Buffett Staying Quiet, But The Warning Signs Are Loud (Uncut) 02-25-2025

Buffett Staying Quiet, But The Warning Signs Are Loud | Ted Oakley

The Fed is it’s really an unfortunate situation. I mean, you got, I don’t know what 20,000 people working there. What are they doing? I mean, really, it’s time to think about it.

They’re spending all that money. And they they’re late to the party everywhere they go. Every time we have a change, they’re late to the party.

I mean, there’s no question if if that this this particular chairman, I mean, I’m sure he’s out of here when his time’s up in 26. But but maybe before that, but I’m just saying that he’s there. They’re not in that equation.

That’s an that’s a physical equation that doesn’t that they’re not in the middle. Hello, and welcome to soar financially a channel where we discuss the macro to understand the micro. My name is Kai Hoffman.

I’m the ad jr mining guy over on x and of course, your host of this channel. And I’m looking forward to welcoming back Ted Oakley. He’s the founder over at Oxford visors, somebody we’ve had on frequently here on the channel over the last couple of years.

And I’m really looking forward to catching up with him. Last we spoke was about five months ago. As you all know, I don’t have to really recap it.

But a lot has changed, especially in on the US side and on the economy side as well. So we’ll catch up like where’s the recession? Has the US maybe gotten away with one here meaning like, okay, no recession, very soft landing. We’ll discuss with him.

And I told him earlier, like, just a quick gut check before doing this interview. But it feels like things have calmed down quite a bit in the markets. SP 500 stabilized over 6000 bond market, the 10 years around four and a half percent doesn’t look like it’s spiking anymore.

US dollar seems stabilized. The only thing that’s not playing ball right now is gold, meaning it’s rallying. And we have to understand why it’s trading around 2950.

And I don’t want to sound negative here at all quite happy about 2950. But I’m also getting a little concerned because we’ve run up quite a bit. And I’ll ask Ted about like, is gold now a meme stock isn’t gold now meme gold.

Don’t hate me for it in the comments. It’s just a way to sort of hypothesize like what’s going on. Like are we trying? I’m really trying to understand the market movements here.

Before I switch over to Ted, you guys know the spiel hit that like and subscribe button helps us out tremendously. And it helps us gain wider visibility on YouTube. So thank you so much for that.

Ted, it is great to welcome you back. It’s good to see you. Thank you, Kai.

Lots to talk about Ted, like last time we spoke was five months ago. Lots to catch up on and dissect. But maybe we’ll start with a more of a general question.

I’m going to ask you about the real state of the economy right now. Like what do you see out there? What is real to you? Well, Kai, we probably have a little different point of view right now. But we think the economy is starting to weaken quite a bit actually underneath.

The first part that you have to watch right now is housing. Housing is really starting to suffer right now. If you look at the public housing companies, they’re declining a lot.

We see new home inventory not existing, but new home inventory rising. Existing homes are rising, but that whole group is declining and they’ve declined quite a bit actually. If housing breaks a lot further, it will impact the economy.

That’s one of the biggest drivers of the U.S. economy. But in addition to that, I think people are confused on where the money is coming from in the economy. If you look at what drives the economy, it’s on the front page of the Wall Street Journal today, and we’ve been saying this for the last year and a half.

And that article says that most of the buying of retail goods, especially high-end or even mid-range end, are people, that 10% of people that make more than $250,000 a year. The reason they’re doing that is because they feel rich with the stock market. Any stock market break, that changes that whole situation because they feel like they’ve got a lot of money now.

Their 401ks, their personal accounts are high. But on the flip side of that, the bottom group of people, if you look at them, auto delinquencies are at a higher than 20, by the way. If you look at credit card debt going up, there’s so many delinquencies starting to hit.

And then people say, hey, I can’t even meet monthly bills. I’m using credit cards. That’s the other group of people.

None of that figures in to be something that’s going to be outstanding here. So I think people are a bit blinded right now, Akai, on where they think the market is. No, absolutely.

Let me bring that up. It’s actually a really good article here. Let me bring that up on the screen.

Let me just make it a little bigger because that’s the article you’re referring to is the U.S. economy depends more than ever on rich people. Maybe we’ll start there our conversation because you can see it really like the scissor, like what’s a profit technical curve? It’s like it’s widening the spread here between the other 90 percent of the top 10 percent of earners. Like how come we don’t see, we don’t feel it as much? The economy is growing.

GDP growth, 2.3 percent. You touched on credit card debt. It’s ticking up, but we are also seeing wage growth.

We’re seeing consumer spending increase. Is it really that difficult to track or is it like to separate the two? Well, let me back up a little bit. Look at the industries.

