Grant Williams: Economy At “A Dangerous Point” Where Reality Is Much Worse Than Headlines Tell Us

Grant Williams: Economy At “A Dangerous Point” Where Reality Is Much Worse Than Headlines Tell Us

And so you know my assessment of financial markets is that they are absolutely Hostage to low interest rates and and added liquidity and my um and my assessment of the of the economy is it’s weaker than the data would suggest and underlying some of the strong headline numbers is a

Real deterioration in in conditions that won’t make itself readily apparent until it’s probably too so I think we’re at a very we’re at a very dangerous Point here and you Know welcome to thoughtful money I’m its founder and your host Adam tagert according to the official data be it economic growth disinflation or jobs things could hardly be better but if you talk to a regular person on the street they’re likely to tell you that times aren’t that great and getting tougher

Why is the prevailing narrative so disconnected from the reality on the ground and where are things likely to head from here to tackle this conundrum we’re fortunate to welcome macro analyst and interviewer extraordinaire Grant Williams to the program Grant thanks so much for joining us today hey Adam oh

It’s good to see you my friend how are you I’m good my friend um have just survived California storms as you said it’s always great to see you we got to our paths crossed for like a microsc in Vancouver last week so I’m glad we’ve

Got the time here to sit down and really catch up um lots and lots of questions for your Grant um and I know you’re a guy who who cares about the regular guy too so you know that that conundrum I mentioned there in the intro I’m really looking forward to getting your opinion

On but if we can let’s start at the the very high level question I like to ask you at the beginning of all of our talks what’s your current assessment of the global economy and financial markets yeah here’s a broad question well you know it’s funny Adam what you

Just said there at the top I think is is perhaps the thing to zero in on and that’s this disconnect between between um you know the economic data and how people in the street are feeling and and I think there’s um there’s some very important information in that and we’ve

Seen recently you know a slew of good results uh sorry it’s little of good strong economic data and we’ve seen the market sell off on the back of it and we’ve seen you know poor data and we’ve seen the market rally and you know you you you find yourself reading headlines

And things like The Wall Street Journal Financial serious Publications serious financial publications of of many many years standing um along the lines of you know stocks rally on poor economic data and you know stocks fall on strong jobs report right and this in a nutshell is what’s happened right this is this is

What’s happened there there are there are two completely disconnected stories here one is risk asset prices and one is the econ the economy as it pertains to the average American Australian Brit Canadian whatever you want to choose um and you know what’s happened over the

Last go back I mean I take it back to 87 and other people had different starting points when when you know monetary policy became the be all the end or the solution uh you know what’s home Homer simpsons’s great line about beer this the cause of and solution to all of

Life’s problems and this is and this is monetary policy in a nutshell you know um we’ve become conditioned to to Easy Financial conditions to liquidity that that famous word that everybody bandies around and markets have become uh accustomed to responding to stimulus rather than economic data and this is

Why you find now where people are you the market is pricing in several rate Cuts this year from the FED despite the economy going gangbusters from all the the data that you would read you know the the talk of um soft Landing has morphed into a much stronger no Landing

I saw a Goldman’s uh piece today uh printed piece of research with with the number of respondents who thought that the 10 year would be trading over 5% by the end of the year was 3% of respondents you know that’s a very very very low number considering where we are

So markets have become conditioned to respond to stimulus not economic performance and that’s a real problem you know it is a real problem because what people are reading in news papers is that everything’s great stock market hits all new new all-time high um we’ve avoided having the crash on the front

Page of the newspapers which tends to send people kind of scurry into the mattresses so everything in the financial world is going gang busters on the headline I mean we can talk about commercial real estate we can talk about the banking sector and stuff shortly I’m sure those will come up in the

Questions but the markets are responding not to the economic data they’re responding to the chance that there will be more stimulus because as we’ve all become conditioned to believe over the last two or three decades stimulus equals liquidity equals higher risk asset prices period um and so you know

My assessment of financial markets is that they are absolutely Hostage to low interest rates and and added liquidity and my um and my assessment of the of the economy is it’s weaker than the data would suggest and underlying some of the strong headline numbers is a real deterioration in in conditions that

Won’t make itself readily apparent until it’s probably too late so I think we’re at a very we’re at a very dangerous Point here and you know I’m I’m a I mean I’m amazed you want me to come back on that I’m a broken record you know I’ve

Advised caution for a long time now um and that caution has been warranted everywhere but um if you want alltime High stock markets and that’s great but if you look at the breadth if you look at where those alltime stock markets are being posted take a look at the S&P take

A look at the NASDAQ take a look at the mag 7 or the mag 6 because Tesla is definitely not there’s nothing mag about Tesla anymore apart from maybe the Maga in elon’s BIO but um but that that’s where the that’s where the performance is if you look at broader look at the

Russell um look at the S&P without the big stocks look at the nasda without the big stocks and you’ll see a very different chart which speaks to uh quite poor market performance Grant if I can interrupt let me just give some percentages to what you’re saying there because I I just pulled

Them earlier um so over the past year the Magnificent 7 are up 69% the S&P is up just 20% but still that’s getting pulled up by those Magnificent Seven right now the S&P is Market weighted so if we look at the equal weight S&P that’s up just

2.7% right 2.7% versus 69% in the mag 7 if you look at the Russell 2000 right which is smaller and and mediumsized businesses over the past year that’s down 1.3% this is the most concentrated that the S&P stop top stocks have been in the past 50 years so to your point the bread

Is just terrible well it’s non-existent right there is no bread the only breadth that’s there is down right and this is and this is a problem because you know unfortunately um a lot of people have become Reliant upon CNBC for their news upon Twitter for their news and a lot

There’s a lot of people about how great everything is and how everything’s alltime highs you know people always talk about the market hit a new alltime high today on CNBC there’s no qualification in that none and so that’s what people believe so we you know we have this very dangerous situation where

Asset prices are not only high but incredibly overvalued you know Nvidia is the poster boy of all this this stuff um and of course we saw this back in the 2000s with Lucen and Cisco they all have very similar charts to Nvidia and we all know what happened then so you know

People just need to be aware of this stuff and they need to understand the context and the broader picture before they decide that just because the stock market has made another all-time high conditions are as safe as they have been at various periods over the last couple

Years you know people have forgotten the Meltdown we had in 20 kind like late 22 into 2023 people have forgotten all that it’s largely been just wiped from people’s memories but real damage was done there you know and the and the silicon value Bank Signature Bank crisis

Of of this time last year real damage was done there and that damage has been kind of um covered up and put sticking plasters over over you know wounds that you can you can see the bone underneath the Flesh and it’s only a matter of time before the sticking plasters come loose

And we’re seeing this now with Community Bank of New York um we’re starting to see that we’re seeing overseas banks in Japan and Germany that are heavily exposed to us commercial real estate having big big Big Falls as they as they as they release their results so you

Know all I all I’m urging people to understand is the stock market being at all-time high is not the story that’s a headline and it is designed very deliberately to Bull animal spirits and to get people into markets and now is not a particularly

Safe time to do that so to to borrow uh a term from the colloquial lexicon um is it is it somewhat safe to say the headlines are basically fake news right now where they’re telling a story of a of a Prosperity that really isn’t a true one it’s sort of a false

Prosperity that we’re telling ourselves and that narrative is able to drive animal spirits and and get uh asset prices you know rolicking but it’s not something that can sustain in unless we fix some of the true problems in the economy which we’ll talk about in a moment but doesn’t sound like we are

Look it’s an interesting question is it fake news I would argue that it isn’t fake news it’s just a very very selective piece of news it’s it’s inarguable to say stock markets are at or near all-time highs right it’s not fake at all they are yeah that yeah

That’s not fake I’m thinking more of like the strong economy the resilient consumer the strong jobs Market there’re all these things that yes if we take the headline number we can say yes you know the BLS was saying that 355 uh 353,000 jobs were created uh in

January but if we scratch below that a little bit we realize oh even by some of its own methodologies it might have actually lost over 30,000 jobs yeah look a big part of the problem here Adam is that uh there’s there’s a codependency between markets and those looking to

Promote them and the people reading the headlines there’s a codependency here in that uh the cnbc’s of the world the the Bulge bracket Bank analysts of the world they all want Rising stock markets right because that’s how they make their money and and that’s how CNBC get their

Viewers when markets are going up but the public want to be told that they don’t want to be told bad news they don’t want to have to do the work and dig into these headlines so you know this this reinforces itself until we get the you know markets in turmoil segment

