Is It Time To De-Risk Your Portfolio? | Ted Oakley

Maintain 20-25% Cash or Short-Term Treasuries

Oakley warns that investors without at least 20-25% in cash or 3-6 month Treasuries face outsized risk, as high S&P multiples could simultaneously compress alongside earnings during downturns.

45-48% Treasury Allocation as Ballast

Oxbow Advisors currently holds 45-48% of portfolios in US Treasuries, providing dry powder to deploy when equity valuations eventually normalize.

All-Weather Portfolio Construction

Portfolios should be structured to withstand 30-40% drawdowns without forced selling, ensuring liquidity exists to purchase discounted assets during market dislocations.

Energy Remains Largest Holding

Despite recent gains, energy maintains its position as Oxbow's biggest allocation across oil producers, drillers, and service companies, with management adding to positions during recent volatility.

Institutional Neglect Creates Opportunity

Major East and West Coast pension plans and endowments have largely excluded fossil fuels from portfolios, leaving the sector at less than 3% of the S&P despite sustained global demand.

Geopolitical Supply Chain Shifts

Prolonged Middle East conflicts may drive Asian buyers toward US energy exports as insurers withdraw 7-day coverage from Persian Gulf tankers, potentially creating long-term demand tailwinds for domestic producers.

Tactical Precious Metals Trading

Oxbow sold significant gold and silver mining positions in late December/early January during peak prices, then repurchased royalty companies after they corrected 30-35%.

Critical Technical Levels at Risk

The S&P and NASDAQ currently test their 200-day moving averages; breaking these support levels could trigger accelerated algorithmic selling and deeper market corrections.

Diesel Prices Threaten Economic Growth

With diesel exceeding $5 per gallon, shipping costs are creating supply chain headwinds that could crimp economic activity independent of equity market valuations.