Harry S. Dent Jr., bestselling author of The Demographic Cliff and The Sale of a Lifetime, predicted the populist wave that has driven the Brexit vote, the election of Donald Trump, and other recent shocks around the world. Now he returns with the definitive guide to protect your investments and prosper in the age of the anti-globalist backlash.
The turn of the 2020s will mark an extremely rare convergence of low points for multiple political, economic, and demographic cycles. The result will be a major financial crash and global upheaval that will dwarf the Great Recession of the 2000s—and maybe even the Great Depression of the 1930s. We’re facing the onset of what Dent calls “Economic Winter.”
In Zero Hour, he and Andrew Pancholi (author of The Market Timing Report newsletter) explain all of these cycles, which influence everything from currency valuations to election returns, from economic growth rates in Asia to birthrates in Europe. You’ll learn, for instance:
• Why the most-hyped technologies of recent years (self-driving cars, artificial intelligence, virtual reality, blockchain) won’t pay off until the 2030s.
• Why China may be the biggest bubble in the global economy (and you’d be a fool to invest there).
• Why you should invest in the healthcare and pharmaceutical industries, and pull out of real estate and automotive.
• Why putting your faith in gold is a bad idea.
Fortunately, Zero Hour includes a range of practical strategies to help you turn the upheaval ahead to your advantage, so your family can be prepared and protected.
|Publisher:||Penguin Publishing Group|
|Product dimensions:||6.20(w) x 9.00(h) x 1.40(d)|
About the Author
Harry S. Dent, Jr. is the bestselling author of The Demographic Cliff, The Sale of a Lifetime, The Great Depression Ahead, and many other books. He is the founder of Dent Research, which publishes the newsletters Economy & Markets, Boom & Bust, and The Leading Edge, among many others. He has an MBA from Harvard, consulted for Fortune 100 companies while at Bain & Company, and lectures widely.
Andrew Pancholi is the director and chief strategist of Cycles Analysis and author of the acclaimed newsletter The Market Timing Report.
Read an Excerpt
The Three Harbingers of Revolution
Cycles are the dark matter of our world. We can't see them, but they affect everything we do.
Neil deGrasse Tyson talks about how dark matter makes up 85 percent of the universe. We can't see it. We don't know what it is. We just know that our equations for explaining the universe don't work without including it. But it does have gravity, which is why we can detect it and measure its impact.
It's the same way with life, except that our "dark matter" is cycles. We can't see them, we can't touch them, and there are too many to fathom, but every single one affects us to some degree at multiple points in our lives.
They're the invisible, underlying currents that drive us.
As this decade rolls by us, we're caught up in an armada of economic, political, financial, social, and geopolitical cycles that are changing the face of our world.
We're about to move much deeper into the most intense phase of the Economic Winter Season in my 80-year Economic Cycle (more on this later). With it comes a once-in-a-lifetime great reset of debt and financial-asset bubbles and the emergence of a whole new economy, as occurred in the 1930s. Think of the advantages if you could have seen that great reset coming-the sale of a lifetime in financial assets back then!
We're also entrenched in the converging downside of the Four Fundamentals-four key cycles that are critical to the performance of stock markets, the survival of economies, and the safety of citizens all across the globe (and I'll talk more about this later as well).
All four have been on a negative trajectory together since early 2014.
This convergence happens infrequently. The most comparable to this one occurred from late 1929 into 1934, giving us the worst years of the Great Depression. The only other such event in the last century resulted in the massive inflation of the 1970s. This cycle will continue to deepen through early 2020, with aftershocks into at least 2022.
But what really sets this century apart is the addition of the Three Harbingers of Revolution!
We last saw the most turbulent of these three cycles-the 250-year Revolution Cycle-during the American and Industrial revolutions of the late 1700s.
The 84-year Populist Movement Cycle is back. The last time this cycle rolled through, we had to endure the horrors of Hitler and Mussolini.
And there's the 28-year Financial Crisis Cycle, hanging over our heads like the sword of Damocles.
