Podcast Summary: Barron's Streetwise

Episode: The Quality Signal That Beats the Market. Plus, Can Metals Stay Hot?
Host: Jack Hough (Barron's Columnist)
Guest: Jared Woodard (Head of the Research Investment Committee at B of A Securities)
Date: January 2, 2026

Overview

This episode explores two major financial themes: the extraordinary recent gains in metals markets, and a sharp, research-driven look at the elusive concept of "quality" in stock investing. Host Jack Hough and guest Jared Woodard unpack why metals are hot, why "quality" stock strategies matter now more than ever, and which metric may be the ultimate signal for outperformance. Key practical insights and investable ideas are shared, including specific ETFs and stock picks.

1. Rip-Roaring Gains in Metals (00:31 – 13:59)

Massive Metal Gains in 2025

• Silver: Up 140% in 2025
• Platinum: Up 133%
• Palladium: Up 95%
• Gold: Up 69%
• Over 20 years, gold has delivered 791% returns, outperforming the S&P 500's 703% — a highly unusual period, as stocks typically outperform over long periods.

"Gold is just stuff. It doesn't do any thinking. It just sits there. Over long time periods, gold and other stuff should track the rate of inflation."
— Jack Hough (01:37)

Base vs. Precious vs. "Special" Metals

• Precious Metals (e.g., gold, silver, platinum) are rare, less reactive, valued for jewelry or coinage.
• Base/Industrial Metals (e.g., copper, zinc, tin) are more common, used in manufacturing.
• Special Metals like Uranium (fueled by nuclear revival) and Cobalt (battery demand) saw big runs: Uranium up 11% in 2025, 168% over 5 years; Cobalt up 115% in 2025.

What Drives Metal Prices?

• Hot economies, supply shocks, or tech shifts (e.g., AI/EV-driven energy demand).
• Precious metals spike on fears of monetary debasement and FOMO buying; rising deficits and dollar weakness are boosting demand.
• Current deficit ($1.8T) eclipses even the depths of the 2009 financial crisis.

"It's unusual to run deficits this large when there's not some kind of economic emergency."
— Jack Hough (08:27)

Volatility and Valuation

• Prices are jumping and dropping rapidly; volatility is high.
• Mining costs lag far behind spot prices, e.g., all-in gold mining cost estimated at $1,715/oz for 2026 vs. spot near $4,600/oz.
• Gold miners are making huge profits and, atypically, are being disciplined (paying down debt and buying back stock).

Outlooks and Consensus

• Wall Street banks remain bullish:

  • RBC: Gold to hit $4,800 by end of 2026
  • Societe Generale: $5,000 target
  • Ed Yardeni: S&P 500 and gold may both hit 10,000 by 2029

• Most bullish consensus pick: Copper (UBS and JPMorgan both bullish, citing supply and demand factors)

Investing Vehicles

• Individual stocks: Barrick Mining (gold), Freeport-McMoRan (copper), Anglo American, Teck Resources, Norsk Hydro (aluminum), Albemarle (lithium).
• ETFs:
  • State Street SPDR S&P Metals & Mining (diversified; heavy steel/coal tilt)
  • Invesco DB Precious Metals ETF (but high expense ratio)

Crypto vs. Metals

• Crypto, often called "digital gold," is underperforming — down 15% in 2025 — while metals surge. Crypto now looks more like the speculative trade, metals the "debasement" or "hot economy" trade.

2. Is Now the Time for ‘Quality’ Stocks? (14:30 – 28:09)

Market Backdrop

• 2025 saw low quality stocks outperform high quality by a staggering 50 points since March, per UBS, but this is seen as unsustainable.
• "Quality" has strong intuitive appeal for investors, especially in periods with questionable business models and extreme market moves.

"There's something comforting and intuitive about the idea of buying quality, almost no matter what you're shopping for."
— Jack Hough (15:01)

The Trouble with Defining "Quality"

• Wall Street lacks a consistent definition: "quality" funds use widely varying methodologies.
• Most popular measure: Return on Equity (ROE) — but this doesn't address valuation.
• Many quality ETFs are expensive and hold similar stocks to the S&P 500 (e.g., Apple, Microsoft), making diversification difficult.

Enter Free Cash Flow

• Jared Woodard’s research points to Free Cash Flow (FCF) / Enterprise Value (EV) as the most powerful quality indicator.
• FCF = operating cash flow minus capital expenditures, stripping away gimmicky accounting.