Coming on CNBC because things are going wrong and then people say well what the hell happened and you know I’ve spoken about this a lot recently um and you know there is an onus upon us uh anybody who’s invested in markets to realize and understand that it’s not

As easy as perhaps several of the last handful of years have made it look things don’t always just go up and and buying a ticker because you think that ticker is going higher because someone told you that ticker’s going higher or you heard a rumor or it’s all over the

Reddit boards or whatever it is that’s not investing it’s not it’s pure speculation and I would argue it’s idle speculation and if you look at what’s been happening take a look at AMC you know let’s look at AMC because this is I I look at this chart MC and it

Honestly it breaks my heart to see this because this is um this is the whole problem in a nutshell right we had AMC we all remember the Apes story and how they were sticking it to Wall Street and uh you know this was the way for the man

In the street to Stick it to the Man but we all have to hold on diamond hands and to the moon and all this all these narratives around AMC this was this was the reaction of a group of and I do not mean this in a pejorative

Way I mean when I say unsophisticated investors I mean unsophisticated at in the ways of the market they could all be brilliant people in their own Fields they could be surgeons and dentists and lawyers and doctors you know I don’t know I’m talking about unsophisticated not maybe in terms of

Finance but in terms of financial markets and how they work so you have a group of people who glom onto a narrative that is Diamond hands to the Moon number go up we’re going to make a whole lot of money and that runs smack Bang into an incredibly art and cynical CEO

In the shape of Adam Aaron who took advantage of these people to issue all kinds of stock that anybody with any background in markets any real understanding of the capital stack of how these whole things were was looking calling this out and saying what this guy is doing is shameful and shame on

Him right and you look at the chart of AMC take a look at a three-year chart of AMC and it’s down I think it’s at $3 and change now after sucking all the diamond hand guys in at the highs or thereabouts and sucking more of them in on the way

Down and and persuading them all not to sell as the stock just continued to go down it’s lost about 98 or 99% of its value and still Adam Aaron is out there you know calling himself the proud Silverback CEO of AMC and playing to the Apes and you know what’s amazing is

There will be people watching this who in the comments will attack me I I’ve seen it happen you know I I feel so bad for the people who’ve been screwed over by this but they will come on still and every time I’ve gone out and taken a a

Pot shot at Adam Aaron for the way he’s behaved I get the Apes defending him and saying ah you’re a washed up has I mean it’s just challenging their beliefs yeah no but but but but it’s but it’s a shame because you know ultimately

When it was number go up and it was all about the number that was all that mattered right it was aha what do you know the stocks doubl today when the Stock’s lost 99% of its value and the shareholders have been pillaged in the process it’s not about the numbers

Anymore the numbers don’t matter it’s about an ideal and look that’s fine right that’s fine to have that ideal and it’s fine to passionately believe in this stuff but one day you’re going to wake up and realize what’s happened and I just feel like the people who are going

To lose money in this sorry episode are the people who can likely least afford it and I just find the whole thing such a tragedy um that nothing was done about this it was legal what what was done was it ethical was it moral uh I think that’s a much harder bar to

Clear and you know I I I just I just feel a great shame but but that but that story encapsulates a big part of the problem here Adam we have we have enticed into financial markets people who who have become accustomed to things just going up and don’t understand

Necessarily why they up because it hasn’t mattered why they went up right no one asks hey why did I make money people ask why why did I lose money but no one ever ask why did I make money and so I just find it a great shame I’m

Sorry to get on my soap box and Waffle on no no no no you’re ch into the sandx I wanted us to jump into so it’s great um so you know I’ve had a number of people on this program of late and Grant I’m going to guess you probably have had

Similar on your program where you know the fundamentalists are super frustrated right because the fundamentals really haven’t mattered in terms of price action for a long time they mattered briefly in 2022 but like you said everybody’s already forgotten that right so uh because the markets because the

Price action has gone up for so long over the past 10 plus years or so to your point All That Matters to people is is momentum anymore right and so as long as price is going up they don’t care why it’s going up to them

It’s just price go up means I buy more right and so getting back to my my sort of comment about fake news I I probably should used a different term because listening to your talk that the term that really comes to mind is magical thinking right is is we’re telling us

That okay you know because the stock market’s at alltime highs everything’s great doesn’t matter that con traded into a super you know small number of stocks all the other indicators out there don’t matter either um and uh when you when you map that to a heavily

Manipulated and when it can be uh when they can get away with it predatory environment right what tends to happen here is the people who can least afford to take the damage are going out there and taking risks that they shouldn’t and Wall Street is praying on that or just

Setting them up to to to take the fall when the whole house of cards come down um you know GameStop sorry AMC is a great example but but but I think in general this is a example of the Axiom of when you’re at the poker table and

You can’t figure out who the psy is it’s you right and and I think you know what right now we are just setting up to be the average uh setting up the average person to be the py to the system here and and I say system because yes they’re

They’re probably the least sophisticated player at at the the financial markets table and they’ll get fleeced probably by Wall Street because that’s wall Street’s intent um but economically uh they’re the psy you know when when uh this incredibly robust you know economic growth that we’re seeing right now and

This no Landing that we’re we’re guaranteed to have if that doesn’t materialize and you and I could talk for a long time about many of the reasons why it may not uh they’re the ones who are going to be losing their jobs they’re the ones who are going to be um you know

Uh mortally or vastly injured by what goes on here the Big Wigs they’re going to get bailed out you we can talk about the the weakness of the banking system here but no matter what happens in the story to the banking system there’s going to be rescues to make sure that

The vast majority of the banks are are okay right and their major you know shareholders and bond holders are taken care of but the average guy he’s going to be the one to to Bear the brunt of this so I I share your concern and your frustration about sort of where we are

Right here where we’re we’re basically making the general public the Canon fodder of of what might happen going forward from here if things aren’t as rosy as the headlines are trying to convince us and you and I I think have a healthy degree of skepticism about

That yeah I think it’s a great point and um you know we live in a time of stimulus and government handouts and government laws yes but it’s very difficult to Target um you know um transfer payments towards people who’ve lost money in the stock market right it’s very difficult if people can’t

Afford to feed themselves uh people on low incomes all these kinds of things there are ways for the government to Target payments to groups of people who are who are suffering um but it’s very difficult because a lot of the people who are who will lose an awful lot of money and who

Probably have in things like AMC were probably doing okay they just happen to YOLO a big bunch of money into this thing and they’ve lost it all they’ve still got jobs they’ve still got um you know decent incomes but their savings are gone uh the Futures have changed and

That’s I want to just push back on that to let you address the rest of your answer which is show push back as hard as you want my friend no but that that I mean I think that’s that’s true but I also think you know a lot of the the

YOLO right in the markets the people that are buying the meme stocks and the people that are buying you know the the the Lesser known on cryptos and whatnot a lot of them are younger people who have basically kind of given up on on making the American dream through the

Way they’ve been told right because they’re looking at the formula and they’re like wait a minute I’m I’m going to work till I’m dead and I’m never going to be able to afford a house so my only way to get in is to stretch and

Speculate and and hope I get one of the winning lottery tickets so they’re yoloing into these things not with discretionary play money but like with the majority of whatever wealth they have so if they get wiped out there it’s game over for them no you’re right there

Is a huge nihilism component to all this there really is um and you’re seeing it play out in this kind of dystopian vision of the future that that generation seem to have with their Vision Pro you know you’ve seen since the Vision Pro was released C all these

People I saw a picture of two people at dinner both with Vision Pro headsets on eating Chinese food and both on their phones yeah you ever seen Ready Player it’s like we’re stepping that movie earlier than expected yeah yeah there is a dystopian aspect of this and a

Nihilistic aspect to this and that unfortunately as you say has been from the removal of the American dream and I don’t think people necessarily put the two together I think people they don’t understand the fact that they can’t afford a house they don’t understand why they just think houses are unaffordable

They can’t join the dots necessarily and understand why houses are so unaffordable and that’s a great shame um but you know here we are in an election year 2024 in the US we have uh I mean it’s going to be Trump versus Biden unless the Democrats can find some

Credible way to shunt aside not just Biden but Harris as well without confessing to the world that the two top people in the job aren’t up to scratch it’s going to be a very difficult thing for them to do um but it’s going to be Trump versus Biden uh you know Trump is

An incred incredibly polarizing character that is absolutely going to be a problem from a a fabric of society perspective if he gets elected there are enough people that cannot countenance the idea of this man in the white house again that we’re going to see an awful lot of upheaval if

