Latest Notes:

Videos: Ted Oakley visits, Cheddar TV, Yahoo Finance, & The TD Ameritrade Network while in New York October 31-November 1st 2019 .

Videos: Ted Oakley visits, Cheddar TV, Yahoo Finance, & The TD Ameritrade Network while in New York October 31 – November 1, 2019 .

Videos: Ted Oakley visits, Cheddar TV, Yahoo Finance, & The TD Ameritrade Network while in New York October 31 – November 1, 2019 .

Ted Oakley spoke to Cheddar TV from the NYSE to break down the close and the top financial news of the week, including a positive jobs report and constructive conversations on the Chinese trade deal.

Ted Oakley joined the TDAmeritrade Network from the NASDAQ and talked about how to find consistent growth and cash flow from today’s technology companies.

Ted Oakley joined The Ticker on Yahoo Finance to discuss the Federal Reserve, jobs, and the markets.

Don’t forget to visit our  Books Page for your complimentary print and digital copy of Ted Oakley’s new book The Psychology of Staying Rich.

Don’t forget to visit our  Books Page for your complimentary print and digital copies of Ted Oakley’s new book The Psychology of Staying Rich.


Video: Ted Oakley – TD Ameritrade Network – October 4, 2019

Ted Oakley – TD Ameritrade Network – October 4, 2019

Ted Oakley visited the TD Ameritrade Network at the NASDAQ exchange to discuss the economy, interest rates, and where he is telling investors to put their money.

Don’t forget to visit our  Books Page for your complimentary print and digital copy of Ted Oakley’s new book The Psychology of Staying Rich.

Ted Oakley – TD Ameritrade Network – October 4, 2019

Ted Oakley visited the TD Ameritrade Network at the NASDAQ exchange to discuss the economy, interest rates, and where he is telling investors to put their money.

Don’t forget to visit our  Books Page for your complimentary print and digital copies of Ted Oakley’s new book The Psychology of Staying Rich.

Oxbow Advisors Market Comments October 2019

For a Downloadable Copy Click Here

YaketyYak

This was the title of a big rock ‘n’ roll hit in 1958 by The Coasters. For us at Oxbow “Yakety Yak” is the never-ending parade of news that investors have to wade through every day to try to make sense of things. More on that later but first to the markets …

The stock market, as evidenced by the S&P 500 Composite and Dow Jones Industrial Average, was volatile, but it basically broke even for the third quarter of this year. Interestingly, during the same time period the utility average and market value of bonds were up closer to 8%. Exhibit 1 shows returns of various popular market measurements for the nine months ending September 30, 2019.

As we said in our July 2019 Market Comments, return numbers have been misleading. Over the last 21 months, the Dow Jones Industrial Average is up about 1 % , and the S&P 500 Composite is up about 3%. In other words, earnings came almost exclusively from dividends, and that’s about it. Most investors are disappointed when they look at 2018 and 2019 together, as results have been low. It isn’t surprising to us that they’re confused. According to the dictionary, yakety-yak is defined as chatter, babble, idle talk and nonsense … which becomes all too clear when taking a snapshot of the current news as shown in Exhibit 2.

One of the things we continually try our best to do with Oxbow investors is to listen. In listening to so many, we hear a lot of frustration and confusion. We’ll try to give some input as to where we are on both the stock and bond markets. Let’s start by looking at the bond market. Interest rates declined during the third quarter of 2019, which in turn caused bonds to increase in value.

Notice Exhibit 3 that shows the decline in interest rates for 10-year and 20-year U.S. Treasury bonds.

What investors might not be notic­ ing is the Federal Reserve’s input 2.60 into the overnight lending market (repo) and the amount of funds 2.30 they have had to put into the banking system over the last few 2.00 weeks. For example, during the week of September 16th, they put 1.70 in $275 billion in just four days. For comparison, remember TARP (Troubled Asset Relief Program) of 2008. The total added then was $700 billion. This may not resonate with most investors, but the bottom line is that there’s a liquidity problem. This means the Federal Reserve will either have to lower interest rates or bring quantitative easing back. That’s part of the reason we at Oxbow continue to hold U.S. Treasury bonds.

