Right. There's certainly extensive reconstruction for one point. But relatively speaking oil has been subdued, it's been around $80 a barrel but did have a spike at some point, but it's been relatively subdued.
39:12 A lot of that has been because we're tapping into the strategic petroleum reserve, tapping into inventories. Many people will say well that's exactly what those inventories are for. But are you surprised by the move in oil? What is your outlook on oil then? >> Well, I think the countries and the US in particular has pulled out all the stops to try to keep the price down.
39:37 They've used strategic reserve. But I'll give you a statistic that came out this past week, and that is I got it on Monday. If you look at CFTC and the oil futures, okay, there's about 480 million barrels short. Somebody's looking for a big break. And I don't know if that's been put on to keep it down >> or it's been put on as a hedge.
40:06 I mean, 480 million barrels is a lot of barrels. If you think you're using 12 a day or 10 a day, that's a lot. And so it's things like that that are in the marketplace that I probably don't have enough experience to understand exactly how that's working. But I think there's other factors that have kept that price in line and they've done everything they possibly could to do that.
40:34 And I really feel like we've been sold sort of a bill of goods here that, hey, don't worry, it's going to stay here and then go back to 50 bucks or whatever. It just doesn't look like that's actually in real life going to happen. >> So you're suggesting that there could be some price suppression manipulation via the futures market, the derivatives market.
40:57 It's certainly not a concept that's new to precious metals investors. The difference is with oil, you are going to need physical delivery sooner or later, right? We're starting to see that change in precious metals with exchanges in the east where physical delivery is materializing. But with oil, you're really going to need delivery of that because you need to use it.
41:17 So what's your outlook then? If you think it's been suppressed, where do you see oil going? >> Well, I know everybody thought it'd be back at 50 to 60, and a lot of people thought it'd be at 40. And we felt all along that the price would basically settle in between 65 and 85. That would be where it settles in.
41:38 And the thing about it is the energy companies can make a lot of money at $75. A lot of money. They don't have to have a hundred to make — I'm talking about West Texas now — but they can make a lot of money at that level and they don't need a $100 oil to do that. And I think that's what people miss on buying the energy companies.
42:00 They think, well, if the price has gone from 105 back down to 82 or 81, whatever, that just means it's all over. Well, not really. They make a lot of money down at this level, and I think they'll continue to do it, and that just makes the companies cheaper when you get right down to it. >> So, you see opportunities in the energy companies like what, the big ones? What are some of the — We own a lot, we own the whole group. On the producing side for example, we own Chevron, we own Exxon, just like
42:34 you said, but we also own a midsize company. Matador is a company we own. A company called Northern Oil and Gas. Great company. We bought, oh, seven or eight weeks ago at around 18 bucks. It's a 10% yield. Even now, it's a 7 and a half% yield at this level. We own natural gas.
42:56 If you look, we own the old Apache company, which is APA. We own Antero. God, what a cheap stock. Seven or eight times earnings. Then we own the pipelines. We own Enterprise Products and MPLX, Energy Transfer. We kind of up and down the way. And then we own a little bit on the service side.
43:18 We own Schlumberger, a little bit of Noble drilling and Transocean, so we're a full-line mix on energy. >> And obviously energy is also dependent on a strong economy, you need energy demand to maintain that. What would you say is the biggest risk to the macroeconomy that perhaps investors are missing or overlooking? >> Well, it's just like you said Michelle, if you go into a major recession, you don't use as much.
43:50 And that's just bottom line, that's the risk, that you went into a major recession, that it would come out that way. I've seen it before and it's interesting. I'll give you — if you look at oil in the summer of '08, and this is after the bear market already started and we'd had a couple of companies go under on Wall Street, that sort of thing, but it was well over a hundred oil and it gave up a lot between then and say January of '09, but it came back quite a bit in the
44:22 next 12 months. And I think what happens is sometimes you'll have oil doing better than the rest of the market, but if you go into a major recession, that's where — I mean like a 1974 or something — you'll use less of it. Whether the price breaks really depends on supply, but that's your risk really.
44:49 >> But in terms of the economic cycle, what do you think is likely? Recessions, stagflation, more of the same? What's your big picture macro outlook for the US right now? >> Well, I think the bigger picture is that you'll have stagflation. That's what you'll have the next 8 to 10 years.
45:11 But I think on the market side, what you would get is that you'll eventually have this overvaluation come again. You don't have to get really cheap. I bought stocks in 1982 at seven and eight times earnings, everything in the market. I'm not saying that. I'm just saying if you come back to 15 multiple on the S&P, that's pretty big decline from here.
45:36 And I think you have to think about it like that. I'm just going to revert back to the mean. And if we do, you'll have some good buys out there. I don't look at as a negative, by the way, in the market. We look at it as a positive >> as a buying opportunity. Again, what do you think could trigger that? What event brings you down? Is it something specific? Is it the Fed? What could potentially trigger that downturn in the market.
45:59 >> I think it's the same thing, Michelle, that I talked about earlier where they've overshot the numbers that they think all of this AI data center, all that will produce. >> I don't think anybody really knows that outcome. I know we certainly don't. >> In a sense, they don't know the outcome there.
46:17 In a lot of ways, you're just betting on the future, but we'd rather not do that. We'd rather wait and see how it really plays out, I think. And when it comes down to it over a next three-year period, you'll look up and yes, AI will be important, but it may be totally different than what we think. And it may not be the valuations what you see.