He wins and I expect him to win that’s not an endorsement that’s just an assessment of the situation um and like likewise if Biden wins uh I think the Republicans given um Biden’s oft demonstrated cognitive um difficulties we saw the latest one this week when he when he saw the ghost of

France miton at a at a NATO meeting for the G7 I mean go figure um if if if he wins the vote the Trump supporters are going to have a very very hard time accepting that and so you know there is this undercurrent of angst in society

Right across the developed world and I don’t think it’s any uh coincidence that it’s happening now um you know you you and I both know Neil how well and you know his his fourth turning framework is an incredibly important one to understand and it’s not a coincidence

You know this stuff is not happening now randomly it’s happening because we’re at the end of a culum we’re at the end of the cycle where we’ve built something and allowed our excesses to get the better of us and we’ve ruined it and now everybody wants to tear it down out um

As I said to someone recently you know it just so happens that we are all the age we are at the time this is happening it’s not our fault or their fault or anybody’s fault it’s just a cycle of man and all the lessons from the last fourth

Turning of died you know all the people that held the lessons and could talk and communicate those lessons are all gone now so we forget and so you know it’s a real shame um but we have to go through this and there is there is a much better

World on the other the side of it but what we’re going to have to go through is filled with a lot of pain a lot of conflict a lot of wealth destruction um a large transfers of wealth and to some people that’s going to sound like a good

Idea because they feel like they don’t have it and to some people it’s going to sound like a terrible idea because they have it and they want to hang on to it but that’s just the way these things ultimately have to be resolved and so you know I my message to people is

Always the same just try and understand what’s happening and and be prepared for it there’s not so much you could do in all honesty but being prepared and understanding what can happen uh and what’s very likely to happen from this point on gives you a chance to at least think through your

Investments your life uh where you live how you conduct yourself day-to-day it gives you a chance to think about things before those decisions are forced upon you in the heat of some kind of um horrendous moment in time all right um so I definitely want to get into you

Know okay what are some prudent ways you think folks um should be preparing but but before we get there let’s I do have some macro questions I want to get back to but this this theme Here is one that I’ve been spending a lot of time on

Recently in these videos because I think it is the theme right I I think you know Society it seems to be on this trajectory where a greater and greater percentage of society is beginning to give up hope lose the script lose faith that the system is working to its

Benefit and and history shows us that bad things happen when you get to a critical point where your populace basically concludes that the folks running the show uh aren’t aren’t doing so for their their greater good um so uh you know we’re seeing lots of breakages in the social fabric you know everything

From the the the BLM Riots of a few years ago to the January 6 takeover to the popular the explosive popularity of of uh organic anthems like Richmond north of Richmond which you know start giving voice to The Angst that the middle classes is the working class is

Feeling um and uh a lot of this is tied to people’s feelings about their their prospects and if if we end up doing a rug pull here of saying hey we promised you all a no landing and then we end up into some something that’s a lot harsher

And harder for people you know a lot more people are going to start falling down into that group of of angry people who were saying hey I’ve been kind of betrayed in the system here and um you uh you mentioned Neil how so we I’ve had him on this program we’ve talked about

The fourth turning I think the audience is pretty familiar with that I’ve also had uh Peter Atwater on have you talked with him ever yeah yeah Peter’s a good friend I’ve talked to him often he’s uh he’s terrific and and I think you know his work that he’s done on confidence

Has been um has been really important actually again it’s one of these things that people um need to understand it’s a little it feels a little tangential but once you get into Peter’s work you realize the applications it has are profound exactly and as people begin to

Lose confidence he talks about how um and begin to feel increased pressure uh they have these different responses it’s sort of like a response spectrum they go down to and it’s a fight ORF flight or freeze which we’re all familiar with follow um which basically is hey look you know

There’s there there’s some person who’s speaking to my my pain here I’m going to get behind that guy right and he he warns about that because when societies get really desperate um that’s when you kind of get like a a dangerous strongman who gets elected into a position of

Power and he he he has a great analogy where he says look if if you’re standing out in the cold rain long enough you’ll get in the car with anybody right so um so there’s that worry but then he says there’s a there’s a a fifth one um and

To to try to not get blocked from YouTube I I’ll just say it’s the effit response right is where people just say you know F this the system’s not working for me the system is the problem and I’m just taken to the streets and basically you know upending everything and this is

Where you get something like we’ve seen it around the world we’ve certainly seen um you know long-standing regimes begin to get overturned uh in a lot of different countries right now um usually peacefully but we’re seeing more you know sort of nationalistic candidates overturning um long-standing parties

That have been in power for decades um Argentina being probably the latest example of of one of those upsets but but on the far end of the scale you get like what happens in Sri Lanka where basically like the entire country just shows up at the presidential Palace and

Drags the guy out right so um I I kind of give all this backstory to say you know that appears to be the trajectory we’re on I’m not saying that the us is going to take to the streets tomorrow but I guess my question is is

Like what worries me about this is I don’t see a lot of things I can point to to say oh these are developments that could reverse that trajectory these are the developments that are going to bring more prosperity to the middle class we’re going to start building it again

We’re going to bring down this you know we’re going to start to unwind the accelerating wealth Gap um and these are the things that are going to you know cool down tempers um you know begin to bring some equality into the system so it’s it’s hard not to see something like

A Neil how predict forth turning where truly the status quo just breaks completely and then eventually is replaced by something different which is which is good when you’re on the other side of all the turmoil but going through it all is rough it is look and you’re absolutely

Right but the thing here that that people need to understand is this isn’t a 2023 2024 story this is a process which has basically taken 80 90 years to come to a head and so if you if you read Neil’s and Bill strauss’s work and you understand how

These Cycles unfold you realize that um all the things you’re talking about are absolutely right and the human reaction to them is consistently the same um and the outcome is always the same it has different shades it has different types of conflict at the end of it for example Le but these these

Fourth turnings generally Encompass financial crisis they generally Encompass conflict um whether domestic or or national or International um and that’s just how they happen but we live in the moment now and we say God you know how do we get here the answer is read the last 80

Years of history and you’ll see and I’ve talked about this actually this story I’ll tell you a story which I’ve spoken about podcast recently so for anyone that’s heard this I apologize but I think it’s worth repeating um there’s a there’s a terrific podcast in the UK called the rest is

History and it’s two English historians one a classical historian and one a modern historian and each week they take a a point in history and they and they pick it apart and it it’s it’s it’s really well done it’s conversational it’s very light it’s not heavy it’s very

Accessible but you learn an awful lot about all these different things and you know they had a a kind of a miniseries within the podcast a year or maybe even two ago about the rise of the Nazi party in in 1920s and 1930s Germany and you know I grew up um post

World War II I I was you know that was the history I learned I learned it at school I learned it through all those great War films of the 70s and 80s with you know Richard Burton and Richard Harris and you know Peter oou and all

These guys guys um and so I knew those stories and it’s always fascinated me uh and my head was always in the space of how could this have happened how on Earth could the Germans elect Hitler like how does that how do a majority of a smart educated industrialized Nation elect a

Madman and I’ve always wondered that there always been my it’s like gez how does this happen and over years I’ve to understand history more and you you go back to the Treaty of Versa after World War I which you know the Allies were determined to to cause as much pain to

The Germans as they possibly could for their transgressions in World War I and then you listen to this podcast series and it’s four five six episodes each one half an hour long and they walk you through the rise of the Nazi party and Hitler’s Ascent to power and all the

Little Milestones along the way and at the end of that series your mindset is how could he not have come to power how could this not have happened given what transpired and the lead up to it and yet all the people that remember that um and again I apologize if I’m

Repeating myself but I think these are important things to to understand you know my I I explained to someone recently that I went to see my father my father’s 85 and he lives in France he’s retired he lives in France and I went to see him in

November and I took cameras and I recorded a conversation me and my father um the story of his life and I sat down like one of the interviews I do on my own channel I sat down my dad yeah and we and we talked for three hours like he

Was a guest on one of my one of my shows on my videos and we just talked about his life and you know I I I knew large parts of it but there were parts of it I didn’t know and the only reason I did

That is so that you know I realized I’m a grandfather now he’s a great-grandfather he’s 85 and the chances are that I never met my grandfather he died before I was born his great grandkids have met him and they will get to spend a period of time

With him a number of years with him I don’t know how many years that’s going to be I don’t know if it’s long enough to be of an age where they want to ask questions and understand that story but when those stories go when those stories pass away and and we don’t

