TechFlow News, July 17: Oxbow Advisors founder Ted Oakley pointed out that investors are missing a prime opportunity to position themselves in commodity-related stocks while underestimating the potential of mining companies. The senior wealth management professional warned that a "generation-level" bear market may be approaching, and most investors have exhausted their ammunition by chasing hot stocks, making it difficult to seize opportunities when the time comes. Oakley stated, "At that time, the (US stock) market could correct by at least 40%, or even more." He expects this correction to last one to two years, rather than just a few months. "Current valuations have deviated from normal levels by about three standard deviations; returning to the mean alone would require a 40% to 45% drop. This is absolutely not a normal market."
Oakley believes that US stocks may peak in the next 6 to 12 months and "consolidate for a period." However, entering the market to chase the last "6% to 8%" gains will face about 25% downside risk, and the risk-reward ratio is no longer favorable. He stated that Oxbow will wait for opportunities when the market falls, but many investors who only passively hold the S&P 500 Index may no longer have the capacity to add positions at lower levels.
The company's Chief Investment Officer Chance Finucane stated that they remain cautious regarding 2027, as next year will face the high base effect from the first half of this year, at which time growth will slow and inflation will decline, which is not positive for risk assets.
Oakley pointed out that semiconductors have evolved from a marginal sector three years ago to a dominant market force. Nowadays, 10 to 12 companies account for half of the market, and investors do not realize that relying solely on the S&P 500 Index cannot truly diversify risk, let alone the continuous heating up of speculative sentiment over the past year. Oxbow used Intel as an example to warn against the risk of chasing highs: When sold in 1999, gains had already reached 400%, and it rose another 100% in the following 12 months, but it subsequently took 26 years to return to the highs at that time.
Currently, Oxbow's stock position is slightly over 60%, holding 45 individual stocks, with the rest in short-term Treasury bonds. Oakley is bullish on the energy sector, believing oil price forecasts are too pessimistic, "I would be very surprised if oil prices do not return to above $100. The damage on the production side is more severe than outsiders realize." In addition, although gold has fallen 7% year-on-year and hovers below $4,000, Oakley believes that as chasing funds gradually clear out, gold prices, miners, and silver are expected to usher in a new round of rally next year. (Jin10)
