Neil Howe, Demography sector head at Hedgeye (author of The Fourth Turning) sat down recently with Adam Taggart (CEO & Founder at Wealthion).

In this special, two-part series, Howe lays out his prediction that today’s society has entered the "bust" part of our current generational cycle -- where the status quo falls apart -- often chaotically -- to be replaced by a new, hopefully better, order.

Below is a brief transcript. FYI Howe publishes a daily Demography Unplugged research note. Click here to learn more and subscribe.


Taggart: This is such an important question that so many of the viewers have been asking themselves of late, which is: "Are we going to see in this Fourth Turning reality re-express itself?" And it certainly may amongst things like psychical resource limitations and stuff like that. You can't necessarily print those up overnight.

Sort of economically here, will reality re-express itself and all those old fundamentals of investing and whatnot begin to matter again? Or have we crossed a rubicon where the Fed is just going to be intervening in any and all cases going forward and we're not going to return that, because they require very different investing strategies. 

Howe: Well, Valuation ultimately always matters. You can't banish the concept of valuation. But I would argue that it's now because of the regime change operating on a big delay and it's operating indirectly. We have a new regime, it still has to operate. There will always be something called valuation, but it's going to operate differently now. 

I think that what's happening is that in response to this we're seeing clearly with this huge monetary stimulus, I mean the combination of the fact that this enormous borrowing, which is going to continue through the 2020's, and the Fed flattening the Yield Curve  which is further inflating the demand for equities, because it just is encouraging everyone to borrow. You see mergers & acquisitions going to record levels. Buybacks now! A record buyback in the 3rd Quarter is amazing.

Here's the new policy, it doesn't matter what you buy after having borrowed. that's a slam dunk. You can borrow anything now and invest the money in anything and you'll be a winner.