The Big Picture Is Clear to Porter
What to make of 2020... We're living in the 'fourth turning'... Peak crisis... Why things happen when they do... The big picture is clear to Porter... Capitalism in crisis... Don't miss Porter's new event tomorrow morning...
A lot has been said about how 2020 is 'unprecedented'...
It has been a new experience for most people alive today. And with the day-to-day noise on TV and the Internet, we can't blame anyone for thinking that "this" has never happened before.
But what if we take a step back from all of that and look at the good ol' paper-printed history of the past few centuries?
It's what we should do as investors who want to learn what makes the markets move and how economies strengthen and weaken over time. And by doing that today, we can see...
This has happened before.
And I (Corey McLaughlin) am not just talking about a pandemic... even though we did write in the May 18 Digest specifically about the similarities today to the (much more deadly) Spanish Flu outbreak of 1918 – right down to how it spread, the multiple "waves" of the virus, and the "social distancing" guidelines.
But today, we're thinking about the bigger patterns of pivotal times in world and U.S. history...
Our colleague and Extreme Value editor Dan Ferris has written about this concept in the Digest several times over the past few months...
Specifically, Dan has been reading and studying everything he can get his hands on lately about the time between 1929 and 1945 – the era of the Great Depression and World War II.
Dan has found a lot of evidence that what we're going through today is similar to what happened then... and has explained what that implies about where you should put your money today.
Unbeknownst to me, I've spent parts of the past few months obsessing over one of the same pieces of research he has... And I found that it aligns with a lot of what our founder Porter Stansberry might talk about in his latest can't-miss event tomorrow morning.
It's a comparison that leaps off the page – that tells you emphatically that this has happened before.
It comes from the work that author William Strauss and demographer Neil Howe published almost 30 years ago in 1991 in the book Generations... and more notably in their 1997 book, The Fourth Turning.
In brief, Strauss (who passed away in 2007) and Howe – the guy who actually coined the term "Millennial" – looked back at the past five centuries of world history (and the shorter history of the U.S.) and found a compelling, undeniable pattern of recurring eras.
These 'turnings' last about two decades, or when the next generation moves into adulthood...
In roughly 20- to 30-year periods dating from 15th-century England until today, Strauss and Howe say you can see the patterns play out in order...
And the four eras fall neatly into "saeculums" – a label that traces back to the Etruscan civilization of ancient Italy and describes periods each lasting about 80 or 90 years, roughly the length of a long human life.
The idea is that this "saeculum" is a period of time from the moment that something happened, like the founding of a city, until the point in time that all people who had lived at the moment had died.
At that point, a new cycle would start.
The real four 'seasons'...
What's more, the four "turnings" each have their own distinguishable characteristics. Dan described this fascinating research in the May 22 Digest...
- First Turning: The High
- Second Turning: The Awakening
- Third Turning: The Unraveling
- Fourth Turning: The Crisis
As Strauss and Howe write, "Each turning comes with its own identifiable mood. Always, these mood shifts catch people by surprise."
Here's where it gets interesting...
The Fourth Turning of the last saeculum lasted from 1929 to 1945.
During a high, the national mood can't be better... A sense of optimism grows that things are moving forward... For example, the era when the Baby Boomers were born.
Then comes a cultural awakening, a time usually marked by individualism, like what happened on U.S. college campuses in the 1960s.
An unraveling is the opposite of a high, where we feel weak government. And finally, a crisis is when all trust in institutions is lost. A crisis typically ends with "total war," as Strauss and Howe write.
For instance, the Protestant Reformation happened during a 16th-century awakening era from 1517 to 1542. And the French and Indian War was an 18th-century unraveling.
The American colonies declared independence from England in the ensuing crisis era from 1773 to 1794, and the U.S. Civil War and World War II were both fought during "fourth turnings," too, according to the theory.
Most recently in the U.S., as Dan wrote in May, these eras have been marked by the post-WWII high – notice how people love to say "postwar boom" – the "consciousness revolution" of the 1960s and 1970s, the "culture wars" unraveling of the 1980s and 1990s... and today, another crisis era.
In fact, Strauss and Howe suggest in their book – which, again, was written in 1997 – that America's next crisis era would peak in exactly 2020, when the Millennials started to come of age in earnest. (They also say this era will reach a "resolution" sometime around 2026.)
It makes a lot of sense when you think about it...
We're not born with the perspective of an 80- or 90-year-old who has lived an entire saeculum. So most of us will live our lives as we see fit, shaped by our circumstances, personality, and what we learn and see along the way...
