Hi all,

The "Fourth Turning" is a theory presented in a book by William Strauss and Neil Howe, which suggests that history operates in cycles of roughly 80-100 years, with each cycle containing four distinct stages or "turnings."

SO WHAT HAS THIS GOT TO DO WITH INVESTING? It is essentially the framework / foundations of Ray Dallio's work on the long term debt cycle. I have used ChatGPT to give you an summary of the theory.

Here is a summary of the 4 cycles:

1. The First Turning: The High. This stage is marked by a period of high cultural optimism and a focus on individualism and self-expression. The dominant generation is the one that experienced the last crisis and fought the last war, and they are in a position of authority and influence.
2. The Second Turning: The Awakening. This stage is marked by a period of increasing individualism and cultural fragmentation, as people begin to question the assumptions and values of the previous generation. The dominant generation is the one that came of age during the high, and they are now in positions of leadership and influence.
3. The Third Turning: The Unraveling. This stage is marked by a period of political and social upheaval, as institutions and traditions are called into question and the sense of civic duty and shared sacrifice erodes. The dominant generation is the one that came of age during the awakening, and they are now in positions of power and influence.
4. The Fourth Turning: The Crisis. This stage is marked by a period of extreme crisis and upheaval, in which the existing social, economic, and political order is fundamentally challenged and may even collapse. The dominant generation is the one that came of age during the unraveling, and they are now in positions of leadership and influence, charged with navigating the crisis and creating a new order.

It is generally posited that the four stages of the current saeculum are as follows:

The First turning: Began in 1945 (end of WWII), and ended in the mid 1960's - This period was marked by a sense of national unity and optimism, as the country emerged victorious from the war and embarked on a period of economic growth and social progress. This era is often referred to as the "post-war consensus" and was characterized by a focus on building and maintaining institutions, a belief in progress and modernization, and a sense of shared purpose and civic duty.

The Second turning: Began mid-1960s and ended in the mid-1980s. This period was marked by a growing sense of individualism and a focus on social and cultural experimentation. The Second Turning era saw the emergence of countercultural movements, civil rights activism, and a rejection of traditional authority and institutions. The specific event that precipitated the most recent Second Turning was the social and political upheaval of the 1960s, including the Civil Rights movement, the anti-war movement, and the rise of the counterculture. These movements challenged traditional values and institutions and promoted a vision of social and cultural liberation

The Third turning: Began in the mid-1980s and lasted until the mid-2000s. This period was marked by a focus on personal responsibility, individualism, and a desire to restore social order and stability. The Third Turning era saw the emergence of pragmatic, results-oriented leaders and a renewed emphasis on civic duty and public service. The specific event that precipitated the most recent Third Turning was the perceived crisis of the 1970s, which was characterized by social unrest, economic stagnation, and a crisis of confidence in government and institutions. The election of Ronald Reagan in 1980 and the subsequent conservative movement reflected a desire to restore order and stability, and the Third Turning era was characterized by a focus on economic growth, national security, and personal responsibility. The end of the Third Turning was marked by the financial crisis of 2008, which signalled a loss of faith in the institutions and policies of the preceding era.

The Fourth turning: Began with the 2008 financial crisis and is expected to last until the late 2020s to early 2030s. The Fourth Turning is characterized by a societal crisis or conflict that leads to a fundamental reshaping of social, economic, and political systems. This era is often marked by a sense of urgency, sacrifice, and a willingness to take bold action to address the crisis at hand.

The specific event that precipitated the most recent Fourth Turning was the 2008 global financial crisis, which highlighted the instability and inequities of the existing economic and political systems. This crisis triggered a period of deep political and social polarization, marked by rising populism, nationalism, and a general sense of anxiety and uncertainty about the future. The Fourth Turning era has been further complicated by additional crises and challenges, such as the COVID-19 pandemic, climate change, and geopolitical instability, all of which have contributed to a sense of deepening crisis and uncertainty. It is worth noting that the exact timing and duration of the Fourth Turning are difficult to predict, and the outcome of this era will depend on a complex interplay of social, economic, and political factors.

WHY DO THE TURNING CYCLES REPEAT THROUGHOUT HISTORY?

According to the Fourth Turning theory, the turnings keep repeating themselves throughout history due to a cyclical nature of human behavioUr and the predictable stages of social and cultural development.

The theory suggests that each cycle, or "saeculum", lasts roughly 80-100 years and is divided into four turnings or seasons. Each turning represents a different phase of the cycle and is characterized by a specific mood, cultural dynamic, and set of challenges.

The theory holds that each turning builds on the successes and failures of the previous one, and that the same underlying patterns and archetypes tend to re-emerge over time. For example, during a Fourth Turning, there is often a sense of crisis and urgency, as individuals and institutions are forced to confront the shortcomings and failures of the previous era. This can lead to a period of deep social, economic, and political transformation, as individuals and institutions work to address the challenges of the time.

The theory suggests that these cycles are driven by a combination of cultural, social, and economic factors, including demographic shifts, technological innovations, and geopolitical events. Over time, these factors can lead to a gradual shift in the dominant culture and the emergence of new ideas, values, and institutions.

While the specifics of each turning are unique to the time and place in which they occur, the underlying patterns and archetypes tend to remain the same. This is why the turnings tend to repeat themselves throughout history, as individuals and institutions grapple with the same fundamental challenges and struggles time and time again.

WHAT ARE THE INVESTING IMPLICATIONS?

One possible outcome of a Fourth turning crisis is a "great devaluation" in which the existing economic and financial systems are fundamentally restructured or even collapse. During a "great devaluation", the values and institutions of the prior era are often called into question, and the existing economic and financial systems may be destabilized or even break down entirely. This can lead to a period of economic contraction, social upheaval, and political instability, as individuals and institutions struggle to adapt to the new reality. The most recent example of this was the Great Depression - during the previous saeculum.

Note: a major "great devaluation" event does not always occur, and is not certain during a Fourth turning.