Get to hear them from people we love and we care about and who we we have a natural inclination to want to hear stories from the stories are lost from the culture and this is why we see um you know in in the streets of Paris after the October 7th attacks in Israel

Young educated people smashing the windows of Jewish delies in broad daylight in Paris why and and anyone who’s my age or older thinks how the hell could this ever happen again but of course to be to be old enough to tell those stories from a cogent place where

You remember remember that time you’re 100 plus years old so none of those kids have had their grandfathers tell them the story of what happened and the persecution of the Jews leading up to World War II and and how it was smashing up and painting stars and all these

Heinous things that we thought we’d never have to see again the stories are gone and so we will repeat the same mistakes over and over again because even though it’s all there in the history books you have to go find it you have to want to read it and understand

It and then go looking for it and take the time to read read it and that’s not the culture we’ve developed we’ve developed this short attention span culture where I’m spoonfed everything I don’t have to go and look for anything I turn on my phone and Tik Tok or Twitter

Or Instagram give me everything I need why why would I go to a library and it that’s why I laugh The Gallows humor that that you know humans tend to be lazy in general we don’t want to have to do the work if we don’t have to but but to expect a generation

Trained to have a Tik Tock extension attention span to be seeking this type of of information it’s it’s so sadly depressing they’re not going to do it but look it’s the reality and and you know it’s I’m I’m I’m not a boomer just so people know I’m I’m a kind of early

Gen xer but and it is an incredibly okay Boomer thing for me to say but it’s the reality you know it is the reality and and we we have to spend more time acknowledging the reality and not allowing the virtual part of this to corrupt that and and that’s a going to

Be a tough lesson for an awful lot of people so I I totally agree I’m I’m going to try to make what will probably be an inelegant segue here um but um uh because we’re talking about something so important that’s going to have so much

Impact on on the future here um but but tying back to Macro for a second so um in previous generations you would have something like when speculation got too excessive you would have something like the Tulip bubble or the south sea bubble or the uh the Great Depression you the Roaring 20s

Followed by the the Great Depression um where it would stick in the National Consciousness whoa okay we let things get really out of control there and we’re not going to do that again right and it it takes a generation or two to your point where that begins to the

Causes of the the the issue fall out of the national memory and then we start making the same mistakes again as a Society right now we’ve had three bubbles uh in the course of recent memory of of living Generations right we we had the the dot

Bubble and then we had the the housing bubble that led up to the great financial crisis and then we now have whatever we want to call this the everything bubble people used to call it or whatever but we’re not learning our lesson this time like even within our

Own generation we just keep repeating this mistake um why is that oh that’s quite simple I don’t think that’s a difficult one at all um think back to the the Wall Street crash of 1929 just go back there and look at what happened the stock market fell 80

Plus% uh it didn’t recover its highs for 25 years 1952 or 1954 was when it finally reached its pre October 29th Heights again we had a great depression we had famine we had all these things and they all happened in the aftermath we had the Roaring 20s when times were

Very similar to how they are now then we had the Great Depression the Wall Street Crash and so the the dangers of wild speculation were hammered home to people they saw they saw everybody they know lose their jobs and and soup kitchens and food lines and

You know dust balls in the in the in the Midwest and they they saw all these things they saw what happens when speculation gets out of hand and everybody gets sucked into it um and that scared that scared two generations of people the the both the people who

Went through it and suffered and got caught up in the hype and lost everything and their kids who watched their parents lose their jobs and have to sell the house and watch their you know Highly Educated parents drive taxis if they could do all these kind of jobs

Get any any work at all to put food on the table the three bubbles that you’ve described there which I presume are the dotcom bubble the 08 07 0607 market bubble and then and the everything bubble today where are the lessons right where are the lessons for

Those you know what happened was we we slashed rates we flooded the system with liquidity we allowed debt to get massively out of hand and we’ve Juiced things that way so there are no lessons no one’s been taught don’t do anything what they’ve been taught is by the dip

The FED will rescue you so um it it makes perfect sense why no one’s learned their lessons these last three times Adam you know because they’ve been actively encouraged encouraged to buy the dip by the reactions of central banks around the world and they’ve done that with

Both hands they’ve bought every dip and it’s it’s been a way to make money and every now and again something happens out the Clear Blue Sky but if you’ve just stuck money in your IRA look where you are you’re at alltime highs you’ve been through all three of those

Crashes and if you take a look at them take a look at 08 on a chart of the S&P considering how seismic it was to us at the time you know you can just about see it on the chart of the S&P 500 now um and that’s the nature of these things you

Know unless people see the consequences and they see the pain that these events cause to real people um they are going to believe hey when the stock market goes down it’s a great chance to get in um you know I remember in being in New

York I was working in New York when the when 2000 um bust happened and I vividly remember being in the line at the cafeteria UBS in New York one lunchtime two guys in front of me um you know sliding their trays along the along

The Shelf putting a bit of food on and I and one of them said to the other something like oh do you see loosens down 20% today and the other guy literally left his tray and said I’ve got to go and buy some left his lunch and ran back upstairs to buy loosen

Because it was it had dropped 20% that’s the mindset not why is it down 20% has something happened it’s price is down I’ve got to go and buy some more this could be my last chance to get in and that’s where we are and so this is not going to change

Um until we reach the point where the system can’t be bailed out and I would argue that given the amount of debt that’s now in the system uh and also given the fact that there is a very clear move on the part of multiple countries meaningful countries around

The world to disentangle or reduce their Reliance upon the US dollar there is a clear path here to the deficits in the debt suddenly mattering a great deal because uh you know the fed and the treasury have got to somehow between them engineer um buyers for an

Awful lot of debt just to keep the the whole shebang rolling along and and I think we are getting closer and closer to the point in time where uh it’s just not going to be possible all right well you’re you’re such a great interviewer Grant you intuited where I wanted to

Take this which is you know earli you were talking about who we have a system that’s become addicted to liquidity and it’s been this this practice of just flooding the system with liquidity when anything starts to go wrong which has prevented us from taking our full lumps

From paying the full price of our speculation so we’re not learning that lesson we just keep leaning into you know this what I hear you saying is an unsustainable system so yes it raises the question well you know how much longer can this last for I hear you

Saying nobody knows for sure but maybe we’re entering the later Innings of it um and we’re certainly beginning to see some pretty big developments on the world stage uh to tr that that are going to make it harder for the US to keep getting away from business as usual um

So I guess two questions for you um one is um without knowing how long it’s going to take do you have a gut feel of the timeline here we still talking years decade or two out or do you think it’s something that could be more acute and

Then secondly if in your answer you can address in in this next year let’s say um we’ve had a debate on whether the lag effect is actually going to matter or not the lag effect from all the rate hikes that the FED has done from starting quantitative tightening um we

Had a higher for longer campaign now the fed’s talking like it’s going to start to bring it down but it’s not it’s not planning to drop it precipitously whether it’s forced to or not later on different story but um there’s a lot of people out there that

Are saying at some point the lag effects going to matter and then there are other people who are saying nope liquidity has been the game they’ll just flood even more liquidity in the system and and we’re going to be able to engineer something that feels like a soft Landing

Um so how long can the whole enchilada hold up here like when do you think the wheels really start coming off but even this year itself will we start to see some issues with with just push out more liquidity and everything’s going to be fine story well there’s a couple ways to to

Answer that first of all we know that’s what they’ll do because that’s really the only tool they have so there will be liquidity poured into this to to try and keep it together but I would I would say let’s go back to 2008 and the top let’s talk about the top

787 uh million dollars right which sounds like peanuts today but it was it was a huge sum back then everybody was just blown away by the size of this this stimulus package rescue package and when they announced that and they announced what they were going to do uh the vast majority of commentators

Analysts economists everybody said this is nuts we’re going to get inflation this is there’s no way that this works without significant inflation um and that was everybody’s fear and I was absolutely among those and of course what people mean by that is we’re going to see the CPI go up

We’re going to see you know food prices go up and electricity bills go up and all these things we’re going to see all that it’s a it’s a catastrophic plan and it didn’t happen it didn’t happen we saw massive asset price inflation massive asset price inflation right across the Spectrum but that’s not

Something that the man in the street is faced with every time he goes to buy milk so it didn’t really matter and because the CPI stayed benign the mission accomplished Banner could be dusted off and hung once again and everybody who was calling for inflation uh was made to eat

