Ep 7 - The Hidden History of Financial Markets That Could Save Your Portfolio

Unlock the secrets of financial markets through the lens of history with Russell Napier, a veteran investor and acclaimed author. In this eye-opening episode, Russell reveals why understanding past monetary systems is crucial to navigating today's volatile markets—and why ignoring history could be your biggest mistake.

Most conversations focus on short-term data and predictions, but Russell argues that true insight comes from studying the patterns of debt, imbalances, and systemic deformations that shape our financial future. From the fall of Bretton Woods to China’s debt explosion, he explains how historical shifts inform current crises and what they mean for your investments today. Expect concrete frameworks like the "Imbalance Analysis" and lessons from the Great Bear Markets, revealing what assets have historically protected or destroyed wealth during times of financial upheaval. Discover the overlooked role of the global monetary system, why debt levels in China and the West are unsustainable, and how political failures have accelerated economic risks. 

Russell shares how financial repression, a strategy used after WWII, is making a comeback—forcing savers into government bonds and risking another wave of economic pain. He warns that the road ahead includes major asset reallocation, with equities potentially poised for correction and gold emerging as a crucial store of value in an uncertain world.If you're a serious investor, a forward-thinking portfolio manager, or simply curious about the roots of today’s financial chaos, this episode is essential listening. 

Russell Napier’s deep historical knowledge offers a roadmap to understanding the seismic shifts coming our way—arming you with the courage and insight to act boldly when others hesitate. Plus, learn about the innovative courses and charitable initiatives Russell has created to foster financial literacy and strategic thinking for future generations. Don’t miss this rare opportunity to glimpse into the future of money through the invaluable lessons of history.

Transcript

SPEAKER_02 0:01

Today, so much of the wealth of the nations is run by machines. And machines are effectively trend-following instruments, momentum-oriented instruments. I think they're even less likely to spot a structural change. Or more worryingly, they're likely to spot it all on the same day. That's pretty worrying. So I do think there's an advantage now for the human being because whatever a machine has, you know, I'm still really using a iron pencil on, so I'm not really the best person to talk about algorithms, but I can assure you of this that whatever they have is they don't have courage. And that is what's now necessary. And that is the advantage of the human being. And if these algorithms all on the same day pick up the new trends and it's within the structural change and all begin to move money, then this all begins to happen very, very quickly indeed.

SPEAKER_00 0:47

Welcome to the most important thing. The podcast where leading voices in finance, economics, investment, and geopolitics share the one idea they believe matters most. Renowned broadcaster Ivan Yeats and finance expert Dr. Alan O'Sullivan will uncover for you what actually matters. In a noisy world, clarity is power. Here, we focus on the principles and insights that endure long after the headlines fade. This is the most important thing.

SPEAKER_03 1:18

So on this week's show, we have part two of the Professor Russell Napier interview. I would strongly recommend anybody that hasn't listened to part one to watch or listen to that before you uh dial into part two. On part one, Russell talked about the many imbalances that he sees in the current global economy, the debt situation, but particularly the debt situation in China, the stability of the financial system. We talked about financial repression, and that's where we uh left it on. So at the start of part two, Russell goes into more detail about financial repression. Uh we also discussed the asset allocation opportunities, challenges obviously in an inflationary regime. And then we finish up with Russell uh going through some scholarship opportunities and his education course, the advanced valuation course in equity markets. So loads in this episode, it's a shorter episode this week. But Russell Napier is somebody you should be following, somebody you should be paying attention to, particularly his theory of financial repression. Hope you enjoy this episode with Professor Russell Napier, part two. So we we get on then maybe to your financial repression theory. Um I know you've been sp speaking about this for a long period, and I mean rightly so, because the debt was still very, very high even a couple of years ago. Well even a decade ago, decade ago it was obvious that the debt was unsustainable, and we've we've kicked this can down the road. We seem to be at a tipping point now. Can can you talk to this financial repression what you mean by that?