The wage growth in the construction business is declining. It’s been declining now for three or four months. That’s a major driver.

If you look at construction, home, residential, that’s a big, big part of this economy. Those actually have been declining. You’ll see certain parts of that where wage growth is going up, but in general, it’s really not.

If you look at the whole picture together, it’s not going up. And what’s happened, and I’ve been seeing this now for a year and a half or so. You go to any resort, any beach, any place where there’s nice hotels, whatever, and you’ll see people spending money like they’ve never spent before.

I go to my home in the mountains in Jackson Hole, Wyoming. You’ll see I’ve been up there for over 30 years. They’ve flooded that place the last two years because this whole group of people over 60 are feeling like they’re rich and they’re spending the money.

They’re buying the services, they’re buying that sort of thing, and more than they normally would because they feel like they’re rich. And so it basically camouflages what’s going down at the low end. When I talk to low end people, and I grew up poor, I know how to talk to them.

They basically said, hey, I’m having a tough time meeting ends here. I’m barely making it. And so I think that’s where we are overall, but people in the markets don’t feel it because we’ve got this 10% up here that think things are all right.

Yeah, no, it’s like the numbers really hide that, like the cracks underneath or in the system here. I want to stay on the wage growth in construction. I think that’s an interesting topic because we had Ed Dowd here on the channel the other day, and he was saying that the illegal immigration workers that are being sort of removed are having a big economic impact, like housing, as you touched on, but also I’m curious, it’s a bit contradictory to my theory here, but wage growth, we should be seeing wage growth in construction if there is a lack of workers because you got to entice them, right? So I’m trying to immigrants versus dropping wages in construction.

Do you see a correlation there? Not really. I think what people don’t realize, now living in Texas, and I spent a lot of time on the borders of Texas and Arizona and California, so I know what I’m talking about here. And if you look around, yes, there’s some groups that have been affected by that, but most of the people I talk to that hire people say that the workers they have that have green cards or even have illegal immigrants that are working for them, they haven’t been affected as much as people think they have.

I think ICE has been going after the bad people, and I think they probably will continue to do that, but it’s not like people are thinking, hey, it’s going to be some sort of wholesale movement because the country tends to go in the way that people want it to go. And if all of a sudden you show up tomorrow and everybody, yard man or maid or anything like that is gone, they’re not going to like that. So I’m pretty sure that that won’t go to that extent.

That’s personal opinion, but I’ve asked a lot of people that hire a lot of these people, and they basically have told me that they’re not seeing a big change about it. No, I appreciate that. I really appreciate the first-hand insights here, Ted.

You touched on housing. I want to stay on housing a little bit. We haven’t talked much about it on our channel about housing, so I just want to bring up the 30-year mortgage rate real quick just for our audience so they can follow along.

But I’m curious, looking at it, we’re right around 7% for the 30-year as a chart I just pulled up here. How important is that? Because we see the dip down to 6%. There was a run on housing again.

Housing costs haven’t really come down. What do you make of this here, Ted? Well, Kai, I think people have it the wrong way. I mean, if you had the right price home, 6.5% mortgage, okay.

I mean, that would have been great back in the 80s and 90s. It was fine. But what’s happened is the price.

I keep telling people, it’s the price. The price of that home starts, number one. Number two, you have to pay taxes on that price, which is really a choker.

And number three, you have to pay insurance on it. You put all those together. And to me, the interest rate is the least of those other two because they keep rising.

And the biggest problem, I think, with the housing is that it’s too expensive. They’ve raised the prices too much and everybody’s sitting big, fat and happy with their home prices. But here’s what we’re seeing, though, by the way.

They’re pulling these homes off the market. 10% of the homes for sale on the market were pulled in December. And you look all across the U.S., anywhere, and basically prices are declining.

They’ll start at, hey, I want to sell this house for a million and a half. Okay, now I go to a million four. Now I go to a million three.

That’s what starts a housing break. And that’s where we are right now. We see it all over the country.

We do have to talk about deflation. And that’s maybe like housing might be one of the biggest drivers of that. And it’s not really reflected in the main like PCE numbers because shelter is excluded, of course.

But you said housing is one of those pivotal industries and markets that you closely monitor. Like how worried about are you about deflation and maybe spiraling out of control here? Well, I don’t think it would spiral out of control, but we said all along that the next 10 years will be periods where you’ll deflate, inflate, deflate, inflate. You’ve got to learn how to trade these markets.

And really, since basically 39% of the people in my industry are less than 40 years old, they don’t know how to trade that market. You’re going to have periods of deflation and they’re going to think, hey, that’s we’re back again to owning long paper and everything will be fine, only to get killed when you reinflate again. And I think that’s the biggest problem today is people probably won’t know how to do that.