Crome now fast forward to 2020 2021 uh we have another round of massive stimulus in the wake covid uh more direct than it had been before but it was added to the amount of liquidity in the system and hey Presto Here Comes inflation and it spikes to double digits in

Many developed economies I think I don’t quite got to double digits in the US but got close um and suddenly there’s pandemonium and panic and what the hell’s going on and we need to deal with this and this is a nightmare and fed policy changes and they forc to time

Yada y yada and it’s it’s like I don’t know if you ever made have you ever made custard I know Americans aren’t big on custard they have the frozen dessert but in England we have Custard with our apple pie instead of ice cream and it’s

Uh you know what custard is but to make it from scratch with custard powder at least instead of making it from real scratch you know you pour custard powder and you put hot milk in and you and you stir it and you keep stirring you keep stirring you keep

Stirring and it takes a while before anything happens it just doesn’t thicken you just keep stirring this damn stuff and the Temptation is to pour more custard powder in you just keep and I know this cuz my dad may be custard and if you listen to this dad you know

Hashtag never forget custardgate um he was left alone to look after the kids one time and this was what happened and he just kept pouring custard pair into this thing kept pouring it in and eventually the Whisk just got stuck it wouldn’t move and it happened really

Quick suddenly it just and that’s what happens right you all the stimulus goes into the the market into Economist and suddenly it matters and and because of the nature of the co stimulus it was a direct injection into consumer Pockets that was the fire that Lit the

Spot and so when we when we think about all this stuff we think about what’s been happening and people talk about when the debts going to matter um it doesn’t matter until it does and when we and we and when we talk about this move away from the dollar it

Also doesn’t matter until it does and and people you know Brent Johnson and Luke Grom two very dear friends of mine I love them both and and cont to popular Beast they do love each other but they’ve got this back and forth on Twitter which is just so much fun to

Watch because they’re two incredibly well argued and thoughtful cases on either side of of a really important debate um and you know I I think Brent is absolutely right in what he says about the milkshake and the dollar and I think Luke is absolutely right and people struggle to hold those two things

In their heads at the same time because both of them is always a counter to the other one but it’s just a question of timing and so when people talk about oh people are trying to bypass the dollar they’re absolutely right and Brent will come back and say yeah but it doesn’t

Mean if it’s tiny it doesn’t doesn’t actually matter and he’s absolutely right and look these countries have just released more dollar debt and he’s absolutely right and LC will say yeah but this is happening over here he’s absolutely right the point to understand here is the direction of travel has

Changed and just like making the custard we are now in a world where where people are actively and publicly looking to be less Reliant upon the dollar they’re not saying we’re going to ditch the dollar but we are actively looking for alternatives to it because a we feel that there’s too

Many of them in the American economy and the American finances are in TAS which they are theyve been for a long time but it’s just getting worse and B the US Treasury weaponized the dollar the Swift system was weaponized long ago so that was a big red flag but once they froze

Those Russian Central Bank assets that is something you cannot ignore as a sovereign entity who holds US dollar reserves you cannot have your National foreign exchange Reserves at the whim of a government whoever they may be friend or Fone so the direction of travel has changed and it is set now

And so we are going to carry on down that road people are not going to have a come to Jesus moment they go actually few the war in Ukraine’s ended we don’t need to worry about having our reserves for us anymore those days are gone so at

What point does that matter when people continually look for ways to move away from the dollar I don’t know I don’t know but there is a point out there where it matters because every single barrel of oil that is traded in deams or Euros or real is $100

Less debt that’s been bought by a foreign Sovereign and Luke I just recall the podcast of Luke and he had a terrific stat for me which I hadn’t seen he talked about the US debt it’s gone from 17 trillion to 34 trillion the last decade so we had 17 trillion added on

That and people look at dou of in a decade doubled right in a decade after taking 240 years to get to 17 trillion right um people look at this and go well they look at China as the chart of Chinese Holdings of treasuries or they look at

The Japanese chart of Holdings they look at the Russian chart of Treasury Holdings and they go oh well you know the Japanese are selling and someone say well look there’s there’s a lot going into the Cayman Islands which is all hedge funds or Brussels or there are

Other buyers and that’s fine you can argue the toss over any chart you like but Luke pulled out a great state he said you know in that 10 years total Holdings by All Foreign central banks has gone down $10 billion now if you think about that you

Think about what that means it’s truly extraordinary we’ve added $17 trillion doar of debt to the US pile and foreign central banks who have always been the biggest and most consistent buyers of that debt over that time have net sold sold and it’s marginal and people are go it matters

Right and it may not matter there’s a treasury market fail or there’s an auction that fail it may not matter right now because at the moment they are covering that 17 trillion from other people we all know who the biggest bar that is of course it’s the Federal

Reserve um but it matters and so the fact that the incentives have change the fact that foreign central banks are incentivized to find alternatives to the dollar now it’s not just a kind of thing we feel like doing we need to secure our national security and we need to secure

Those reserves and make sure that we will always have control over them and this is why for the last two years Central Bank purchases of gold have gone to levels have never B been seen a records going back 70 80 years because gold is a completely neutral Reserve

Asset so the world is changing and we don’t do well with change as human beings we don’t handle it well we don’t see it when it’s big and slow moving we tend to react to change when it’s in our face or impacts us personally directly but these are massive changes in a

Financial system which we all swim and you know my friend Ben Hunt wrote this great piece years ago about you know um about water and and told the story of the two the you know two goldfish swimming towards an old goldfish two young goldfish and the old fell says to

One of the gfish hey water’s nice today boys huh and one of the gfish says what’s water we don’t realize we’re swimming in this stuff because it doesn’t actually impact us but if join the dots if you pay attention to moves being made that seem innocuous by

Foreign governments uh in terms of their Reserve Holdings asset allocation gold purchases there’s a very clear set of Dots here that you can follow and it leads in One Direction and One Direction only less demand for the dollar uh more pressure on the FED to uh

Cover the the deficit in terms of the deficit of demand for treasuries and the likelihood that the pressure on interest rates is going to be upward if they are going to try and sell those bonds and it doesn’t matter till it matters but it will matter ah all right well look sadly

We’re coming up on the hour here um I could talk with you for hours Grant and uh just want you to know on on the new thoughtful money platform you’re welcome to come here anytime you like open invitation um okay so there’s there’s a lot in what you just talked about there

That um we as individuals don’t have agency over right we can’t really control what foreign central banks are going to do with their treasury purchases or what trade deals are going to strike but we don’t have to just Sleepwalk into whatever may be coming in the future

Here um we have personal agency and earlier you talked about the importance of getting knowledgeable about sort of the true nature of what’s going on and then taking steps to reduce our own personal vulnerability uh to what might be coming down the road and who knows maybe even opportunities to to profit

Right um so what are what are some prudent preparations that you would encourage people to consider I’ll put one out there just because you’ve already sort of put it on the table um perhaps getting at least some exposure to Gold um you know take a page from those Central Bank playbooks that are

Saying hey this is a this is a currency unit we can all trust uh might be a good step for people yeah and you know I’ve been an advocate go for many many years a long time my my allocation to it rises and Falls depending on the conditions and

Right now I think your allocation to it should be rising but there are other things that people can do it’s not as daunting and a lot of those are kind of mindset things you know first of all I think reading history is so important you know Market history but also Now

Geopolitical history you know there are so many wonderful um books wonderful podcasts out there it’s so accessible now to to to immerse yourself in history and even if it’s you know there’s another great series called Empire which someone put me on to recently which is another podcast and

They go through the the the the English Raj in India and the Roman Empire and and the the Ottoman Empire and all these Empires and the story of Empire is the story of America you America is an Empire and its story will be similar in nature to all the other Empires because

We’re all humans and we all make the same mistake so I think it’s important to understand history to realize that these these previously Unthinkable events happen a lot over over time and then another thing I think is important Adam is is your mindset you know um and again I’ve spoken about this

Recently we’ve become we’ve become uh conditioned to think about buying stocks and the idea that I’m going to buy that stock is a very particular mindset and it’s a very different mind mindset to I’m going to invest in this business and we’ve substituted the latter for the former over the years and

I understand it you know it’s it’s it’s it’s way better for um all the you know the Char Schwabs of the world and the cnbc’s of the world to get you thinking in terms of buying a stock because buying a stock is just there’s a three-letter ticker that I’ve been given

A tip to own and I’m going to buy it why because it’s going to go up and I’m going to make money and the simple truth is when you become a shareholder in a company you’re a part owner of that business and thinking of it in terms of