(Andy brought the 84- and 28-year cycles to my attention. I've been using the 250-year cycle for decades. I also have an 80-year cycle that is very close to his 84-year cycle.)
This is going to be fun! Let's look at each of these harbingers to better appreciate how they're going to revolutionize our world.
Harbinger #1: The 250-Year Revolution Cycle
The current revolution started in mid- and late 2016, with Brexit and then Trump, and it could last a decade or two, to as late as 2033.
The last one started in the 1760s, with the thirteen colonies' rebellion against the Sugar Act of 1764 and the Stamp Act of 1765. It culminated in the Boston Tea Party, in 1773. The First Continental Congress was formed in 1775, followed by the Declaration of Independence, in 1776. The Revolutionary War lasted from 1775 to 1783.
That period, from 1765 to 1783, was the birth of democracy. That was a very big deal, and it's still spreading through the emerging world.
From 1776 through 1789 Adam Smith published five editions of his breakthrough book The Wealth of Nations. He's considered the founder of classical economics and the first to express the dynamics of free-market capitalism-what he famously called "the invisible hand." Sounds like dark matter, doesn't it?
This era also marked the practical beginning of the Industrial Revolution around the emerging breakthrough innovation of the steam engine.
I call this "When Harry Met Sally."
Two opposite principles converged to create the greatest advance in standard of living in perhaps all of modern history.
Capitalism rewards individual contribution and risk-taking. Democracy is inclusive, giving everyone a say via the right to vote. This aligns the troops with the generals.
The 250-year Revolution Cycle before "Harry met Sally" saw the Protestant Reformation, starting with Martin Luther's 95 Theses, posted in 1517. This created a split in the Catholic Church and played into the power of the printing press, invented in 1455.
This period also saw the emergence of one of the greatest inventors in history, Leonardo da Vinci. There was a clear intellectual revolution in this late stage of the Renaissance, from roughly 1517 to 1532.
Here's what this cycle looks like:
The present 250-year Revolution Cycle corresponds with the Economic Winter Season of my 80/84-year Four Season Economic Cycle and Andy's 84-year Populist Movement Cycle. I increasingly think that these two cycles are one and the same and that the 84-year time frame is the more accurate.
Andy is a close friend and possibly the only other person in existence to be able to outcycle me at times.
We had a shootout at my Irrational Economic Summit, in Palm Beach in 2016, with many similar cycles, like 10-year, 30-year, 45-year, 60-year, 80/84-year, and 500-year. But Andy was pulling out 100-year, 144-year, and 180-year cycles that converge in this period.
He basically outgunned me on some of these longer-term cycles, and that's not easy to do.
That was when I decided we had to combine our cycle expertise, and this book was born.
Over the years, I've also increasingly turned to him for help fine-tuning my forecasts, because he excels at the shorter-term stuff. He has mastered the art of cycles analysis by developing signals that show him potential turning points and an array of other invaluable information.
Harbinger #2: The 84-Year Populist Movement Cycle
This particular cycle is easier to see in the world today, because we're witness to the countless protests and riots almost daily.
It started with the deep dissatisfaction of the everyday worker and middle-class citizens when the U.S. economy fell apart in 2008. They'd already endured falling wages since 2000, so they were ripe for revolt.
These people have been devastated by one bubble and burst after the next, all while they've watched the wealthiest 1 percent run off with 50 percent of the money. It happened the same way in the 1929 long-term stock peak and the Economic Fall Bubble Boom Season-yes, about 84 years ago.
Worse, in the United States, they've been further affected by the "Asian deflation" in middle-class wages, thanks to competition from legal and illegal immigrants coming largely from Mexico and Latin America.
In Europe, that wage pressure was magnified by the refugee crisis, in which more than a million people poured into the continent in 2015.
The Greece default and the threat to the euro in 2010-11 was another spark. Unemployment in the Southern European countries is still near record highs. Black markets thrive there.
Now we've entered the real stage, a populist revolt against globalization, immigration, and Wall Street financial trickery.
Brexit passed against the polls in the UK.
Trump emerged against the polls in the United States.