And you’re going to have you like the next 10 years, we said that all along that you’ll have to know sort of when to hold them and when to fold them. No, absolutely. It’s like it’s a very difficult market right now.

It’s like even here in Germany, I was looking personally, I was looking at buying an apartment and the mortgage rate, even at three and a half percent. Like it just didn’t make sense because the rents haven’t caught up for it to be even an investment property because I’d be short. The rent wouldn’t cover my mortgage like that.

Well, that’s true. You can’t. I mean, if you buy a home today and you want to rent it in the rent market, you’re going to have to really take into consideration those other two things I mentioned because those won’t decline.

Have fun going down and asking these municipal governments to lower your taxes or the insurance companies. They’re even worse. So, you know, that’s not going to happen.

Besides Washington, D.C., like where do you see weakness in the housing market right now? It’s like I’m sure you’ve seen the map on. I think it was a Zillow map with all the available housing all of a sudden pop up in the Washington, D.C. area. Do you see a similar map somewhere else or is it just.

Well, I just look at nationally. OK, nationally. And I just got these numbers this week.

OK, last week at the end of the week nationally, if you look at new homes, I forget about existing homes. Everybody’s been saying the new home market is great. It’s great.

It’s great. Well, go look at the public companies. They’re killing them.

I mean, they’ll announce earnings. Some of them have the last few weeks. They’re down 10, 12 percent the next day and they’re all going down.

I mean, they’re all down 30 percent from where they were October 1st. And so what’s happening is is that their inventory is going up to now the new home inventory. So if you can’t sell new homes, which are cheap, you know, 250, 300 a lot of times and you can’t sell existing homes, then all of a sudden the next thing becomes I’ve got to lower the price.

And when you lower the price, you cut the profit. And that’s where I think we are right now. Absolutely.

No, I think we’re seeing that everywhere. Some some places more more so than others, like here is like Austin, where you are at, which was a hot market or like a hotspot during covid as well. I’ve been hearing there’s some regional there’s some issues in housing market now, meaning prices are dropping.

Right. Oh, yeah. Houses, housing market here is not great at all.

Matter of fact, you see more and more homes for sale and they put them up. They can’t sell it. They bring it back.

I mean, you know, four years ago you could sell anything that was it could be the worst. It could be the worst piece of property in the whole municipality and you could sell it. But that’s not the way it is today.

No, that’s definitely changed. Maybe let’s take a step back. You mentioned the economy is weakening like we were ignoring it.

You mentioned the housing market is one example. Where else do you look for cracks in the system here, Ted? Well, what you have to watch what’s happening with service. In other words, if if the market stall, which they have, by the way, you know, the markets are not any higher than they were October 1st.

So we’ve gone three months in a row with no increase in the market price. If the next thing is a decline in the market, then that 10 percent that we’ve been talking about, they’ll cut it back because they won’t feel as good, especially if you get 20 or 30 or 40 percent down. Then they’re like, oh, I thought I was rich, but I’m not.

You know, and a lot of those same people see are concentrated in these big 10 stocks of the S&P. And they’re the ones that will get hurt the worst because that’s what everybody owns. It’s like anytime you look at any market high and you get a break, it’s always in what everybody owns the most of.

And so that’s where they’re concentrated and they’re more concentrated today, actually, than I’ve ever seen, even more than ninety nine in these 10 stocks. And so what happens is you’re going to see that start to take place in PMI services, which I think will I think will really decline quite a bit because people will just say, you know, I’m going to do that. I’m not going to buy that.

I’m not going to go on that trip. And they’re spending they’re spending money now, like they used to say, like a drunk sailor. But the main point is they got it in the stock market.

And you have to watch those two together right now because that’ll change things. No, it does. I remember having a conversation with a refrigerator repairman a few years ago, and he was so happy that the gas price was dropping because he could finally afford a trip to a hot springs 150 miles away.

So I see exactly that like happening again. Maybe we’re a couple of years away from that, but we’re on the verge of that. Same sentiment, like that’s what it feels like where we’re headed.

Is that something you see as well? I’m curious. I’m trying to get a sense of like what’s the underlying sentiment here? Well, ours is that, you know, you need to be careful here. First of all, we screen a lot of companies.

And so we know which ones are expensive and which ones aren’t. But there’s probably 200, 250 companies we would like to own out of 3,800, 3,900. But even out of those stocks, a lot of those are expensive.

In other words, everything’s at the upper end of the boundary. We can’t forecast. I’ll just tell you, I couldn’t forecast anything.

However, I can, we can do this. We can tell you when things are extremely overvalued relative to what it should be. And if you look at price to sales of the market, you know, price to market cap, we’re even higher on price to market cap.

