Oct 25, 2026 · 1h 12m
Oxbow trims risk ahead of a potentially volatile 2027
"We're Worried About 2027" - Stocks To Plunge 30%? | Chance Finucane @OxbowAdvisors
The discussion examines how investors can protect accumulated wealth when concentrated valuations, changing economic conditions, and weaker data-center spending threaten markets.
- 1Oxbow sees concentrated AI gains, elevated valuations, and slowing data-center investment as risks for early 2027.
- 2The firm is reducing risk gradually through short-duration Treasuries, selective energy and defensive holdings, and limited AI exposure.
- 3Chance Finucane argues that diversification protects wealth while disciplined positioning can preserve capital for future buying opportunities.
Don't miss
Chance Finucane warns that aging investors may be carrying too much stock after an unusually strong run, making protection of accumulated wealth the priority.
The brief
Chance Finucane of Oxbow Advisors opens with a warning about the first part of 2027: concentrated AI gains, high valuations, and changing economic conditions could make risk management more important than chasing momentum.
Oxbow’s response is incremental rather than absolute. The firm keeps limited AI exposure, favors short- and intermediate-term Treasuries, and adds selectively to energy, healthcare, real estate services, and other less cyclical areas.
The central tension is whether data-center and power-infrastructure spending can keep supporting a bifurcated economy. A slowdown could pressure both market leadership and consumer spending, even if the Federal Reserve intervenes.
Chance describes a stock-selection discipline built around free cash flow, durable businesses, sector-specific valuations, and downside control—not a wholesale move to cash or a bet on one macro forecast.
The conversation’s sharpest warning concerns aging investors who may still carry excessive stock exposure after a long run of strong returns, making wealth protection more urgent than repeating past gains.
The payoff to caution is optionality: if a bear market arrives, disciplined investors may have capital available to buy businesses at more attractive prices.
What was said on this episode
30 statements · 14 positive · 14 negative · 1 mixed · 1 neutral
AI-related tech stocks could fall 30%, while semiconductor stocks could fall about 50%.
“The downside is too steep. You can make a case that tech stocks, the downside is 30%. The downside for semiconductor stocks specifically is more like 50%.”
Listen at 4:02
Oxbow recommends focusing on reasonably valued non-AI positions.
“we focus more on the more reasonably valued non-AI positions”
Listen at 4:17
Oxbow is increasingly concerned about AI stocks.
“we're getting more and more concerned for those AI stocks”
Listen at 5:50
Slowing growth and inflation create a poor environment for tech stocks.
“when you see economic growth slow and the inflation rates start to slow down, that's a bad environment for tech stocks pretty consistently”
Listen at 6:58
Oxbow expects slowing growth and inflation during at least half of 2027.
“we see that as the backdrop for at least half of 2027”
Listen at 7:07
AI-related stocks may experience accelerating downside in 2027.
“we think that downside could really pick up going into next year”
Listen at 7:16
Oxbow believes AI will disrupt real-estate services less than perceived.
“We don't think it would be as much of a factor as what the perception was.”
Listen at 10:39
Treasury yields will rise on average in the new post-2020 era.
“on average, you're going to see yields rising”
Listen at 14:00
Oxbow recommends limiting Treasury maturities to roughly three years or less.
“we don't want to go too far out on the yield curve. So we're still sticking to more or less three years or less.”
Listen at 14:03
Oxbow is concerned about market conditions in 2027.
“we're pretty concerned about 2027”
Listen at 15:49
A difficult first half of 2027 could create buying opportunities later that year.
“there's a good chance that could provide an opportunity for us in the back half of next year to get some good buys”
Listen at 16:09
“this is one that I don't think we would be surprised if the stock market went down 30% or more”
Listen at 16:22
A significant nominal-GDP slowdown makes stocks, cyclical stocks, and tech perform poorly.
“when you have that backdrop and basically a slowdown in nominal GDP growth in a significant manner, it's difficult for stocks and specifically cyclical stocks and tech to perform well”
Listen at 18:24
A rollover in the trailing-to-forward PE gap tends to precede a significant bear market.
“when you've had this period of uninterrupted, great stock market, it tends to proceed as soon as that. ratio rolls over, it's a pretty significant bear market that's ahead”
Listen at 20:08
A 50% S&P 500 decline would significantly affect consumer spending through the wealth effect.
“if you had a 50% decline, and I know you've talked about this, where so much of people's savings is now in the S&P 500, what that would do to consumer spending and the wealth effect”
Listen at 22:34
Construction spending growth is concentrated in data centers and power, while other sectors decline year over year.
“The only growth in construction spending, there's more than 70% annual growth. Data centers? Yep, data centers. And then power, which is also data centers essentially, is 10% growth. Every other sector of the economy, whether it's residential, manufacturing, all the way on down, negative year over year.”
Listen at 23:31
Oxbow aims for portfolio declines below half the market’s during a 30% stock drop.
“if you do get, let's say, a 30% drop in stocks at some point in the next year, that we want to be positioned in such a way that our declines are ideally less than half of that”
Listen at 27:40
Oxbow recommends incrementally adjusting sector risk rather than moving all in or all out.
“The decisions you make are incremental. And we've got long term views of where we want to own certain types of assets in different sectors of the market. But you're making incremental decisions to right size the amount of risk you're taking”
Listen at 29:01
Oxbow favors businesses with durable, consistently growing free cash flow.
“businesses that generate lots of free cash flow and. ideally consistent cash flow that you know in a decade you would expect that in eight nine or all 10 out of 10 years they're growing that cash flow”
Listen at 31:41
Oxbow is currently concentrating precious-metals exposure in high-quality core holdings.
“for the current time we're kind of really just sticking to the the high quality core within that space”
Listen at 36:27
Markets can experience 10-to-16-year periods without reaching new highs.
“there are. 10 to 16 year long periods where the market never makes a new record high”
Listen at 45:28
Active allocation among stocks, precious metals, and bonds may be necessary to generate returns in range-bound markets.
“the only way to generate a return is going to be actively adjusting the positioning and your allocation between stocks versus precious metals versus bonds”
Listen at 45:53
Energy remains Oxbow’s preferred sector.
“It's still our favorite sector at this time.”
Listen at 47:03
Slowing growth and inflation create a difficult environment for energy stocks.
“if you have a period where you see a slowdown in growth and inflation rate comes down a bit, that's a difficult environment for energy”
Listen at 48:18
Short-term Treasuries can lock in annual returns of roughly 4% to 5%.
“you're locking in four to 5%. annual rates of return, that's a great base rate to have”
Listen at 54:38
Short-term Treasury allocations can reduce the risk of major portfolio drawdowns.
“the risk of a major drawdown in your portfolio is really diminished”
Listen at 55:17
Older investors with substantial stock wealth face greater downside risk.
“now there's greater risk of downside”
Listen at 59:03
“if you had a 50% decline in stocks, you got to get a double to get back to where you were”
Listen at 1:01:26
Short-term Treasuries yielding 4% to 5% provide investors time to decide on other allocations.
“The starting yield on a short-term treasury, somewhere between 4% and 5%. That's a really good starting point that buys you time to figure out what else you want to do.”
Listen at 1:05:18
Municipal-bond attractiveness should be evaluated against same-maturity Treasury spreads.
“you still need to pay attention to what that spread is between munis versus the same maturity level of a U.S. Treasury”
Listen at 1:06:55
Statements are attributed to the speaker as said on the episode and reflect their view at the time, not PodLume's. They are not advice.
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