50% stock crash ‘wouldn’t surprise me’; This is the biggest risk today – Ted Oakley

The biggest risk investors currently face is unsustainable stock market valuations that will eventually push back, said Ted Oakley, founder and partner of Oxbow Advisors.

“From this level, if you look at your standard deviations of valuations from where the market is, and you just go back to an average of where it should be, that’s probably right now, somewhere between a 40% and 50% break ,” Oakley told David Lin, anchor for Kitco News.

Oakley noted that while a correction of that magnitude is not necessarily imminent, a major correction within the next two years is likely.

If investors have enough liquidity to take advantage of such a correction, “you could really make a lot of money,” he said.

“The biggest risk is in the stock market. I think real estate is also risky. We are in a period where we call it ‘everything is speculative’, and it is true, almost everything is speculative. Private companies are selling for speculative prices, but the markets are selling for prices that have never actually existed before,” he said.

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