We were back in 99, 2000. And people are just basically, they’re just, you know, they’re just whistling down the road, not thinking about it. They’re very complacent right now.

But some of them are starting to worry. I will say that some of them are starting to worry. Famous last words is like, this time’s different, right? Like we’ve seen all that money supply M2 being created.

Like, is it different this time? Should we maybe apply higher valuations metrics? Like, let’s assume you mentioned 2000s, like the valuation of 2000. Should we just apply a plank 20% increase to that to see, okay, this is a new realistic level. And we’re probably way past those anyway.

But like, should we adjust our expectations? Well, I think the Federal Reserve is lost here. Okay. I mean, first of all, they’re playing by all the old rules they played by for 25 or 30 years, which are very poor to play by, by the way.

Federal Reserve is the last thing we need to be inputting to what we should be doing. And I don’t know if you’ve read much about the Mar-a-Lago Accord. Now, whether that comes into play or not, I don’t know.

But if it does, if it does, that’s going to change the whole outlook of everything. And that will throw a high degree of uncertainty in the marketplace. It probably would be good in the long, long run.

But the Federal Reserve then would be cut out of the equation, because they wouldn’t have the impact that they normally would. Can you quickly elaborate on the Mar-a-Lago report? Because I have to admit, I missed that over the weekend. What does it say? Yeah, there’s a piece, I can’t remember the lady’s name.

Yeah, I could get it for you. I wrote about it also in the Financial Times. But it came up in the Wall Street, too, about the fact that meeting in Mar-a-Lago, there was something like this, but basically a Mar-a-Lago Accord, you know, they always name these things after somebody’s place, you know, like, you know, Bretton Woods was a place, you know, and there’s always something like that.

But it’d be like another Bretton Woods and go something like this. And that is, if you go to all the major allies, the top 15 allies of the U.S. and said, hey, if we’re going to stick together, we’ve got this axis of evil over here with, you know, Russia and China, if we’re going to protect ourselves, here’s how we’re going to help protect you. And that is, you’re going to exchange your, you’re basically all your U.S. debt for a 100-year piece of paper that can’t be traded.

And we’ll fund some, we’ll maybe fund some cash to you. But all of a sudden, you do two things. You reduce the debt to, you will reduce your debt over time, because all of a sudden, see, you’ve termed it out over such a long period of time.

Secondly, if you look at it, your interest is going to go down, but also the dollar is going to go down, see, which is, if the dollar goes down, that’s what they’d like to see happen in all this. If the dollar goes down, that’s good for business here. People buy the product here.

And everybody keeps talking about strong dollar, strong dollar, strong dollar. That’s really not what they want. And I don’t think, I’m just listening to the treasury secretary and other people.

And I think, I don’t think that’s what their end game is. I think the end game is to try to do something that would do it. And whether that comes to pass or not, I don’t know, you know, that’s up in the air.

I would encourage people to read about it, because if that does come to pass, it will be, it would be like one of those major changes, like when we went off the gold standard or something. That’s, this would be a big, big deal. And so, I think, I think that’s what would throw people, and particularly throw the Federal Reserve, because all of a sudden, they wouldn’t be in control of anything.

It’d be all fiscal policy. Now, that’s sort of like maybe ulterior motive of Trump and Elon Musk as well, like just to weaken the position of Jerome Powell and the Fed, and maybe just, like pushing to the side anyway, because they can’t change anything at the Fed, because the Congress would just block it anyway, based on. Well, yeah, and I think here’s the Fed is, it’s really an unfortunate situation.

I mean, you got, I don’t know what, 20,000 people working there. What are they doing? I mean, really, I can’t stop and think about it. We’re spending all that money, and they’re late to the party everywhere they go.

Every time we have a change, they’re late to the party. I mean, there’s no question that this particular chairman, I mean, I’m sure he’s out of here when his time’s up in 26, but maybe before that, but I’m just saying, they’re not in that equation. That’s a fiscal equation that they’re not in the middle of.

No, it’s just like, it seems like they’re always reactionary now that they’re talking about maybe working some of the forecasts into their models. It seems like they’re flip-flopping on their strategy. Every month, every press conference, there’s a different nuance to it.

It’s like, oh, let’s wait and see. Sometimes we’re data dependent. Sometimes we’re planning to include tariffs and other scenarios, I think he called them, that the new president might propose, right? Well, I think they want everybody to always understand, hey, we’ve got this under control.

We’re the Fed. We’ve got this going. They’ve made so many errors the last 25 years, even the last five years.