Ownership in terms of do I want to own this business is a very very different mindset and whilst it’s been okay to just buy stocks because they’ve gone up when we get to the inevitable bursting of these bubbles you were going to find that stocks go down as well as

Up and and the ones that go down the least and the ones that perform the best are the good businesses so you know if people can just change their mindset when they get a tip and instead of going hey you should buy this stock just try

And think to hey do I want to invest in this business is this a business I want to invest in if this was not listed if there was not a three-letter ticker for this stock that I I could just press a couple of buttons in my e account and

And buy the stock would I put my capital with the owners of this business and and expect to see a return expect to see a yield expect to see growth in that business it’s a very different mindset and it requires as I’ve said before more

Work on our part we’re going to all have to work harder and and there’s no substitute for help work I I I I totally agree with that and and it’s interesting with this mindset of buying a stock it’s very transactive it’s very yes sort of like oh I I think it’s underpriced I

Think it’s going to go higher and if it does let’s say your thesis is right then you have to ask yourself okay well then do I get out now because is it is that Arbitrage gone and and is it now too overpriced right and it’s it’s just this constant treadmill of transactions that

You have to be more right than wrong on over time to grow your wealth which to be honest most average people they don’t have the skill set the expertise or the bandwidth to do that right whereas if you if you put in the effort to invest

In a business you’re much more likely if you’re making a good decision to pick a good business and ride it for a long period of time um and therefore your attention and your churn and and your transaction volume probably be a lot lower in the long run you’ll do less

Work right because you’re hopefully just accumulating good businesses and in the large part holding them until they don’t become good businesses anymore um and and I think history shows that that tends to be a much better a much more higher probability path to success if you build a portfolio of really good

Businesses and then hold on to them um but that’s not the the mindset that we’re being encouraged to develop by by today’s environment no no we’ve we’ve we’ve we’ve become focused on price and it’s very different to Value you know again I’m repeating myself but price is

What you pay for something value is what it’s worth and and they’re different and they tend to be different most of the time things are either expensive I.E they’re trading they’re overv valued or they’re cheap they’re undervalued they’re not people that haven’t recognized the value in them but we’ve

Become fixated on Price It’s All That Matters to people hey what price is it what price is it never mind you know Nvidia what what price is NVIDIA today not what’s that business worth what’s the value of Nvidia is it a 100 times sales or whatever God awful MATC it’s

Got to I would argue no it isn’t but that doesn’t mean the price isn’t right for now but you know if we can if we can condition ourselves to think first about value and not price I think it will give you a much better chance of owning investments in businesses

That will weather storms better when the inevitable Storms Come All right well thank you so much for for sharing all that wisdom with us Grant um as we wrap up here two last questions for you one is for folks that have really enjoyed this discussion and would like to follow

You and your work where should they go well both of you should uh both of you should uh find me at Grant D williams.com the two people have enjoyed this de I know one of them is you I’m not sure who that is with you but give

Them my love and um yeah it’s all there I’m on Twitter at TTM G and everything else is grant-williams very simple all right fantastic and when I edit this grant I’ll put those URLs up on the screen so folks know exactly where to go folks I’ll have links in the description

Below the video too so you can get oneclick access to them and and you may have already answered my second question Grant I’ll leave it up to you um but I I’ve been closing these discussions recently by asking our guests to share one non-money related investment that they would encourage folks to consider

Adopting in their lives because we’ve been talking about money and finances for this whole past hour um now you you did talk about reading market and geopolitical history uh you gave us two great podcasts to go listen to the rest of the story and Empire um and then we

Talked a bit about mindset um but is there anything else that you you might want to add into that uh non-monetary bucket yeah well the rest is history just so you get the right name of the podcast for anyone the rest is history so letor the rest is history yeah I just

Want to make sure everyone gets the right thing uh the other thing I was and it goes back to what I did with my own father you know spend time talking to people of different Generations older generations of you about their lives it’s I mean it’s fascinating you know

It’s it’s they lived in a completely different world to the one we live in in every possible way it’s it’s remarkable and so listening to those stories and spending time with people while they’re still around and and getting to hear their experiences in their own language in their own voice firsthand about how

Their lives were you’ll be amazed once you get your grandparents talking about what life was like in the 1950s you will be amazed at how fascinating it is to you this completely different world that you’re not familiar with it’s extraordinary and so spend time spend time hearing the stories of people who

Lived in a different world and and and listen to them and take them in and and you know cherish that time because the people and the stories will be gone one day and you won’t have the chance to ask these questions listen to these stories and that’s I find to be an incredible

Shame so um I’m I’m very both impressed and envious of your decision to sit down and and interview your father the way that you did um Grant because I I have the same ability to do that uh technology wise except both my parents passed away in the past 12 months and

Having now you know in the aftermath been going through their personal effects or whatnot and and coming up with all sorts of questions that I just wished I could go back and ask them right now uh it’s gone like you said once they’re gone that opportunity is gone for good so

Um you can’t underscore enough the value of of what you’re saying there which is to the extent that you’ve got stories you want to preserve wisdom you want to tap into or even just conversations you want to have that you you’ve been meaning to have you’d like to have I’ll

Get around to it sometime um you know once once folks are are up in their certainly in their 80s you know don’t wait just have them agreed great all right well thanks very much my friend this has been wonderful like I said you’re welcome back in the program anytime really appreciate it Grant

Always great to see you mate as always and I’m delighted that thoughtful money is going so well kudos to you you know you do a fantastic job and I’m I’m so pleased people are are giving you the love that you deserve for this product because it’s always superb so more power

To you my friend hope it hope it continues to uh to blaze a trail for you yeah you’re very kind my friend I I I consider myself a very thin shadow of the excellent standard that you set but I really appreciate the kind words all right mate take care of yourself we’ll

Talk soon well all right well now’s the time on the program where we bring in the lead Partners from new Harbor Financial one of the financial advisory firms endorsed by thoughtful money I’m joined this week by senior partner Mike Preston John ler has the week off Mike

How you doing good Adam how are you good to see you I’m good hey it’s always great to see Grant um I I’m sure you took a bunch of notes um what were some of your top takeaways from that conversation now Grant talked a lot about you know the markets responding to

Instead of economic performance they respond to stimulus now it’s absolutely right it’s the the the subject of the FED is a very tired subject that’s really all almost anyone talks about anymore and game theorizing what the Market’s going to do in response to what the FED does well we really kind of went

On a one-way trip starting back in the financial crisis in my mind in 2008 or 2009 the system basically broke back then fell under its own weight and and the and the rules were completely changed and the rules were not changed in a good way I don’t think I’d like to

Paraphrase some of the things that I heard Grant say that I thought were very clear very poignant and very very it’s good to to realize just how warped and how unreal this time is that we’re living through and Grant talked about the fact that he’s a broken record he’s

Been a broken record for a lot of years he’s been advising caution well so have we I don’t think that either one of us can be blamed though the rules have completely changed andal valuation metrics haven’t worked we can we can show you we can prove and others have

Done the same we’ve quoted John husman’s work many times on this channel uh valuation metrics are absolutely completely unglued from reality and there’s no way for markets to produce solid results from these levels the problem is that momentum keeps carrying things Higher and Higher and this is all about

Psychology um you grant said the stock market at all time highs is not the real story this is to entice people into the markets this whole wealth effect which frankly is a crime in my opinion but this whole thing is about getting people to feel like they’ve that they’re left

Out that they’re not in the pool they want to jump in the pool they want to be part of the party it it’s it’s really completely it’s it’s almost insane what we’ve lived through here he talked about AMC which is um you know the movie company and then GameStop these meme

Stocks that was back in 2020 that was back when covid started and then we had 7 trillion dollar in stimulus and and we just keep rolling forward in this new normal in this new normal Grant talked about the fourth turning I I too am a big fan of the fourth turning Theory um

Strauss and how work on that and I think that we’re in the culmination phase or the the climax of the fourth turning and I think in the next 5 years we’re going to see that climax Max and so I don’t think it’s going to be any surprise to any of us

When we look back and see just how unreal all of this was a lot of what we’re seeing here in the financial markets is not real feels real because today it’s real but you can’t really have two big bubbles and and we’re in the third but two big bubbles within the

Last 25 years have collapsed by two-thirds or more and we’re in the third and largest bubble here and while we can’t predict what is going to happen in the future this Market Should Fall by 60 plus% just to get back the fair value so that’s the hard thing we’re forced to

