In today’s Issue:

  • Demographics will undermine demand for your stocks too
  • The electricity grid is in worse shape than whistleblowers suspect
  • When governments max out their debt, strange things happen in the stock market

Recency bias creates the presumption that the future will look like the past. It’s perfectly reasonable, most of the time. And we can’t spend our lives wondering what might happen tomorrow. The list of possibilities is simply too large.

But spending some time thinking about it every few weeks can pay handsomely. Yet, few people bother to look ahead to see what might change.

I am your antidote.

The Fleet Street Letter’s purpose is to help subscribers fight their recency bias in investing. To make them aware of the big turning points that might make an enormous difference to their lives.

If they’re ready for the change, it could make them wealthy.

Those that aren’t ready, will be caught by surprise.

Daring to predict radical change is a miserable business. Most people don’t want to hear about it. Or they ridicule your ideas.

Even when you get things right, people have long forgotten. Or they declare it was obvious at the time. After all, extreme things happened often, historically. Yet recency bias prevents us from entertaining the possibility that they might happen in the future too.

Being willing to predict change requires a thick skin. Having been the world’s worst semi-professional flying trapeze artist for a few years, I have thick skin. Literally and figuratively speaking.

And, it’s been a good few years for predictions in The Fleet Street Letter…

We anticipated the importance of drones in 2019.

We predicted the boom in Japanese defence stocks too.

Our prediction about the breakdown of Net Zero was published just as the green energy bubble peaked in the stock market.

We foresaw Labour’s taxes. And the frequency problems in the electricity grid that are front-page news today

I also warned about double digit inflation in 2021, just before it began to surge.

But today, the list of radical change is accelerating…

Demographics will undermine demand for stocks and bonds

There aren’t enough young taxpayers to support the age pension. People intuitively understand this.

Some even have the foresight to extend the same idea to the property market. If there aren’t enough young taxpayers to fund pensions and healthcare, then there aren’t enough property buyers either.

Investors planning to sell their properties to fund their retirement will flood the market relative to demand.

I don’t know why. But very few people are able to apply the same idea to the stock market.

If there aren’t enough young taxpayers to fund pensions, and there aren’t enough young property buyers to soak up retirees’ investment property selling, then how can there be enough young investors to buy retiree’s shares?

The Western world has built its retirement system on investing in order to escape the demographic crisis the Treasury faces. Yet property markets and financial markets face the exact same supply and demand dynamics.

We are going to find out the hard way when everyone tries to rush for the exits at the same time.

The electricity system is going to fall apart

One of the top news stories as I write this is a scandal over the electricity grid’s frequency. When I first began writing about this in The Fleet Street Letter, people couldn’t have cared less.

But the real problem is yet to be discovered by the media, politicians, or whistleblowers.

So far, the focus has been on the transmission grid. It’s struggling to meet standards on frequency. This risks a Spain-style blackout.

But it’s the distribution grid that’s the real problem. Conveniently, it’s not as carefully monitored. Yet it’s the electricity that gets delivered to your house and business. And I suspect it is in bad shape indeed.

If this scandal breaks, as it did on the transmission grid yesterday, the UK’s grid will be in need of a major overhaul.

And the hidden damage done by what’s known as “dirty electricity” is going to trigger an almighty lawsuit for someone.

Governments going broke changes the nature of investing

It takes a long time for a government to go broke. This creates the illusion that large deficits are sustainable. An entire generation or more of politicians can get by borrowing ever more.

To be honest, I can’t imagine what restrained them from borrowing more and faster. Warnings of a debt crisis were premature by decades.

But those days are over now.

Politicians can’t test the envelope anymore. The European Sovereign Debt Crisis and Liz Truss Moment proved it.

What does our political system look like if the government cannot simply spend whatever it wants to?

How will this impact financial markets?

Investors don’t know… because nobody’s memory goes back that far.

You have to look at history. And be willing to entertain ideas that recency bias will make you dismiss.

How much change can your mind entertain?

Not many investors were willing to think about double digit inflation in 2021.

Or the risk of international blackouts spreading around an interconnected grid.

Drones were considered a toy for delinquents, not the most important weapon of war in the next conflict.

Even considering these things is a step forward for investors. Because they can gain an understanding of what might be coming. If it happens, they’re prepared.

But what about actually taking action?

Would you be willing to adjust your portfolio of investments for the risks and opportunities these big ideas represent?

Would you be interested in investing to try and profit from the things that’ll change the world in coming years?

If the answer to either (or both) of those is “yes,” then join us at 3 pm today to find out how.

We’ll be live and free, answering your questions.

Until next time,

Nick Hubble
Editor, The Fleet Street Letter

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