The errors they made are unconscionable. So why listen to them? I always tell, I’m on part of a bank and always telling the bank, why are you listening to them? They don’t do you any good. So why don’t you just make up your own mind what you’re going to do and don’t listen to that? Because then, again, if fiscal policy comes on, it will basically overshadow them and they won’t be as significant as they were before.

Ted, I’ve asked other guests on this channel as well, so I’m curious, what camp are you in? Are you in camp, like we need higher interest rates or camp lower interest rates right now? Well, we’ve said all along that this decade will be a period where you’re going to have high and low. You’re going to have to trade that. In other words, we wouldn’t be surprised, and I’ll just give an example.

Most of the bonds we own for the last two years have been less than 48 months, really less than 36 months. A lot of treasuries. But we have stepped out and bought about a 6% position in the 30-year treasury.

Here’s why. That’s not that much. But we think those rates will trade down because of the softness for a while.

But that doesn’t mean we would keep that position. You give us 10 or 15% profit and that, we’re gone. And what would happen is you’ll turn around and a year and a half, two years later, rates will be higher again.

And so our point is you’re going to have to be with people that understand how to make a decision and how to buy or sell something at the right time this next 10 years. You can’t just plug in and expect it to work. Bond yields.

This is an ultra-complex topic. This is playing off your answer here as well, because the yield curve has been an interesting phenomenon as of late. I mentioned things have stabilized.

I’m just looking at the charts here. The bond yields rose up, touched almost on 5% again, wanting to break out. Now we’re sitting at 4.5%. Seems like duration risk has calmed down maybe a little bit and is not as aggressively priced in anymore.

And since you’re buying 30-year bonds here, what’s the duration risk here? Why have the bond yields come down? What’s the market pricing in now? Well, by the way, we’ve only bought 6%. So it’s not like we’ve made a big cut on it or anything like that. However, what happens is we think in the short term, I’m talking about zero to six months, we think the economy will keep on weakening.

And when it does, the Fed will be forced to lower rates again, because that’s what they do. They’re always late to the party. And you’ll have all these things taking place.

And then they show up and say, oh my, we’ve got lower rates. And then you have people, but you can tell it in the trading. In other words, you’ve come down to this level over the last two and a half months, and you’re not going any lower on the price or higher on the rate.

And that just tells you that something’s changing in the marketplace. Because if they were discounting a lot higher rates, that price would keep on coming down. That would be discounting a higher rate.

That’s not what’s happening. And so that’s how we see this next period. There’ll be a period in there, rates will get really, they’ll try to push them down again, and then you have to go the other way.

You got to bring everything in real short, because the next move will probably be higher. It’s just what you do in the bond market. Now, it’s an interesting topic.

I keep quoting Simon Hunt, who once said, the bond market is the root of all evil on our channel. Because there’s so much money involved and so many interests are playing in the bond market. So that’s why I love asking about it.

You have to watch bond investors though, because I will tell you, especially on the corporate side, the bond investors are the smart ones. If you see bond prices of a stock going lower, there’s something wrong with that stock, usually, if it’s not interest rates. So bond, looking back, I remember Enron, we didn’t own it.

I used to tell everybody, you need to sell it. Why is that? I said, because the bond holders are selling, they’re selling the bonds. And they’re like, oh no, I can’t do that because I’ve made so much money in it.

Well, I’m just telling you, the smarter investors, the bond investors are selling it. So you always watch out for that. No, absolutely.

It’s just one of those indicators. When the rats are starting to leave the ship, you should too. Absolutely.

Ted, we talked about deflation earlier, but inflation is ticking up based on official numbers right now. And we’re sitting at 3% on the inflation scale here. How concerned are you of inflation? Where do you see it trending? And how is it being impacted right now based on tariffs and everything else? Well, it’s stagflation, really.

If you look at goods, for example, particularly staples and things like that, they’re going up in price and they’ll probably go up more in price with these tariffs. Short term, that’s not good for the market, not good for the pricing, not good for the profit margins. That’s why we think that this period right now is almost like when Ronald Reagan came in.

He was very popular, but he had 44 days up in the market. But as soon as he was inaugurated, we spent the next, I don’t know, 16 or 17 months declining to a low in 1982. He came in in 81 and that’s just the way it was.

It was better after that, but that’s the way it is. We’re not political, but I would tell you that if you look back historically with Republican presidents, they have recessions pretty close to after they first get in. I could go all the way back to Harrison, but I’m just telling you, it’s something to keep in mind.

And I think people are right. They think everything is going to be great, but all this dislocation of everything is upsetting to the apple cart here. And that’s my point.

You have to keep in mind in investing and not get caught up in all the social side of it. Yeah. It feels like the president has been dealt a bad hand from the get-go or a bad deck of cards that he’s trying to reshuffle and trying to make the best of it.

