Squinting at the Future

The 'shining star of losers'... Japan's lost decade(s)... Looking forward... Two trends with 'new world' implications... Expect – and exploit – relentless innovation... Prepare for heightened volatility...

An icon passed away earlier this month...

Haru Urara was a Japanese racehorse who never won a single race during her six-year career.

Yet, she was beloved in Japan. Her name meant "Glorious Spring" or "Gentle Spring."

Born in 1996, Haru Urara ran her first race in 1998. After losing 80 races in a row, she grew more famous and became known as the "shining star of losers everywhere." She ran her last race in 2004.

After she retired, Haru Urara won her first – and only – race... a time trial race for older horses in 2019.

It's a heartwarming story. And it immediately struck me how weird it must seem to Americans... idolizing a horse that lost all 113 races of her career. It's not a very American way of looking at the world, but it is very Japanese.

You see, many Japanese felt a sense of loss during the country's two 'lost decades'...

In the 1980s, Japan saw a historic stock market and real estate boom. But the market peaked on December 18, 1989... and proceeded to fall 62% through August 1992. It didn't bottom out until June 2012 – down 76% from its 1989 peak.

As the economy sputtered and the stock market entered a gut-wrenching sideways slog, the 1990s became known as the country's lost decade.

But as the malaise persisted through 2010 and beyond, the lost decade became decades. It took 34 years for the country's stock market to eclipse its former all-time highs.

During that time, many Japanese looked to Haru Urara. They admired her persistence through adversity.

The Japanese began wearing her losing ticket stubs as lucky talismans. Today, you'll find them offered on eBay for $100 or more. Haru Urara was even immortalized as a character in the Japanese video game Umamusume: Pretty Derby.

To Japan, Haru Urara's story is an affirmation of endurance despite unrelenting loss and hardship.

All of this got me (Dan Ferris) thinking about how different Japan is from America...

While Japan was struggling during the 1990s, America thrived as the Internet, globalization, and U.S. dollar dominance helped send our stock market soaring to unprecedented – and by some measures, still unmatched – heights. So while Americans are not immune to the scrappy appeal of underdogs, we overwhelmingly favor winners.

Japan is also largely ethnically homogenous, whereas America is an ethnically and culturally diverse melting pot.

Consequently, the Japanese culture doesn't value individualism the way we do in America. Allegiance to family, company, and country are much more important.

The Japanese also communicate in a far more subtle and indirect manner than Americans. They do it to avoid conflicts and "losing face." In nearly all communications, the Japanese are formal and hierarchical, showing consistent respect for elders and other superiors. Americans are much more informal and egalitarian.

The Japanese value loyalty, order, and stability. Many Japanese view lifelong employment at one company as ideal. Meanwhile, Americans value career growth and upward mobility in their careers and tend to change jobs as often as necessary to achieve those goals.

There is more than one lesson in Haru Urara's story, but today I'm focusing on how Japan is so different to America that it might as well be another planet to us.

But you don't have to travel to Japan to experience another world...

Things can change so quickly and dramatically that you can wake up one day feeling like you're in another world.

Think about life before COVID-19... and compare it with life from late February 2020 through 2021. It was as though we stepped through our screens onto the set of a dystopian, authoritarian film.

Or look at the 1920s compared with the 1930s and 1940s. The "roaring '20s" was a time of great optimism amid constant innovation, including:

• Electricity becoming widespread
• Silent films giving way to "talkies"
• The introduction and growth of radio
• Cars becoming mass produced
• The invention of Band-Aids, frozen foods, and traffic signals

The stock market rose 250% from 1920 through its September 3, 1929 peak. Then it crashed violently, falling nearly 50% in about two months... and setting off a bear market that didn't bottom until July 1932, with the Dow Jones Industrials Average falling 89.2% from its peak.

In October 1929, economist Irving Fisher predicted the stock market had reached a permanent new plateau.

Just like in Japan, economic malaise and bad government policy kept the economy bogged down and unable to recover. And it contributed to the start of the greatest global military conflict in history, World War II. The Dow didn't eclipse its 1929 high until 1954.

Those of us born and raised before the Internet existed know what big change feels like...

When I was a boy, the thought of spending the whole day stuck in the house was absolute misery. When it rained, my siblings and I were bored out of our minds, and we drove our mom crazy.

Kids today aren't like that. Research published in 2022 suggested that about 25% of children played outside regularly, compared with 71% when their grandparents were children. For my age group (55 to 64), it was 80%.

The same report also said children today are told to be quiet while playing outside more often than in the past.

Today, young and old folks alike now spend most of each day glued to screens. We're like a different species. We were once agile and lively. Now, we're all like zombies, subdued as we worship a glowing electronic idol. Few saw it coming and nobody listened to them.

Yet, as unknowable and world-changing as the future is, investors have no choice but to look forward in time and squint at the possibilities...

