Stocks Are Priced for Perfection — Why Late-Cycle Risk Is Being Ignored

📖 About This Summary

This article summarizes a Thoughtful Money interview featuring Ted Oakley, Managing Partner of Oxbow Advisors, hosted by Adam Taggart. Oakley explains why today’s stock market valuations are among the most extreme he has seen in his career, why investor complacency is dangerously high, and how disciplined capital allocators are positioning for what may be the final innings of a long bull market. All content is edited and annotated by Time Health Capital.

“Things are really, really expensive — about as expensive as I’ve ever seen them.” — Ted Oakley

📈 Valuations at Historic Extremes

Oakley begins with a blunt assessment: equity prices are stretched far beyond historical norms.

• The CAPE ratio is near 40 — among the highest readings ever recorded.
• Price-to-earnings ratios hover around 24.5, well above long-term averages.
• The market has delivered three consecutive years of double-digit gains, a rare late-cycle signal.

Markets could push higher in the short term, but Oakley believes we are already in the eighth or ninth inning — where upside is limited and fragility increases rapidly.

🕒 Late-Cycle Momentum vs. Economic Reality

Despite elevated valuations, optimism remains widespread — a classic late-cycle condition.

• Employment growth is slowing beneath the surface.
• 401(k) inflows and momentum could support markets into 2026.
• Oakley expects a meaningful market high in 2026–2027, followed by a true correction.

He compares today’s sentiment to past pre-crisis periods, when investors assumed “summer forever” and dismissed downside risk.

🪙 Precious Metals, Energy & the Fed Pivot

On the day of the interview, silver surged above $60 per ounce — reinforcing Oakley’s view that hard assets are entering a new phase.

• He owns silver, miners, and royalty companies, expecting further upside.
• Global accumulation of hard assets is underway, while institutions have yet to fully participate.
• Oakley expects future rate cuts driven by political pressure, not economic health.
• He warns of a potential 1970s-style inflation feedback loop: cuts → inflation → more cuts.

In equities, his largest recent additions have been in energy, not technology — a deeply contrarian but cash-flow-driven bet.

🐻 When the Bear Market Arrives

Oakley argues that a true bear market hasn’t occurred since 2008 — meaning an entire generation has never experienced one.

• Real bear markets involve multi-year declines and investor capitulation.
• They end with emotional exhaustion and widespread abandonment of equities.
• Demographics may accelerate the next downturn as Baby Boomers enter years of forced asset liquidation.

If passive flows reverse, selling pressure could become structural rather than cyclical — challenging the belief that “markets always go up.”

⚠️ Complacency Is the Real Risk

Oakley repeatedly emphasizes that today’s greatest danger is not fear — it’s overconfidence.

• Investors, advisors, and retirees are behaving as though risk no longer exists.
• Complacency typically precedes sharp and violent repricing.
• Markets punish those who confuse long trends with permanent conditions.

💡 Our Commentary / What It Means for Us

At Time Health Capital, we see Oakley’s warnings as consistent with a broader macro transition.

• The era of easy liquidity and passive wins is ending.
• Cash flow and balance-sheet strength matter more late in the cycle.
• Hard assets are shifting from contrarian positions to strategic allocations.
• Liquidity — dry powder — becomes a competitive advantage during dislocations.

This is not a moment for panic, but for disciplined positioning ahead of structural change.

❓ Questions & Implications for Readers

• If passive inflows reverse, how resilient is your portfolio?
• Are you relying on narratives — or cash flow?
• Do you have liquidity ready for a multi-quarter correction?
• Which assets will matter most in a stagflationary or policy-distorted environment?

🎥 Prefer to Watch the Full Discussion?

Watch the original Thoughtful Money interview here:

Stocks Are “As Expensive As I’ve Ever Seen Them” | Ted Oakley