More unexpected disruptions will follow.
While the anti-EU candidate-Geert Wilders-failed in his bid to become the next prime minister of the Netherlands, it was a close race. . . . AND he and the far-right movements blanketing Europe aren't going away anytime soon.
And the French election was a heated contest between the populist, anti-EU, far-right candidate, Marine Le Pen, and the more liberal Emmanuel Macron. While Le Pen also lost her bid, she and her National Front are also here to stay.
The last time we had such a populist movement was in the early 1930s, led by Hitler and Mussolini in Europe. Hitler's whole appeal was his promise to make Germany great again!
The emergence of Hitler as German chancellor, in January 1933, and Trump as the U.S. president, in January 2017, occurred exactly 84 years apart. (I'm not calling Trump the next Hitler, nor am I likening the two! I'm just demonstrating this cycle and how precisely it defines such populist movements.)
If we trace this 84-year cycle back, we get the populist movement that lasted from 1933 through World War II.
Before that, we had the European revolutions, starting around 1848.
People became fearful of losing their perceived birthright.
The masses were fed up with being oppressed by the ruling classes. But they lacked a unifying catalyst.
That is, until Karl Marx and his principles brought a torchlight of hope. The simmering discontent gathered speed, and suddenly there was unification among the masses of Europe. Communism was born!
The continent was like a house of cards. Just the slightest thing brought it crashing down.
Between 1848 and 1850, every European nation experienced uprising and revolution.
It happened quickly.
The populace had had enough.
Does this sound familiar?
No one would have expected this five years earlier.
The Industrial Revolution then; the Internet and the technology boom now. The reckless, oppressive rule of the aristocrats then; ineffective governments now.
The cycle returns.
Before that, we had the First Continental Congress in the United States, in 1774, and the Declaration of Independence, in 1776 . . . which brings me back to the 250-year Revolution Cycle.
You see, three 84-year cycles add up to 252 years!
Just look at this next chart. Look at what these cycles look like together. . . .
Andy will give you more details about this particular harbinger in chapter 2.
Seeing cycles line up like that and identifying their impact may be the most beautiful thing I've ever seen (with the exception of my lovely wife, Jean-ne).
Harbinger #3: The 28-Year Financial Crisis Cycle
Andy also has a 28-year cycle that correlates with financial crises. This is similar to my long-standing 30-year cycle in commodity prices.
In 1933, the cycle bottomed out. That was when we saw the highest unemployment in U.S. history and the worst of the worldwide Great Depression.
The next bottom hit in 1961, with twin recessions in 1960 and 1962, the Cuban Missile Crisis, and President John F. Kennedy's assassination.
Then we got the recession and savings-and-loan crisis of 1990-91 (shortly after the bottom in 1989).
The other major financial crisis, obviously, was the one in 2008-09, and that hit on my 80-year (or, more likely, 84-year) Four-Season Economic Cycle over two Generational Spending Wave booms and busts: the peak of the massive baby boom spending cycle and the dawn of the dreaded Economic Winter Season.
And finally, we get what Andy and I see as the next likely massive crash, from the second half of 2017 through at least late 2019 or early 2020.
That brings us back to the 84-year cycle, with a major separatist movement and backlash to globalization . . . and what a massive cycle this is shaping up to be!
Twenty-eight times three is . . .?
Other examples of this cycle include . . .
1793: France stumbled through the thick of the French Revolution.
1821: After centuries of rule, the Ottoman Empire lost control of Greece. Panama and Peru broke away from Spanish colonization. And Faraday invented the electric motor.
1877: Russia declared war on the Ottoman Empire. Britain annexed the Transvaal, a province in South Africa.
1905: Russia entered a crisis. There was a huge famine and many violent uprisings. The Japanese wiped out the Russian navy.
1961: The Bay of Pigs invasion failed. The Berlin Wall went up. Russia won the early space race as Yuri Gagarin made history.
1989: The Berlin Wall came down. The Chinese army massacred students in Tiananmen Square.
Like I've said, the cycle turns.