But in the end, it’s a losing proposition. I don’t want to be in his shoes. He’s trying his best in my opinion, but that’s the point.

Maybe one last topic before we get a bit more granular and we can talk stock market and gold in particular. I want to talk about the dollar and the role of the US dollar in general in all of this. You touched on the potential interest in weakening it.

I think I’ve said on a show a couple of months ago that it was one of the first things Donald Trump said back in 2016 that he wants a weaker dollar to improve exports and really close that gap, the trade balance here. How are they going to achieve that and is that the goal? I feel like they’re going to sacrifice the dollar for the next two years and then only focus on it starting in 2027 maybe early. Well, part of it will be what should happen probably is all the tariffs get put in place and it won’t be 25% because that would crush everybody.

But let’s just say it’s 7% or 8% across the board, that sort of thing. That’s going to have an impact on things in general. By the way, historically, that’s not too far out of line, maybe for the last 10 years, but you go back a lot longer than that, that’s not that far out of line.

But it has a short-term impact of costing more for everybody all of a sudden. As soon as the economy looks, our economy looks like it’s breaking and slowing, the dollar will go down. Because people don’t want to get caught in that.

If the markets are down and the dollar is going to go down, they’d be all right with that side. But the problem is that if they see that, I think that’s what you’re going to see generally because it’ll impact the trade side. All of a sudden, they’re trying to get people to build factories here and move things here.

They may be successful, but you can’t do it in six months. Now, I keep coming back to TSMC. It’s an interesting one because I’m interested in computer gaming and graphics cards and all of that.

They’re the big supplier to NVIDIA, and they’re lagging massively behind delivering the new graphics card they announced, the RTX 5090 series or the 50 series. One thing that keeps popping up in YouTube reviews that I see is the mention of increased prices due to tariffs, which is an interesting as an extra $50 to the cost of a graphics card. For some people, that’s a lot of money.

I’m curious if that’s an indicator, something I should watch when earnings for NVIDIA, maybe not this quarter but next quarter, whether that’s going to have an impact. Is that something you’re monitoring as well to get really granular here? We don’t own the stock, guys. There’s nothing about that stock that we want to own.

Sorry, it was just an example to the sector. I would say this, that people are probably a little bit myopic on this. If you look at a lot of other countries, when they trade between each other, they all have tariffs between each other.

Look at European countries. Then what happens, and we’re thinking, well, tariffs, we’re not the only people. There’s a lot of things go on.

I think they’re basically saying, hey, you know what? You’re going to have to pay your part. It’s going to cost us a little bit maybe in the short run, but in the long run, it’ll be better for us. I think that’s the way they’re looking at it.

I don’t know. Obviously, I’m not there. I’m just going to tell you what I think from the outside.

I’m looking it up and I maybe have my facts wrong, but US red wine is very difficult to get here in Germany. I’m wondering if it’s protectionism, whether we’re trying to protect the European red wines, meaning the Bordeaux, the Tempranillos, the Primitivos, whatever you have, the Sangiovese out of Italy, or whether that’s just because the US adds additives. I need to do my homework on that, but that’s where my mind went.

It’s like, yeah, we are protectionist as well. It goes both ways. No, no, no question about it.

I’ve read a lot about the wine picture. That’s not something we invest in, so I don’t really think much about it. But yeah, they’ll catch up on all those things, though, eventually.

That’s a two-way street. I get it. From a US perspective, it’s easy to understand where it’s all coming from, right? Let’s talk stock market valuation in general.

I saw an article this morning where the market opened applauding that it’s finally a positive day in the markets after three down days. It sounds like a massive crash was happening. We’re so happy to see some relief here in the markets, but what’s the real state of the market itself? If you look at the S&P 500, it seems pretty stable above 6,000.

Is there anything that makes you nervous right now? Yeah. What happens is they open them up strong and then they go negative, like they already have today. We’re already negative today.

I think people are thinking that, hey, we’re going to keep this thing going. We’ve got to buy them. It doesn’t work that way.

When markets are toppy and things are like that, people start reading into these things, then the markets will open strong, but people sell into it. That’s what happened a lot last week. That’s happening today.

I think futures opened up off the bat with a strong opening, but 30 minutes later, it’s weak again. I think people are not ready for that. They’re not really seeing those signs, and so they just stay pat.

They’ll stay pat until they lose about 20% or 25%, and then they’ll sell. That’s just the way it looks to us right now. We broke below 6,000, actually, as we speak.

59.97, as we speak. It seems to be holding, but we’ll see. 6,000 is an interesting number anyway.

Let’s talk gold, Ted. We’ve done this before, but we really need to talk price movement here. Gold is trading.