Stock Market … Still Late Cycle

If you hike very much, you’ve probably seen the sign that says “Be Bear Aware.” We would have to say that currently very few investors seem to see the big picture now. Two things stand out to us. The first as seen in Exhibit 4 shows the current divergence between the Dow Jones Transportation Average and the Dow Jones Industrial Average. This historically happens near the end of major market advances. Transporta­tion of goods slows down. The two averages peak together, then diverge just as occurred in October 1989, May 1999 and July 2007. After that, the entire market suffers at some point. Back in the day, it was called the “Dow Theory,” but it’s still useful in 2019. Most investors today are completely teth­ered to the stock market, and the Federal Reserve knows that. Hence Jay Powell’s message of being there to help rates decline if things get weak. What is happening in the market is twofold, an increase in investors’ real estate values, as well as their stock portfolios. Since consumers are almost 70% of spending nationally, it goes without saying that consumers are the principal driver.

Notice Exhibit 5 that shows equity in household real estate versus stock ownership. These two factors have been buoyed by easy money, and now investors are chock full of both. Any downward change in prices alters spending. The Federal Reserve is very cognizant of those numbers.

The other new information in the third quarter had to do with actively managed funds versus passive or index funds. Passive investing has just crossed higher than actively managed funds. What does this mean? The majority of investors don’t seem to be looking for or analyzing real companies any­more. They just throw their money into an index, which simply buys everything. No one considers looking at real busi­nesses, real costs, real debts or real cash flows.

Notice Exhibit 6 that shows passive funds overtaking actively managed funds. This reminds us of 2000 when just about everyone bought nothing but technolo­gy-and 2007 when everyone bought subprime leveraged real estate. Now most everyone seems to be buying indexes. Can everyone liquidate at the same time? The problem in the long run with indexing is it becomes a pure momentum investment with little thought as to value.

We think the active vs. passive debate is obscuring a more relevant concern for indi­vidual investors. It is our strong opinion that a person’s or family’s primary investment goal should not be to beat an index like the S&P 500. It should be generating enough income and personal savings to live the life they want. This requires two elements: (1) an investment plan that has a high expecta­tion of meeting those lifetime needs and (2) a very high likelihood that individuals can stick to their plan. An optimized strategy projected to deliver the highest returns does investors no good if they lose faith and abandon the plan after a volatile swing up or down in the market. Even investing in passive ETFs (exchange-traded funds) requires active decision making. Remember what your true end goal is, then keep that as the focus. 

Where to Now?

As most of you know, we at Oxbow Advisors have had a large position in U.S. Treasuries for the past 12 months as we were expecting interest rates to decline. The big question now: Will rates decline further? We don’t know. But the information we see tells us there’s a very good possibility that rates could continue to trend lower. At Oxbow, we spend a great deal of time looking at the landscape, and sometimes we have to make a change. We stand ready to do that if markets warrant such. Oxbow income strategies have outperformed so far this year. Oxbow equity strategies also have done extremely well while holding high liquidity. In fact, all our portfolios have significant levels of liquidity. Our value screens are showing fewer and fewer companies that are at attractive valuation levels. As we enter the fourth quarter, we assume the Yakety Yak will continue as it has all year. Our next Market Comments will be in January 2020. Both now and until then, we wish you the very best during the coming holiday season.

Ted Oakley & Bob Walsh

Oxbow Advisors

Video: Ted Oakley – Yahoo Finance – September 19, 2019

Ted Oakley – Yahoo Finance – September 19 2019

Ted Oakley, Managing Partner at Oxbow Advisors, spoke with Yahoo Finance about the recent Fed rate cut and what that means moving forward.

Don’t forget to visit our  Books Page for your complimentary print and digital copy of Ted Oakley’s new book The Psychology of Staying Rich.

Ted Oakley – Yahoo Finance – September 19 2019

Ted Oakley, Managing Partner at Oxbow Advisors, spoke with Yahoo Finance about the recent Fed rate cut and what that means moving forward.

Don’t forget to visit our  Books Page for your complimentary print and digital copies of Ted Oakley’s new book The Psychology of Staying Rich.