"The irony of looking for quality... you have to be quantitative. You have to measure something."
— Jared Woodard (18:32)

"The goal with a free cash flow measure is... focus on what cash is coming to the business. Cold hard cash."
— Jared Woodard (19:03)

Why It Matters

• Historically, investing in high FCF/EV stocks delivered 15-16% annualized total returns since the early '90s — about 5% alpha over the S&P 500.
• This margin is "massive" and "a little bit shocking," and recent returns are still in line with historical results.

"Investing in a basket of stocks that score well on this measure... has performed about 15, 16% total returns per year since the early 90s."
— Jared Woodard (19:03)

• Despite its track record, only 25% of surveyed pros seriously consider FCF/EV.

How to Use Quality as a Satellite Strategy

• With S&P 500 valuations stretched and US bonds recovering from historic drawdowns, now is a good time to "go broad" with satellite strategies.
• Non-traditional approaches:
  • International small-cap value (outperformed with lower volatility past 5 years, often overlooked)
  • Active credit (emerging market debt, fallen angel high yield bonds)
  • Real assets beyond basic gold (dynamic-weighted commodities, not static indices)
  • Thematics: AI, nuclear, reindustrialization—but beware overlap

"When large cap equities are... expensive, Treasuries are enduring... the longest, largest drawdowns... This seems like an ideal time... to invest broadly where you find good opportunities."
— Jared Woodard (22:26)

Core Takeaways on Diversification

• Consider active, flexible approaches to commodities and real assets.
• Embrace new global and thematic shifts (AI, onshoring, decoupling).
• Make your portfolio robust for inflation, currency swings, and changing macro risk factors.

"Having a portfolio that's robust against risk of inflation, of big moves in currencies... is going to be incredibly important."
— Jared Woodard (25:45)

3. Practical Investment Ideas (28:09 – End)

ETFs Mentioned:

• Pacer US Cash Cows 100 (COWZ): FCF-focused, strong 30-year record, value tilt has hurt recent 10-year performance.
• VictoryShares Free Cash Flow ETF (VFLO): FCF screen plus growth trends; launched 2 years ago, recently outperformed S&P 500, trades at 14x earnings.

Handpicked Stocks (from Jack’s Barron’s screen):

• AT&T
• Chevron
• Deckers Outdoor
• Expedia Group
• General Motors
• Merck
• Omnicom Group

"Investors can also screen for their own stocks. I ran a screen recently for companies with high free cash yield... the stocks I came up with are ATT, Chevron, Deckers Outdoor, Expedia Group, General Motors, Merck and Omnicom Group."
— Jack Hough (28:43)

Notable Quotes & Timestamps

• On Gold’s Outperformance:
  "Gold is outperformed... that is definitely not normal because the S&P 500 represents companies. And companies are run by smart people... Gold is just stuff."
  — Jack Hough (01:35)

• On FCF as a Quality Metric:
  "The irony of looking for quality as an investor is it seems like you can't really be qualitative about it. You have to be quantitative."
  — Jared Woodard (18:32)

• On Historical Outperformance:
  "Investing in a basket of stocks that score well on this measure ... has performed about 15, 16% total returns per year since the early 90s."
  — Jared Woodard (19:03)

Key Timestamps

• 00:31: Discussion of metals’ recent gains and why
• 05:20: Precious vs. base vs. special metals, drivers, and volatility
• 10:38: Gold mining economics, forecasts, and recommended stocks/ETFs
• 14:30: Shift to “quality” investing; definition issues and ETF pitfalls
• 18:32: Jared Woodard on why free cash flow is the true quality filter
• 22:26: Market context and the importance of diversification
• 25:45: Real assets and thematics as portfolio diversifiers
• 28:09: Actionable ETFs and stock picks for quality investing

Episode Highlights

• Metals have outperformed everything—especially gold—driven by a unique mashup of monetary fears, real economic growth, and supply shocks.
• "Quality" stocks are hard to define, but the free cash flow to enterprise value ratio stands out as the winning historical signal.
• Diversification beyond US large caps—into global value, credit, and real assets—may be the best shield against current market risk.
• Actionable investment ideas include new-style ETFs (COWZ, VFLO) and high-FCF stock picks.
• Dynamic, flexible approaches now trump static buy-and-hold in both equities and commodities.

Tone and Style

Jack Hough’s delivery is conversational, witty, and full of memorable analogies ("sniffing melons," "cigar box accounting"). Jared Woodard brings quantitative rigor with accessible explanations. The rapport is friendly and unpretentious, making complex finance accessible—“Wall Street like you've never heard before.”