Let me get the actual number. We are at 2938.96 right now. And I mentioned it in my intro.

It almost feels hyped without any retail participation, but the price moves. I’m curious what your thoughts are. Has the price move been too fast for you, or do you think it’s been a healthy move? I keep referring to it to meme gold, because I’m starting to get a bit nervous around the high price right now.

What are your thoughts, Ted? I think people are nervous just because they’ve got a pretty good profit. Sometimes people look at it and say, gosh, I’ve made X amount of dollars, so it has to come back. Well, it doesn’t have to.

It doesn’t have to come back a lot, necessarily. And that happens when you get in a move in an industry group. We see that particularly in the miners.

If you look at the miners relative to where they were in 2011, we’re not even close on price to cash flow. We’re not even remotely close. And it’s the smallest part of the S&P.

I mean, it’s a tiny part of the S&P 500 or the miners. But on gold itself, I think when you’re in an era of uncertainty like we’re in right now, we’re in a high era of uncertainty. Everything is uncertain.

And not just in the US, around the world. And so people are like, you know, uncertainty, I think I’ll buy some gold. I think I’ll own a little gold in here.

And I don’t, while you may have it, have a setback, and I get you could if you get up 3000. So it sells off 150 bucks. But I think the next thing will be 3500.

And you have to look at gold that way. If you’re going to own it, own it. And don’t try to trade the bullion too much.

And you can trade the miners. But the bullion, whatever you have in bullion, I think you have to keep it. Because historically, there’s been periods when it was flat down a little bit for two or three, four years, five years, and you just had to keep it, you know, because eventually it catches up.

And I think the uncertainty right now, though, is has not people just in the US or people all over the world and countries, especially, they won’t have anything to do with the US. And they’re saying, hey, we’re gonna buy some gold. Yeah, Ted, I think you got me packed properly here.

It’s like, I’m a junior mining investor. I’m super cynical. And I’m always nervous when something goes up too much, or not too much, but goes up in general, that this is too good to be true.

Right? Well, right now, Kai, you have to look at it about how trading, the institutions have just started biting on the miners, just started biting. So they’re going to have to go for the biggies. They’re going to go Agnico, Newmont, Barrick, they’re going to go for the stocks that have the volume, they can’t go down on the junior end.

And we’re not a junior miner investor, but I would think, okay, and I still think this will happen, that a lot of those juniors are going to get taken out on the buy side on M&A, because they can buy them cheaper than they can go mine it. And I could see that happening for the juniors. Again, I don’t, we don’t follow that group.

And I’m not the person to ask at all. But if I had to just guess what will happen is you’ll go through a flurry of that over a one or two or three year period where a lot of those miners, juniors get bought up because with the prices where they are, it’s cheaper to go buy them. I can’t hear you, Kai.

Apologies. I keep doing that when I’m coughing in the background. Apologies.

No, it’s like, curious, like you mentioned that it’s like, whether it’s cheaper to buy or to sort of explore on your own. And maybe as a counter argument, Mark Bristow mentioned that they’re finding gold for $10 an ounce right now, like exploring, which is a bit of a big counter argument to the whole M&A thesis, in my opinion. It is, but I think the biggies haven’t moved enough yet.

That’s my point. If you look at where the momentum is in the market, it’s in the big, that’s where the institutions go to. Individuals will trade them back and forth.

I understand that. And they’ll trade the GDX, GDXJ, that sort of thing. I think people that understand the juniors, my hat’s off to them because it’s a tough area to know, but I’m sure there’s good money to be made there.

It’s just not an area we are in. No, no, we’re not going to get into that. We don’t have to.

Maybe just as a last follow-up question there, Ted, you mentioned the big ones, the new ones, the Agnico Eagles, they all reported within the last 10 days. I’m curious if you have some thoughts there. Maybe put some perspective around those numbers for us.

Well, you have to look at what they do after they announce. If you’re seeing a lot of the bigger industry, like Walmart announced stocks down 11 or 12 percent, 10 percent one day because they’re saying, hey, it might be softer next time. I think what they’re seeing with the minors is that all of a sudden they’re thinking, you know what, we may be in for some pretty decent times here.

And so they’re not talking down bearish to say, OK, be careful because it can’t last or something like that. But I don’t think, on the other hand, they’re trying to push people into the stocks. It just makes common sense, supply to man, that all of a sudden they’re making more money.

And yeah, they’re going to have some write downs that are going to change those numbers a bit. But generally, if you look at them, most of them are going to be valuing higher, I think. And I think that’s what people have to think about on the big ones.

No, absolutely. Like they’re printing cash, free cash flow and the earnings are through the roof here. And one thing I’m personally quite happy to see, which could mean maybe a bit of a momentum change for the minors, the costs are coming down.