You see, all the returns from all the investments you hold today lie in the future.

The same is true of all the grandkids' tuition, vacations, and other dreams those returns will finance – along with the taxes you'll pay on them.

Knowing that we must look into a future we can't possibly predict puts us in a precarious position. We're like the World War II Army general who received a series of memos from the Army's Weather Division, informing him that they had studied past forecasts and found that they failed so often they were worthless. The general's office sent the Weather Division a note, saying:

The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes.

Like the general, we must look ahead. The best available tool, deeply flawed as it might be, will have to do.

For investing, our best guide to the future is the past. At some point, everything that has happened lies in an unknown future. How it all came to pass can help us detect patterns to prepare for the future.

And today, two trends have 'new world' implications...

The first is relentless innovation.

There's no doubt that AI will permeate our lives in the coming decades – at least as much, if not more than, the Internet has.

It wouldn't surprise me if we all wind up with our own personal AI assistants that do everything from mundane tasks like ordering groceries and making doctor's appointments to helping us navigate marital problems and make career choices.

Quantum computing could also cause a massive revolution in our lives – in everything from health care to energy generation, cybersecurity, and communications of all kinds.

I also expect both trends will foment a huge market boom and bust cycle, and the world before and after such a period might as well be two different planets.

Fortunes will be made from these advancements. But they'll also be lost, as booms turn to busts. Lots of folks were right about the Internet in the late 1990s. And lots of folks were wiped out in the dot-com bust.

But in the long term, it's technological changes that will make you feel like you've left your home planet for a new world.

That leads us right to the second trend: heightened market volatility...

I've been warning about the historic market valuations we're seeing for a while.

Historically, returns from similarly expensive levels in the S&P 500 Index have led to flat 10-year and 12-year returns, as economist and portfolio manager John Hussman's research has shown.

That doesn't sound so bad, but the reality is brutal. Imagine living through the 1930s again. The decade began with the Dow falling 89% and entering a two-and-a-half-year bear market. Then the market rose 365% over the next five years... only to spend another year falling 49%. The Dow finished the decade 38% below where it began – making it the worst decade in U.S. stock market history.

The Dow rose about 400% from 1945 to 1966 in the great postwar boom period. The mood was exuberant as Americans bought homes in the suburbs and sent their kids to college on a single income.

But from 1966 to 1982, the Dow went nowhere as inflation ravaged the economy. If you were an adult making a good living in 1965, the next 17 years bludgeoned your savings as the last vestiges of the gold standard disappeared and the U.S. dollar's value plummeted. The world you knew and loved disappeared, and you were suddenly living in a much more challenging one.

Nobody sees anything like this coming today...

You'll see all kinds of "research" showing it's far less likely... even though all research can do is examine the past.

Yes, the past is our best guide... but as Wall Street often reminds its clients, past performance is no indication of future results. Everything looks fantastic right up until the day it all falls apart. And there have been plenty of bear markets and crises in the past.

At this point, a massive bear market and extended sideways market accompanied by a stubborn economic malaise would make a lot of people feel like they've awakened into a different, darker, less hopeful world.

As usual, I'm not predicting anything. I'm just saying you can't predict the future. So you should prepare for a world where incredible innovations like AI and quantum computing transform your life even more than the Internet did... But you should also prepare for the inevitable busts that have followed tech booms throughout history.

The world will only change faster and more dramatically from here. The pace of technological change means both heightened opportunity and risk.

Study, learn, adapt... And prepare your portfolio to win big in good times and help you survive the hard times.

New 52-week highs (as of 9/25/25): Altius Minerals (ALS.TO), Antero Midstream (AM), Valterra Platinum (ANGPY), FirstCash (FCFS), L3Harris Technologies (LHX), Grand Canyon Education (LOPE), Lynas Rare Earths (LYSDY), Invesco WilderHill Clean Energy Fund (PBW), Sprott Physical Silver Trust (PSLV), Sprott (SII), iShares Silver Trust (SLV), SSR Mining (SSRM), and Valero Energy (VLO).

In today's mailbag, a subscriber shares a thank-you note... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.

"Good morning, nothing in the mailbag [yesterday], so probably an opportunity for me to pass on a thank you to Stansberry! Here in the U.K., we're able to invest our pensions in a thing called a SIPP – Self-invested Pension Plan. I took over my pension from Fidelity four years ago and have doubled it in that time thanks to this research. This year alone it's up 40% thanks to a mixture of metals and some Stansberry picks... This is life changing and, as long as I guard the trailing stops carefully, could mean retiring a few years earlier than planned.

"Very cautiously guarding the downside with stop-losses (stored outside the market makers' eyes!). Thank you!" – Subscriber Matt T.

Corey McLaughlin comment: We love to hear it, Matt. Thanks for the note.

Good investing,

Dan Ferris
Medford, Oregon
September 26, 2025