Capital Reversal and the Fourth Turning | Neil Howe and Ben Hunt

We are in a genuine Fourth Turning right now. If you're unfamiliar, it's a crisis period that predictably arrives roughly every 80-100 years, as the generations alive at any one point in time turn over. It may sound like metaphor, but it's much more structural than anything else. And if you're waiting for the economy to "normalize" or get back to how things were, you're likely waiting for something that isn't coming.

Neil Howe, author most recently of The Fourth Turning is Here, brings the historical framework to this episode pf Excess Returns. He shows how we're in a period most comparable to the 1930s, driven by generational shifts and the aging out of leaders shaped by the last crisis. What makes this conversation different from typical doom-and-gloom interpretations you may have come across: Howe argues the Fourth Turning is cyclically optimistic. History shows that after breakdown comes genuine renewal. The timeline won't be comfortable, but the pattern is real.

Ben Hunt, founder of Epsilon Theory and now running Perscient, adds the narrative layer. He's been busy using tools to track how the dormant stories that aren't being told right now, the ones waiting to resurface, are always the ones to track the closest. Because most pressingly, in the past year he's been seeing capital flows Signatures reverse for the first time in two decades. The foreign capital that's been flooding into the US, financing our deficits and inflating our markets, is beginning to leave. When the tide goes out after 20 years of rising, everything really changes.

The real spine in this hour long conversation is that we're in the middle of a true regime change. For investors, that means your defensive positioning and your offensive positioning both need rethinking. Gold and non-US equities make sense as genuine diversification into a world where the dollar and US institutions are no longer automatically trusted. Inflation likely returns as a feature of how we reset the nominal asset levels that currently feel impossible. The companies that thrive will be ones solving actual material scarcity, not ones promising processing power in a world that may not have a grid to plug into.