All of the same costs are down for the big ones. So we’ll leave it at that, Ted. Last question, I’ve asked you that last time as well.

I’m curious if you still have the same answer for us. But I ask you about a hypothetical $100,000 investment strategy. How would you allocate? And let me repeat what you said last time.

I’m curious if that’s different. 30% in short term fixed income, 30% commodities and gold, 30% in stocks, 10% cash. Would you change any of that? Not really.

I would be close to the same thing. I mean, I think you can pick and choose on when you buy those things. I’ll give you an example.

I’ve had an investor for 20, 28 years, 29 years, maybe 30 years. That always tells me when the markets are low or high. And I had a message left to me this morning that he wanted to get back in the market.

We’re at all time highs. And that same investor, I can tell you, if we were sitting today down 30% or 40% would want to be getting out of the market. Well, what I’m saying about that is you have to have some feel for when you do those things.

Like we like hard assets at 30%. But what’s that going to be? Well, that’s going to be some gold. That’s going to be some fertilizer.

That’s going to be some iron. That’s going to be some things that pay high cash flow, some gas pipelines, that sort of thing. All those fit together, but there’s a bit of buying when you know where to buy them.

Market-wise on that 30% in the market, we have three strategies. But in our stock strategy, we have about 40% out of the market in Treasuries, not because we’re trying to time it, just because it’s not there. I mean, if you look at Warren Buffett’s letter this weekend, I think he did all he could just not to be bearish.

He did his best to say, I’m bearish, but I’m not going to say that to you. Anyway, I think that’s what people need to realize. Watch a lot of these pros.

They know what they’re doing. And if you don’t see them really aggressive, that should tell you something. I was going to ask you about his massive cash position that he has.

It’s the biggest in US history. What is it? 300 something billion dollars that he’s sitting on right now. A ridiculous number.

How is he ever going to deploy that capital ever again? Even if the market corrects and he finds opportunities, he’s going to own half the US at some point. Well, he’d certainly own full… I think he would certainly use that money to buy the whole company. I don’t think, again, you’ll ever see a company that size buy pieces.

I mean, he owns 28% of Occidental. I think the thing about it is that he would buy whole companies. You can use that money pretty fast if you’re buying a full company.

No, it makes sense. We don’t have to dive into details here. Let’s write out the storm first, and then we’ll see where we come out on the other end.

Ted, I always appreciate our conversations tremendously. Where can we send our viewers? Well, the best place, Kai, is Oxbow. Go to our website, oxbowadvisors.com, and you will find everything there that we do.

We’re very transparent. I mean, you’ll see our market letters. We do a quarterly call that a lot of people like to watch.

But we’ve written a lot of books. I have a new book coming out in March. Certainly send you a copy if you like.

But we don’t try to hide anything. We’re pretty simple, I have to tell you. We’re pretty simple.

And by the way, we’re very humble. And so that’s the way you’ll see us operate. Yeah.

Maybe one last cheeky one, but your investor you were talking, it wasn’t Jim Cramer by any chance, was it? No. What I’ve told people before, I said, you need to be careful with those shows. I’m just not going to knock on that show, but it’s a lot of shows.

You need to decide what’s right for you. We always tell everybody that if you’re listening to everybody else in the world and you don’t know what’s right for you, then you may be different. You may have a different level that you feel good about for risk, and you need to think about what’s right for you.

Absolutely. No, Ted, that’s exactly what our channel actually tries to achieve, have different viewpoints on and have people sort of figure it out for themselves and really hone down on that gut feeling. What is right for you? Absolutely.

Ted, thank you so much for joining us. It was a great pleasure having you back on the program. Everybody else, thank you so much for tuning in.

Ted said it perfectly. You need to know what’s right for you. We’re just trying to provide some information, but you have to make the decisions.

We can’t make those for you and neither do we want to. Make sure you educate yourself. Go check out different channels, different avenues, but know what you’re looking for.

You’re not into, I don’t know, arms and weapons manufacturing, don’t buy that stuff. It doesn’t matter. It really is up to you.

If you’re into gold, great, buy some more. I’m not trying to hype it, but it’s really up to you. I think Ted made the perfect case here.

Make sure to follow him, Oxbow Advisors, really interesting YouTube channel as well. We’ll link to all of that down below. If you haven’t done so, hit that like and subscribe button.

It helps us out tremendously. We do appreciate it. I sadly read every comment.

I shouldn’t, but they’re entertaining and we do appreciate every positive and constructive feedback. So please put that down below. Thank you so much for tuning in.

We’ll be back with lots more here on Soar Financially. Thank you.