Have this faith faith in the numbers and in math which we do have or faith in money printing Faith In The New Normal and we choose faith in mathematics and faith and and history Grant talked about read history talk to your elders absolutely if we don’t understand history we’re going to keep repeating

The same problems over and over again I love talking to older people always ask them about their experiences in life and I think we can learn from that problem with the reality of what’s going what happens in economic Cycles though and even with the fourth turning theory is

That you only see the completion of the cycle every 80 years or so that’s that’s kind of central to the the whole theory is that most people have to be gone before you can start all over again World War II was so horrific that was the last fourth turning that all of

Those people have to be gone before it’s possible to enter into that climax again so there’s so much more here we can talk about Grant talks a lot about um the fact that we have this great wealth disparity you we’ve been going on about that for many years a lot of people see

It it just hasn’t mattered yet because the average person if they’re not feeling the pain they’re not going to do anything about it and I believe the average person feels that things are not real anymore they feel like they’re you know part of what they’re witnessing with an explosion in

Housing prices and an explosion in the stock market kind of feels good to be part of that it’s good if you own a house it’s really bad if you don’t own a house but people don’t really understand why it’s that way Grant said they understand that they can’t afford a

House many people but they don’t understand why and it’s not until this whole thing comes unglued and confidence in the money Printing and and the FED is lost that we really understand the cost of this and it it sounds like I’m on the soap box here too because we’ve said

This for many years and we’ve been really early just like Grant but everything that we do in managing money I’m happy to go into some of the things we’re doing lately if you’d like as well but everything that we do about managing money keeps those big picture things in

Mind and we’re constantly trying to be very cautious but also participate when we can and just realize that this is probably shortlived well and that’s exactly where I want to take this which is um you talked about kind of putting your faith in math uh and reality and to

A certain extent even though you didn’t use the word Mike fundamentals um I talked about earlier with Grant that that one of the challenges and frustrations for a lot of fundamentalists as fundamentals don’t really matter as much in terms of price action for a long time um and so if

You’re if you’re a capital manager like you are right I mean you are managing your client’s assets and I was just looking at some some data around thoughtful money and it it reaffirmed uh an understanding I already had which is that like two-thirds of the audience that watches these videos is 45 years

Old or older right so these are people who are you know in the second half of their lives in many cases they’ve they’ve made a good chunk of their wealth and and they they don’t want to lose it and they don’t have time to recover from a really big loss right so

They want to continue to grow their wealth but they more importantly they don’t want to lose what they’ve accumulated up to to today so we we have this Market where I I feel guys like you have a really you’ve got a really sacred responsibility but a really tough job

Right which is you have to manage capital in this crazy environment where you distrust the current price action right so you think that there will be some correction at some point in time where the fundamentals will matter more and and that’ll get expressed in in true price discover

But at the same time we live in a world where the interventionalists the interventionists are going to keep intervening right so a lot of the folks I I interview on this channel they kind of think the arc from here over the next year-ish or so is going to be the current

Market rally melt up you could even call it right now um is going to hit some Zenith and then things are going to start to get Rocky and if they get Rocky enough or when they get Rocky enough then we’re going to see the central planners step back in with another

Massive policy response and that’s probably going to shoot assets to the Moon again so even though you believe in math you just can’t take a math-based position and then just hold on to it forever you’ve got to be really aware of and cognizant of what’s likely to happen

With the non-market participants who are coming in to juice things up um that’s that’s a real challenge but your reality is is not managing the markets you wish ah had your reality is managing the markets as they are today so how are you as Capital manager dealing with this you know I

Think prices are going to need to correct at some point but then again if they do the the central planners the powers are going to step in and and try to juice things again if they can how are how are you currently navigating that landscape it’s it’s really a hard job

Adam here you’re absolutely right it’s difficult because this time that we’re living through is not a normal time as I said before three major bubbles of this magnitude within 25 years I can’t find anywhere in US history that that’s happened before you know and now we have an all-in situation where probably the

Entire the entire thing blows up if we have a reset in asset prices I know that you recently had an interview I believe with Spen Henrik who basically said that very thing who said the whole system depends upon it not going down anymore so they have to do this and they don’t

Have any other plan they don’t have any other lever to throw it’s one thing and one thing only confidence so it’s difficult because know based on these valuations and based on these fundamentals that the S&P 500 Should Fall by 2/3 from here maybe more furthermore I know that over five to 10

To 15 years from these levels the expectation or the net expectation from these levels is a negative return treasury bills should far outperform the S&P from these levels what I did underestimate is just how far this can go right so um you know thank goodness for clients we’ve never shorted the

Market net we’ve never really bet on the market going down but we have raised cash and and and had some caution for a bunch of years that looking back maybe I wish that we didn’t because here we are today on the S&P it just touched $4,995 uh points it’s just about to

Touch 5,000 as we speak and so we’re at the all-time top and so the best thing to have done as we speak right now is to just go into the S&P 500 Index and stay there but that’s not the end of the story particularly if I’m writing the

S&P Falls by two-thirds or more so that’s the difficult spot that we’re put in as a money manager and it’s all about psychology so I talk here a lot about fi fundamentals but I would say 70 to 80% of what I do is about psychology it’s about helping people understand that

They have enough that they don’t need to change the mark they don’t need to chase the market it’s about it’s it’s about picking aside whether you’re going to uh know jump into the pool or you’re going to be more restrained and be okay with it if you’re left out it’s about feeling comfortable

With your position and you know frankly it’s about simplifying life and having the okay to do that and lastly it’s probably about deflecting or um assigning kind of the emotional turmoil uh from for a lot of people that hire us from themselves to us so all we can do

Is look at the data and take actions based on the data and pick a side to some extent and have some conviction about it that doesn’t mean we’re we’re doing nothing that doesn’t mean that we’re sitting on our hands and and doing nothing we’re close to 40% net long

Stocks uh as we speak we’re making some adjustments on our Hedges we’re moving them up as this Market moves up but still with this Market going vertical up until now nothing looks better than just going all in but that’s not the end of the story so yeah I would just advise

People to take a deep breath talk to us if they want uh it’s it’s a hard time because you’ve got the FED working against you this whole thing is about psychology and making you feel like you’ve got to be in all right so a couple things one you mentioned you’re

40% long one of the things that um you I think you guys at new Harbor are notable for is is when you are long given that you have the skepticism about where prices are today you often times will match your long positions with some edges to the downside that basically

Give you some insurance such that you know if you’re dancing while the music’s playing if the music suddenly stops and people really Panic you’ve got some circuit breakers there that will prevent how far your long positions will fall correct yeah that’s right and and if I could just share the screen very quickly

I’ll give you a quick visual on this so here’s the S&P 500 on a daily daily chart and and here we just hit 4,99 9 5.04 today on February 7th maybe we’ll close above 5,000 today for the first time so the daily chart shows the activity over the last year or so when

We had this up move and this and this Breakaway Gap back here back in November October and November when we broke this downtrend line we became concerned about the possibility of a blowoff top and I hate to admit it because I really don’t I don’t want to encourage that language

I don’t want to enourage people chasing it but that’s what it looked like our our indicators reversed up Etc so we added to our long positions we got above 30% now we’re above we’re just about 40% as of today but as we moved up in this

Market we started to move up our hedge so right now we’re about 40% long but we have a 15% notional put option which would immediately drop us to 25% in the in the event of a market crash crash right now as of today that hedge is at

4500 on the S&P today or tomorrow or the next day we’re going to move that hedge up to 4700 and if we move to 52 or 5300 that hedge will be moved up to 49 or or five and so the notional value of four uh 40% stocks is there but it wouldn’t

Take much of a drop let’s say two or 300 points which is a very small amount you know four % something like that four 5% and then boom automatically we take off the table 15% and go down to 25 the remaining 25% has other Hedges on it and

We’re focused in sectors that we think have strong relative strength things like Insurance Industrials we’re adding healthc care just broke out of a long flat base uh Emerging Markets we like a lot because of the valuations but within there we’re within the we’re in the strongest countries we just add added

Japan we have Brazil India and Mexico and and and some of those things have run so quickly that we’ve sold covered calls against them as well so I can’t say that if we had a crash which could we could have at any time that’s the real risk here I can’t say that we

Wouldn’t lose but we wouldn’t lose a lot our 40% would immediately go to 25% and the remaining positions with their covered calls have partial Hedges against them as well and so it it’s it’s a very buffered situation there’s no way to have your cake and eat it too you