And the next one should start later this year!
When these three Harbingers of Revolution converge, you can expect major social, political, and economic changes at local and global levels. They converge most precisely in late 2017.
Here's the beauty of it: when you're aware of these cycles, it's easy to take steps to survive and prosper as the "dark matter" rolls on over us. We share these details with readers daily in our free e-letter. Sign up at economyandmarkets.com. And remember to get your free report at dentresources.com, a thanks for reading this book.
The thing with cycles, though, is that the more confirmation you get, the more confidence you have about what the future holds.
While the Three Harbingers of Revolution are significant cycles individually, and while they constitute a powerful force when they converge, there's another big cycle that's joining this party.
Which Came First? The Chicken or the Egg?
Do you see the parallels between then and now?
When the UK broke away from the European Union and Donald Trump won the 2016 U.S. presidential election, it was clear: a tipping point had arrived. And 2017 would be an interesting year. (As would the rest of the decade!)
Many would say that Trump is a man of action. True to his word, he ordered construction of a wall between Mexico and the United States on Wednesday, January 25, his sixth day in office. But, as Harry would say, he's looking to build a wall for nobody. Our Mexican-born immigrant population, especially illegals, has declined since 2007 and will likely continue to do so in the even deeper downturn ahead.
But did you know that the most famous geopolitical and socioeconomic wall to date, the Berlin Wall, was erected in 1961?
It was built to prevent communist East Germans from escaping to the more prosperous, capitalist West Berlin. It worked for 28 years, before it was brought down in 1989.
Add 28 years to 1989 and we arrive in 2017.
Right here, right now!
This shows the geometry of cycles.
Before we go any further, I must make one thing clear: I write this to show you how cycles unfold in geopolitical and financial arenas. Nothing more. I'm not making judgments. I'm not criticizing. I'm simply observing!
A geopolitical and socioeconomic dividing structure is in the cards once again, as an absolutely perfect repetition of cycles unfolding.
That means 2045 will be a landmark year in divisiveness and financial crisis as well, not only because it lies a further 28 years ahead but also because it will mark 100 years from the end of the Second World War.
Paradigm shifts will occur.
On Friday, January 27, President Trump signed a separate executive order imposing immigration and travel restrictions on certain groups. While this ran into legal challenges, he refused to back down.
Sure, his order placed people of certain origins under suspicion, regardless of whether they are good guys or bad guys. But previous administrations-not as innocent as they'd have you believe-pursued similarly discriminatory policies.
Table of Contents
Preface: What the Politicians Don't Know Harry Dent 1
Prologue: Why We're Entering the Most Critical Time of Our Lives Andrew Pancholi 15
Part I The Forces Driving the Revolution 19
Chapter 1 The Three Harbingers of Revolution 21
Chapter 2 Which Came First? The Chicken or the Egg? 32
Chapter 3 Witness the Climax of Globalization and the Centurial Cycle 40
Chapter 4 A World Rushing into Revolution 48
Chapter 5 An Even Bigger Cycle 73
Chapter 6 The Four Fundamentals That Shape Our World 85
Chapter 7 Deep in the Heart of Winter 100
Chapter 8 What Needs to Happen to Get to Spring Again 117
Part II The Invisible Yet Blatant Bubble 155
Chapter 9 There's No Bubble Here? 157
Chapter 10 The Model That Politicians and Investors Desperately Need 177
Chapter 11 Missing Links from Past Financial Crises 193
Chapter 12 The Modern-Day Mount Vesuvius in Real Estate 198
Chapter 13 The Six Bubble Busters 215
Chapter 14 When You Put It That Way … 232
Part III How to Profit from the Greatest Revolution and Financial Crisis since the Late 1700s 251
Chapter 15 The Two Safe Havens in Winter 253
Chapter 16 The Emerging World Boomers 271
Chapter 17 The Next Commodity Stars 285
Chapter 18 The Gainers and the Sustainers 297
Epilogue: Cycles and Your Life 302
Chart Index 309
About Harry S. Dent, JR. 313
About Andrew Pancholi 317