46:40 It's like the internet in 2000. It ended up being a really really important item, maybe more so than AI, >> but it ended up in different ways, not what everybody thought it was in '98 and '99. right? It'll be here, but we just don't know exactly in what form and which companies will ultimately be >> successful.
47:04 Ted, as I mentioned at the top of this interview, you've written several books about not only building wealth, but preserving it, including The Psychology of Staying Rich, $30 Million and Broke, and most recently, Second Generation Wealth. So after more than four decades of advising wealthy families, what is the biggest mistake that you see people make when it comes to preserving wealth and being able to successfully pass it on to the next generation? What's the biggest mistake? >> Michelle, that's a good question.
47:35 One of the things I always tell people, and I've watched it over the years, is it's a lot easier to make a lot of money than keep it. I found that to be true. But one of the things I find in wealthy families is they think money will solve everything. And that's not true. Still your second and third generation still have to have self-esteem, >> the ability to make it on their own, feel like they're really worthy of something and all those sorts of things.
48:06 And so that means you got to separate them from the money. The money is just gravy later on in their lives. But a lot of people that have wealth cannot do that. They want to make it as easy as they can for those offspring and that's probably the worst thing you could do. You need to make it pretty tough on them.
48:28 So they have to make it and I think they forget about that. And so you end up with kids that are just dependent on the parents for the rest of their life because they have a lot of money. >> Yeah. I guess the challenge is how do parents manage to give their children financial security but without removing the ambition, the resilience and the sense of purpose that helped create that wealth in the first place, right? Is that what you're saying? >> Well, what I say in my book on Second Generation Wealth is look, you owe them an education. You brought
48:57 them into the world. So, if you put them through college, no debt, have a car paid for, from that point forward for a while, next seven or eight years, you're on your own. >> All right. Yeah. That's the psychology there. And I hear that in terms of preserving the portfolio itself, we often have experts on this show that say gold is the ultimate store of value,
49:29 best way to preserve your wealth. How do you see gold fitting into a portfolio in terms of wealth preservation percentage-wise? >> Well, I think you always think about gold as the ultimate item. If everything went bad, like if everything went bad tomorrow and you had gold, then you really do have something that's been down through the ages.
49:55 And I think people forget about what it means to own gold. Gold is not meant to compete with the S&P or anything like that. I always tell everybody if you look at 20 years ago how much gold it took to buy the average home in the US and then you do the same thing today, you'll find it's a lot less gold to buy the average home.
50:17 >> And that's what it's meant to be. It's meant to be a hedge on all that. And usually for us it's a currency hedge. We think the dollar will decline the rest of your life and may get into real trouble at some point. And so gold is that ultimate really insurance policy that you'd have against that.
50:39 A lot of people disagree with that. I know Warren Buffett disagrees with it, but I always tell people, by the way, and he says it doesn't produce income, but I said he owns a lot of land and it doesn't produce income either. So, you can't necessarily say that about gold. It's been down through the ages and right now there's nothing that can compete in our opinion.
51:02 There's nothing competes with it. >> All right, Ted, I'll give you the final word here as we're closing up. Final thoughts. >> Well, if I was talking to people today, I'd say really take a look at yourself. We have a new book coming out late this year entitled Asleep at the Wheel.
51:25 And it's about everybody, particularly baby boomers that are 90 95% in the market. They don't own anything else. And we're trying to get the point across that you need to have some balance in your assets. Your assets need to be balanced because then it gives you some options. If things were to go bad, you've got some options, but if you've got all of it in one thing, you don't have many options if that one thing goes bad.
51:54 And I think if I had to leave it with people today, it's always take a look at it and try to have a balanced portfolio, >> right? And people hear balanced portfolio, it doesn't mean balanced with different equities, as you say balanced with different exposure to different asset classes.
52:11 Ted, I look forward to reading that book. In the meantime where can our viewers enjoy more of your work? Where can they find you? I know you have a YouTube channel. Where can they find more Ted Oakley? >> Well the best place Michelle is at oxbowadvisors.com, the website. We're real simpletons.
52:30 Everything we do is on there. We don't really try to hide anything and we make mistakes and you'd see that too. But I think you'll find anything we do there. If you want a copy of a book, we'll be happy to send it to you. But that's the best place to go. >> All right, Ted. Appreciate your time. Thank you so much, Ted Oakley.
52:50 >> You bet. >> And as always, a big thank you to you for watching. Make sure to hit the subscribe button if you haven't already. Also, please do follow us across our social media accounts. We really do appreciate that. There's also a free weekly newsletter you may want to subscribe to.
53:09 It has exclusive insights and specials and other content that you will not find on our YouTube channel. You can find the link to subscribe in the description below. It's also on the website milesfranklin.com. As always, please do leave us your comments. Feel free to praise, whine, or just opine. I genuinely enjoy reading them, even the snarkier ones, though I do prefer the sweeter ones.
53:34 And many of the questions and suggestions do end up inspiring future interviews and topics. So, please keep them coming. And if you would like to learn more about building a precious metal strategy, you can reach out to info@milesfranklin.com. There is a team of specialized advisers and brokers that can guide you according to your personal circumstances.
53:54 Also check out milesfranklin.com, the website. Thank you again for watching. We will see you soon. Until then, stay sovereign. >> This is The Real Story with Michelle Makori.