The "secret sauce" of this demographic theory explains why certain generations behave the way they do.
Strauss and Howe say each generation has one of four "archetypes" or the way they see the world, which also appear in order, on schedule, for hundreds of years.
They are hero (meaning civic hero), prophet (idealist), nomad (reactive), and artist (adaptive)...
For instance, the "Greatest Generation" is a hero generation. The Republicans of the pre-American Revolution are considered the same. And today, believe it or not, so are Millennials.
Generation Xers are nomads. They came of age during a third turning. Their slogan was, appropriately, "Works for me." The Silent generation, kids of the Great Depression and WWII, are considered "artists"... as are today's children.
And because these archetypes arrive, in order, they predictably interact with and view other generations in regular patterns, too. As Howe says, the theory considers "how generations are shaped differently and how on predictable timetables they shape history as mid-life parents and leaders."
Right or wrong, Millennials uttering the phrase "OK, Boomer" are like Republicans of the mid-1700s thumbing their noses at the King George lineage of England... Perhaps this is why the Broadway play Hamilton has been so popular today.
This context really struck a chord for me...
It's the closest I've come to finding an explanation as to why events happen when they do, and not sometime else.
Don't get me wrong... It's not an end-all, be-all theory. But with this framing, events that might seem unprecedented at the time are very clearly linked in the bigger picture.
And that's the point I'm trying to make today.
I recently listened to a Hedgeye interview with Howe in which he said that our current crisis era started with the (aptly named) Great Financial Crisis ("GFC") a little more than a decade ago. As he said...
We think the original catalyst was the GFC of 2008, which saw huge changes in American's attitudes toward rich and poor... and gave rise to populism...
From there, Howe went on about what's to come...
This next decade is critical. The 2020s is going to be an absolutely tumultuous decade. We're going to see politics run off the rails. Parties are going to feel the future is at stake, that it's now or never time.
It's not just that the COVID crisis is hitting us economically, but it accentuates the blue zone, red zone perception of "If we don't dig in now, it's gone forever for us." That is the fourth turning mood.
When asked how a "total war" that ends the crisis might present itself this time around, Howe didn't give a specific answer. But he did say that most of the rest of countries around the world are on similar schedules as the U.S.
That seems to offer a wide range of scary outcomes that not many people can envision.
As Porter likes to say, hearing this was a 'horse meets water' moment...
As you hopefully know by now, Porter is set to share his latest prediction in a brand-new video event tomorrow morning. (You can sign up for this free event right here.)
And I couldn't help but make the connection between Porter and Howe's words and theory of The Fourth Turning (as I've listened to an audio edition of his book over the course of many "quarantine walks" lately).
It's all about thinking big...
Regular Digest readers know we've shared how Porter has explained the cycles of the "populism" that Howe mentioned many times, including in Porter's own prescient book The Battle for America.
The sort of environment we have today – where "regular" people feel like they're being ignored by "elites" and it seems like you can't disagree with anyone without being "canceled" – reflects a distinct time of extreme politics that isn't always happening.
Radical events like a "Debt Jubilee" – when "the government essentially steals money from one group and hands it to another" – happen during these times, according to Porter. As he put it in The Battle for America, four elements must be in place (and they're during crisis eras)...
- The wealth gap must be getting dramatically bigger.
- There must be cultural threats from those perceived as "outsiders" with different values – whether they are minority populations or immigrants.
- The government must be ineffective at providing solutions.
- And there must be growing anger toward the "elites."
Sounds familiar, doesn't it?
As we shared back in the June 3 Digest, we saw populist movements in the Depression-era 1930s – when the "wealth gap" was last as great as it was today. And to put it in Fourth Turning context, we again saw populism rise in the 1960s during the last American "awakening."
It seems whenever the dominant two (out of four) generations of the time see the world differently at their various points in the life cycle, these big pivotal moments happen.
For instance, coming-of-age Millennials saddled with college debt would love to see it simply erased, but they also don't fully realize the knock-on effects... and that socialist policies don't quite align with capitalism. That's the system that birthed companies like Apple (AAPL) and Twitter (TWTR), which gives these folks the ability to tweet messages of protest (or anything) on smartphones in the first place...
And we know Baby Boomers who've paid into Social Security for decades surely don't want to see it go broke because of other "big government" spending just when they need it for a comfortable retirement.
I don't find it a coincidence that Porter wrote in Chapter 2 of The Battle for America that these movements happen "every 30 to 40 years"... and that the next one was set to happen this year.
Because capitalism is in crisis...