SPEAKER_02 3:06

Yeah, so when debt is too high, there are a limited number of options to be taken by politicians. And it's a social problem, it's a political problem, so it will be politicians. So they are austerity, default, hyperinflation, financial repression, or really high real rates of growth. Now, the last one, of course, is the one that we would all hope for. Of course, that would be best for everybody, but at the minute it doesn't seem to be there, and that seems to be an issue with productivity. So I'll leave that one. I would say ultimately that high rates of real growth are not really within the gift of politicians. They tend to relate to innovation, productivity, innovation driven by the private sector. We will leave it and hope that that one turns out and then go back to the other four. So austerity, well, there is no appetite for austerity. Uh as you know, France has been debating its so-called austerity budget now for quite a long time, and not really coming, and it's brought down several governments now, very minor tightening in fiscal policy. It was tried in the United Kingdom with George Osborne and he left office, and the moral of the story is don't do austerity. You've got default. Well, we learnt with Lehman Brothers and also with Greece that if you if you know one man's liability is another man's asset, so you leave great big holes in balance sheets if you do default, so it's a difficult way to go. It's not necessarily going to bring you to a land flowing with with milk and honey. And then there's hyperinflation. And uh you often see people banding around, well, they'll go for hyperinflation. But if you look, as a historian, you look at the history of hyperinflation, it's really obvious that hyperinflation comes after you've stolen people's savings. Stolen is a strong word. Manipulated might be a better word. Clipped might be another word. You know, we all there are great words for what you do here. But you know, uh the Weimar Republic happens because Germany doesn't have any private sector savings, because it's already destroyed all those savings in funding the First World War. Uh similarly with Zimbabwe, there's a prolonged period before an independent Zimbabwe gets to hyperinflation because at first it has to try and steal or manipulate the savings of the people. Uh so financial repression, let's be just clear what it is, it's forcing savers to own government bonds at yields that reduce their purchasing power of those savings. Now, if we wanted to talk just about financial repression, I think we'd need a whole other podcast because there are a legion of different bits of legislation that are necessary to do this. You have to make some assets less attractive to make that one asset more attractive. Uh, and no doubt we'll get into uh some of that. Uh but that's effectively it, and it's easier than it's ever been because so much of the private wealth of a nation, liquid wealth of a nation, is held within regulated financial institutions. And uh, let me give you one tangible example rather than this just being a theory. The British government will pass, I think it's got to be four weeks away now, something called mandation. And mandation will give the power to a British government minister to mandate where certain savings institutions are putting their capital. So that's your capital, that's your savings. And of course, the focus at this stage is on funding a British investment renaissance and industrial policy that so many nations now have. But it's a power of mandation that could have recommending more ownership of government bonds. And the financial repression thing is not something I've just made up, it is what was done uh really in the post-World War II era. So we're looking back to an era where, as we mentioned, debt to GDP was very high coming out of the war. We're looking at what was done. This is what was done, and as a financial historian, it gives us something of a guide to what's coming on. I've been speaking about it for far too long, but actually it manifests every day. Every day someone will send me an email going, uh, I see it, I can see it, this is happening, it's happening over here. And of course it is happening, it is happening slowly, but it really accelerates if government bond yields get to a level which they consider to be unacceptable, unreasonable, or about to catapult them from office. So it can be it's uh the famous Hemingway quote I mean, how do you go bankrupt first slowly and then quickly? Well, it's the same with financial repression, I think. It's first slowly uh and then quickly.

SPEAKER_03 7:09

I think anybody who pushes back against the idea that governments would mandate private savings but to purchase uh government bonds should go back and and look at the pushback on negative interest rates, so that's never going to happen, or helicopter money, which essentially was what happened in p during COVID, where they stuffed uh cash in people's bank accounts. So I mean anything can happen, unconventional can happen. And I think the the state of the situation we're in gives uh plenty of credence to that. Just just in terms of mandation itself, you spoke about that period night post-World War II, Russell, between how it's similar to the current situation. So, how did assets perform during that period? And and how can we use that framework for looking at the future?