Can’t just go long the S&P 100% and not feel the pain if we get a crash uh we are trying to participate as best we can we have to accept that we’re going to underperform if this Market goes vertical more but our clients essentially want like I said earlier to

Delegate the responsibility to us they want somebody that’s going to match fundamentals with their uh with their strategy and um somebody that has a plan so that’s my best answer to what it’s like to be a money manager during these times it isn’t easy because a lot of uh

What we’re seeing isn’t real very helpful answer and very instructive on showing how to play offense and defense at the same time a lot of retail investors I find just tend to play one or the other they say I’m going to be offensive which means I’m G to be long

Everything or I’m going to be defensive which in most cases just means I’m going to be out of the market um you’re showing how you can play offense and defense at the same time uh to make sure that whichever way the market goes you know you’re you’re you’re not going to

Be um putting yourself at the risk of a catastrophic loss of your client’s assets there um all right well look um as we as we wrap up here uh you know when when the markets really start running like this right we we we talked not that long ago about the pull of the

Big the big round number of hey is this Market going to run to 5,000 it’s showing us that it clearly looks like it’s going to if not today probably probably later this week um and you know when when when the animal spirits are running uh at this level of intensity uh

Fomo becomes a really real thing uh and and it can even infect people who started the process saying nope I’m I’m just going to be really disciplined right and one of the things that I find very helpful about a financial adviser like you guys is is that it does give a

Restraint and a reality check to our own emotions as investors and so uh I’m curious Mike um you know your job is to to help people focus on their investing goals hey remember when we sat down we came up with your plan these are the things you

Wanted to do in your life by a certain period of time and that’s what we’re helping you you know we’re creating a plan for you to get there fund your kids education fund your retirement Etc when the animal spirits start running people just start saying I just want to make

More money right and they all of a sudden start loosening their risk tolerance and saying ah come on let’s stretch for more look everyone’s making so much money every day are you beginning to see that with the folks that are reaching out to you or any of

Your clients are you beginning to see people hear that siren song of of fomo not really that much yet to be honest Adam that’s good to hear it’s not really that much well it’s good to hear but it’s also a little scary because uh it

Leads me to believe that we may go off on one final blowoff that will knock our socks off here you know and and maybe that’s what we need maybe that’s exactly what we need to put a point on the largest bubble we’ve ever lived through that we’ve ever seen so but it’s it’s

Very psychological you know our work with people is ex I can say personally anyway that my my work with people is very psychological there’s that that thing about fomo that you said it’s a very real thing people feel like oh am I an idiot that I screw up should I have

Just been in the market this whole time look at all my friends they’re making money I’m not or I’m not making much you know and uh but nobody knows the future nobody knows just how much this system was going to change after the great financial crisis

And nobody knows how this will end we can only guess how this will end and we can guess where the S&P 500 will touch based on mathematics but nobody knows the path and that’s the Insidious thing here is this this whole wealth effect has been used against us it’s been used

As a transmitting mechanism to say that the economy is strong don’t ever doubt the United States you know keep you know keep believing in the US Etc I I certainly believe in the United States it’s been great to me it’s been probably the greatest country that

Ever was but I I do think that we peaked a long time ago you know I think we Peak decades ago and I think that we’re just refusing to look at what we need to do to live within our means and we’re abusing the fact that we’ve got the

World’s Reserve currency and uh we’ve been doing it for a couple decades now and it won’t it it won’t end well every bubble every bubble throughout history Grant talked a lot about reading history every bubble in history ends in collapse and I think this this one will too as we

As we finish out this fourth turning I just hope that we can help people through it I hope it’s not too bad I hope it doesn’t escalate into a fighting a fighting War um but I hope we all get through it okay I think that’s the most

Important thing we’ll do our best to help people get through that I expect that there’ll still be markets on the other side of all this we hope to help people through it and on the other side and if we can get through it the first turning is a wonderful time to be alive

And that’s what we hope to do with the Insight that we have all right and uh and whether it’s the Turning from the fourth turning to the first turning um or whether it’s just a garden variety recession I just want to remind folks that history recent history shows us if

You look at the past recent recessions we’ve had everyone was preceded by um a pretty aggressive rate hike in increase by the Federal Reserve uh then the markets the FED paused the rate hikes the markets then um went off to the races as I like to say with Darius Dale

Um right before recessions that’s when parest get to their craziest right before the cops show up um we’re seeing the markets get pretty crazy right now it doesn’t mean they can’t get even crazier from here but we’ve had the run up and rates we’ve now had the pause

We’re now having the markets take off according to the historical script this is play out to a te so who knows what’s going to happen from here but if it gets followed by recession Market correction and the FED desperately cutting rates try to catch things back up well that

Would just be following what history shows us to expect so uh we’ll keep our eyes on this obviously very closely one of the reasons why this program exists and why I have these financial advisors on every week here to keep uh us monitoring things on a on a week- toe

Basis Mike thanks so much we’ll start wrapping up here couple quick housekeeping things for fol folks um one as I say every week I you know highly recommend that the average person watching this um works with a a good professional financial advisor who understands all the macro issues we

Talked about here uh Grant did a great job of underscoring the key macro issues Mike did a great job of underscoring the role that the financial adviser plays if you’ve got a good one who’s doing that for you great stick with them give them a call maybe say hey if you haven’t

Talked to them in a while hey can we talk about the plan going forward from here to make sure that you’re fully uh updated on it um but if you don’t have one or if you’d like a second opinion for one that does meet all that criteria consider

Scheduling a free consultation with one of the financial advisers that thoughtful money endorses maybe even Mike and his team there at new Harbor to do that just go to thoughtful money.com fill out the short form there these consultations are totally free uh there’s no commitment to work with these

Guys it’s just a free public service they offer to help as many people position as prudently as possible today uh and another reminder that the thoughtful money spring conference uh is coming up for pretty quickly uh it’s going to be on Saturday March 16th uh again that’s online um ticket sales have

Actually been doing pretty well because a lot of people are taking me up on my encouragement to register now and lock in the lowest uh early bird price discount that we’re offering here so to go get that just go to thoughtful money.com onference a reminder if you’re

A premium subscriber to our substack uh you get an additional $50 off of that uh low early bird price discount uh and it only costs 15 bucks a month to become a premium subscriber so if you want to play the Arbitrage pay 15 bucks to save

$50 go do it I want you to get the lowest price um update to um if you haven’t heard already uh Rick rule just signed on uh to uh present at the conference he’s always great at these conferences when he comes uh because he just fully opens the kimono and shares

All of the stocks that are on his natural resource stocks watch list you’re going to walk away with dozens and dozens uh of tickers to go investigate um all right and then um uh if you enjoyed having Grant on this program would like to see him come

Back on the channel as soon as the schedule allows please let him know that by hitting the like button then clicking on the red subscribe button below as well as that little bell icon right next to it all right Mike I’m going to give you the last word here any parting bits

Of uh of advice for folks as we head off into the sunset here for a week I think I would just uh mention one thing that Grant uh said in the talk that we agree with buy buy some gold I didn’t mention that in in the earlier replies but 5 to

10% of investable assets buy some gold it’s sitting here above $2,000 an ounce it looks like it’s going to break out of this what you would say is maybe a triple or quadruple top at this point I do believe that’s going to happen it’s hard to make sense of this world where

Everything feels surreal and it’s all about psychology and we don’t know what money really is buy some real things gold and silver makes sense and um Grant talked about reading history and talking to elders and I think that makes a lot of sense too but

Sit back and and just kind of wait and see what happens and uh you know we’ll make it through this fourth turning it’ll be fine and I just want to say thank you Adam for having me on I appreciate the opportunity no it’s always a pleasure Mike thanks so much

Buddy we’ll see you next week everybody else thanks so much for watching thank you see you soon

WORRIED ABOUT THE MARKET? SCHEDULE YOUR FREE PORTFOLIO REVIEW with Thoughtful Money’s endorsed financial advisors at https://www.thoughtfulmoney.com

According to the official data – be it economic growth, disinflation or jobs — things could hardly be better.

But if you talk to a regular person on the street, they’re likely to tell you that times aren’t that great, and getting tougher.

Why is the prevailing narrative so disconnected from the reality on the ground?

And where are things likely to head from here?

To tackle this conundrum, we’re fortunate to welcome macro analyst and interviewer extraordinaire Grant Williams to the program.

#wealthgap #wealthinequality #liquidity
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