Ted Oakley: Equity Valuations have Never Been Higher
Tom welcomes Ted Oakley, Managing Director and Founder of Oxbow Advisors, to the show. Ted explains his upbringing and why that led him to form two of Texas’s largest foster child foundations. As a child, he had to work starting from six years old. Fortunately, he was able to get very educated and eventually ended up in New York City.
Ted discusses how the upcoming job numbers may improve over the past months performance but notes that it’s hard to measure real employment numbers accurately. The jobs and family act need to be passed so that society at large obtain some return on that money. We need to stop paying people to stay home.
Based on discussion with those on the front lines of the housing market, he feels that we are past the point of peak mortgage growth.
Ted outlines three possible scenarios for inflation and discusses which seem the most likely. He also explains how the PPI acts as a measure of wholesale prices and why it tends to be more accurate than the CPI.
Good companies will already pay their employees well to prevent turnover and maintain a good product. Companies that don’t take this approach will experience pain as wages spike.
Oxbows equity strategy is to find companies that have 15% growth potential over the next five years. Few companies can sustain that growth rate. In addition, they try to find companies that are also at a discount along with a low debt burden. You want gains to be built on gains, and selling stocks means paying taxes, so it’s good when you can hold equities for an extended period.
He explains the role of gold in their conservative and high-income portfolios at reducing risk.
He likes many miners because their balance sheets and cash flow have improved massively. You want companies with cash on hand and those well-positioned to take advantage of metal prices as they move higher. They like the royalty side of the market and combine those with a few good resource equities.
Time Stamp References:
0:00 – Introduction
0:34 – Background
3:09 – Oxbow Principals
4:37 – Jobless Claims
7:37 – Mortgages
9:25 – CPI & Manufacturing
12:43 – Shrinkflation
14:22 – Inflation Outcomes
17:22 – Paul Volcker & Today
19:04 – Producer Price Index
21:49 – Wages & Profits
24:26 – Factors – Equity Mkts.
29:55 – Taking Profits
32:01 – Gold’s Role
35:06 – Miners & Valuations
40:35 – Gold Vs. Currencies
42:51 – Silver Thoughts
44:09 – Other Commodities
45:47 – S&P vs. Commodities
48:03 – Futures & Hedging
49:10 – Business Warning
51:29 – Wrap Up
Talking Points From This Episode
- His background and philanthropic activities.
- Why unemployment figures should improve.
- Three scenarios for inflation.
- Equity strategies and gold as insurance.
J. Ted Oakley, CFA, CFP, is Managing Director and Founder of Oxbow Advisors. Ted has over thirty-five years of experience in the investment industry. The “Oxbow Principles” and the firm’s proprietary investment strategies were developed as a result of the unique perspective Ted gained throughout his almost four-decade tenure advising high net worth investors.