Wealth manager warns stocks could face a 40% slide

Ted Oakley is telling investors to stop staring at the hottest stock-market names and start checking how much cash they have left if the party turns.

The founder and managing partner of Oxbow Advisors said on The Julia La Roche Show that the market may be approaching what he called a “generational bear market,” with a possible decline of at least 40% if conditions break the wrong way.

Oakley, who has advised wealthy clients for more than four decades, said such a fall would likely play out over one to two years rather than a short, sharp dip. He said market valuations are far above their usual range, and that a return toward normal levels could imply selling of roughly 40% to 45%.

He also warned that investors chasing a final move higher may be taking a poor trade. Oakley said the market could still set a high within the next six to 12 months, but he argued that trying to catch the last 6% to 8% of gains could expose investors to a possible 25% decline.

Oxbow would look for chances to buy during a selloff, Oakley said. His concern is that many investors who have piled into the S&P 500 may not have much cash ready if prices fall.

Big index, narrow bet

Oakley said investors may be less diversified than they think. He pointed to the growing weight of semiconductor and other popular stocks, saying a small group of companies now accounts for a large share of the market.

In Oakley’s view, buying the S&P 500 does not automatically protect investors if the index has become heavily concentrated in a handful of names. He also said speculation has increased over the past year.

Oxbow made a similar point in a client note earlier this month, using Intel as its cautionary tale. The firm said it sold Intel in 1999 after the stock had gained 400% over four years. According to Oxbow, Intel then doubled again by March 2000, but took 26 years to get back to those gains.

Chance Finucane, Oxbow’s chief investment officer, made a separate bearish case in an interview with David Lin released Thursday. He said the firm is cautious about 2027 because growth and inflation comparisons from the first half of this year could make the economy look much weaker next year.

Finucane said a backdrop of slowing growth and easing inflation would not be friendly for risk assets.

Where Oxbow sees bargains

Oakley said Oxbow’s stock strategy is a little more than 60% invested across 45 holdings, with the balance in short-term Treasurys.

He said the firm sees value in energy, and argued that oil-price forecasts have become too pessimistic. Oakley said he would be more than surprised if oil does not move back above $100, adding that he believes production has been hurt more than many investors understand.

Among individual names, Oakley said Oxbow bought Northern Oil & Gas near $18. He said the stock has not moved much, but pointed to its 9.5% to 10% dividend and said its production is 70% hedged, supporting the payout.

He also named gas producer Antero Resources as a bargain. Another area Oxbow likes, according to Oakley, is mineral and royalty companies. He highlighted Kimbell Royalty, which owns mineral and royalty interests across 17 million acres in the U.S.

Oakley also praised Canadian gold miner Agnico Eagle Mines, saying it is about 45% below its 52-week high and looks attractive given gold prices and mining costs.

Gold itself, down 7% over the past year and trading just under $4,000 an ounce, is starting to look appealing, Oakley said. He argued that the market may be close to shaking out momentum buyers who chased gold after its strong 2025 run, which could set up a better stretch for gold, miners and silver into next year.

This story draws on original reporting from MarketWatch.