Those of you who have signed up for Porter's event tomorrow morning probably have already seen some of this language... If you haven't already, what are you waiting for?
You probably feel it and see it. We're on the brink of a major tipping point, and it might already be here.
The COVID-19 pandemic – on its own – may have been the spark. But anyone who has studied American or world history could tell you that what we're seeing play out in our economy, markets, politics, and society today has been coming for a while. As Porter puts it...
Unfortunately, we're beginning to see where social bonds begin to fray because people don't believe anymore in the reality of society or the economy.
As we said on Monday, every time the Federal Reserve creates a new dollar, it widens the gap between the rich and poor, whether anyone knows it or not.
And frankly, it gives those with access to Wall Street a leg up on those who don't. Prices go up, while the value of the U.S. dollar goes down... Inflation is an economy-killer.
And it breeds anger and distrust from people who feel like they can never "get ahead," whose paychecks pay for less food at the grocery store or less of their college tuitions.
The calls for a Jubilee and other radical policies to 'solve' our problems are getting louder and louder...
Uncertainty is at an all-time high... Interest rates are at zero and can only go negative from here... And yet, stocks have been rising. But smart investors know that it's correct to be worried about the long-term effects of the Fed printing, printing, and printing some more.
Today, the yield on the 10-year U.S. Treasury bond is 0.59% – less than half a percent! Good luck growing your money or keeping up with inflation that way. Even the yield of the benchmark S&P 500 Index is more than three times higher today – at slightly less than 2%.
To that point, we're already seeing investors flee to "safe havens" like gold, a store of value as old as the world itself. As we've written in recent months, it's not a bad bet that gold prices will continue moving higher. Consider allocating at least some of your portfolio to gold.
But what else can or should you do with your money today? If you believe all of what we've said today (or even a good chunk of it), what do you do next?
To navigate this undeniable crisis environment, protect your assets and, yes, grow your portfolio, you have to see the turns before they happen... otherwise, you risk driving off the road.
And with this proper vision comes the opportunities that most other people will probably miss. To see them and take advantage, it's critical to see the big picture clearly...
Just like people like The Fourth Turning researchers Strauss and Howe... like Dan and Porter... and like all of our Stansberry Research editors.
'Thinking big' pays...
It's how Porter saw the Great Financial Crisis – the start of the ongoing Fourth Turning – coming before anyone else...
And it's how Porter also knew that stocks would climb fast from their March lows this year. He called "the bottom" almost to the day, as he made that prediction on March 26.
And now our founder is at it again with what might be the biggest prediction yet...
Capitalism may be in crisis, but Porter has an answer and guidance for investors who are worried today about their money... and the country's future.
This is an idea that, if put into practice, could help protect your finances and drastically grow your wealth for the next 20 years. And again, Porter's delivering his latest message tomorrow morning... It all starts at 10 a.m. Eastern time. We urge you not to miss it.
The event is totally free. All we ask is that you sign up in advance. You can do that right here. In the meantime, we'll go watch the world keep on turning – at least we hope.
New 52-week highs (as of 7/28/20): Agnico Eagle Mines (AEM), Alamos Gold (AGI), Sprott Physical Gold and Silver Trust (CEF), Curaleaf (CURLF), Franco-Nevada (FNV), SPDR Gold Shares (GLD), Green Thumb Industries (GTBIF), Lonza (LZAGY), Flutter Entertainment (PDYPY), Procter & Gamble (PG), Sprott Physical Gold Trust (PHYS), Sprott Physical Silver Trust (PSLV), Trulieve Cannabis (TCNNF), TFI International (TFII), Torex Gold Resources (TORXF), Tudor Gold (TUD.V), and Vanguard Inflation-Protected Securities Fund (VIPSX).
In today's mailbag, thoughts on the airline industry after Stansberry's Big Trade editor Bill McGilton wrote about the topic in yesterday's Digest. Do you have a comment or question? E-mail us at feedback@stansberryresearch.com.
"I think that plane makers have to add UVC light treatment of all recycled air on planes before I will get on a commercial airline. It would be a minimal cost and less than 10 lbs of additional weight. Even before the China Wuhan virus planes were virtual cesspools of disease and now it will even be worse. They need to fix that issue before I fly again. They should probably be using ozone to disinfect planes as well as UVC light between flights. Otis is doing it for elevators so it is possible which I know since I have such a system in my home HVAC system. When I see the airlines running ads on these measures I will begin to think about flying again." – Paid-up subscriber Nelson D.
All the best,
Corey McLaughlin
Baltimore, Maryland
July 29, 2020