SPEAKER_02 7:57

Yeah, well, that is a great question. And for GILTS, the answer was don't own GILTs. And you know, bringing down debt to GDP, it is well nigh impossible to make money in fixed interest securities. The whole definition of bringing down debt relative to GDP is that you have to destroy the purchasing power of debt. So wherever that debt may be, I think it's very difficult to own it and expect to make a profit. The real losses over that period for an owner of guilts was uh certainly over 80% in terms of purchasing power over a very long period of time. Now the British did that kind of slowly. The French did it very quickly. There were three years after World War II where French inflation was around 40% and bond yields were six. You put that to one of your MBA students and they'll say that's impossible. Nobody would lend money at six if inflation's forty. But as you pointed out, it wasn't really any choice about this. So you can do it slowly or you can do it quickly. And that's how you that's how you uh that's how you go about doing it. I think most countries will prefer to do it slowly rather than rather than quickly. Look, there's all sorts of ways we can do it. Up until recently, it was compulsory for a pensioner in this country to buy an annuity at a certain date. Now, that was lifted, ironically, not that many years ago in the United Kingdom. But obviously, if you brought that back, you'd be forcing all your pensioners to own government bonds uh again. Uh we can dress it up as the safe asset. It is often called the risk-free asset. So you can do that. Now, to go back to the assets that perform well during this period, and of course, most what most people will be interested in is equities. Now, equities do perform well uh in the initial couple of decades, and a couple of decades is long enough for all of us. But, and there has to be a but, uh, if we go back to our cyclically adjusted PE, Schiller PE, one of the cheapest, you know, one of the bear markets in my four great bear markets is 1949. So we enter a period of financial repression, we're at the start of it, with exceedingly high or exceedingly low uh valuations of equities. And one of the simple lessons of financial history is if equities are really cheap, you buy them. Uh, you know, as long as the stability of the system isn't going to change, as long as you're not going to get communism or world war or a world war, you buy equities when they're cheap. So they did perform a role of defending the purchasing power of people's savings from 1945, really all the way to 1966. However, that is not where we are today with what people will have in their portfolio today, which is effectively the S P 500, which is about 70% of global market capitalization, which would have been on less than 10 times cyclically adjusted PE in 1949, and is currently nearly 40 times cyclically adjusted PE. So it would be nice for me to say to you, well, look, we just take the last period of financial repression, we just say that all the assets are going to perform exactly the same as they did last time. And my answer is no. No, they absolutely are not. Remember at the end of World War II as well, that the savings institutions of the developed world were all owning government bonds. Uh there was very little left in equities. Of course they were owning government bonds, they'd been forced to buy them. British institutions were forced to sell all their overseas equities to the government, and that was replaced with guilts, and that and those foreign currency assets were liquidated to buy armaments. So if you end a period where there's virtually no owning of equities and they're really, really uh cheap, then you probably buy them. Now we are in a situation where actually equity ownership is pretty high relative to bonds and valuations are very high. So if we now begin to force them to own government bonds, they're gonna have to sell something, uh, and what they're likely to sell is is equities. So one final kind of moral of the story. If there are cheap equities, then you buy them. Uh and it's my contention that there are. Uh that the SP 500 may be overvalued, that global stock markets may look reasonably priced X the US, not grossly overvalued. But within that, we have a category of stocks known as value stocks. And I think listeners probably know the difference between growth and value equities, and I won't explain it, it's easily Googled. Uh, but they are by definition cheap stocks, and cheap stocks at a period of higher inflation and low interest rates actually will defend the purchasing power of your savings. And then the other then the interesting asset class is obviously gold, uh, which doesn't do anything from 1945 to 1971 because it's not allowed to, it's pegged to the pegged to the dollar. But obviously, once that peg is lifted, then it sort of more than compensates for what's gone before. Today gold is freely floating uh and uh and is a good store of value and is proving itself to be so. So that's the history of the key kind of asset classes from 45 to 79. And I think we just have to be careful in jumping up and down and saying, well, equity's defended us from inflation from 47 to 66 anyway, therefore they will continue to do so. I think that's wrong for the key uh equity indices, which are now grossly overvalued and grossly overowned, which is worth pointing out. The SP 500 forward ownership is a very, very high level.

SPEAKER_03 13:00

Yeah, I mean it's fascinating when you look at equity valuation through the lens of the monetary system, that the SP 500 really is a function of the old monetary order where a lot of the a that that that price appreciation was driven by foreign buy foreign buyers and foreign capital. And when there's repatriation of capital, you get a kind of a tide going out moment, perhaps. And I know Japanese equities is something that you've spoken about as well in terms of not as a function yes, as a function of value and price, perhaps, but also a function of maybe Japanese domestic market might be more disposed to Japanese equities and Japanese government bonds.

SPEAKER_02 13:44

Yeah, well, we have to think about a word of capital repatriation in this new global monetary system, as you pointed out, what's defined our period in the markets is an end of home bias, a reduction in the percentage of domestic currency assets held by savings institutions. We always talk about that, because that's what's happened in Ireland, that's what's happened in the United Kingdom, it's what's happened in France, it's what's happened in Germany. But by definition, if home bias is coming down, it can't be coming, you know, it's someone's got to benefit from that. And obviously, that was the United States of America. So the question now, and I can give you a number for that, uh, foreigners own sixty-one point five trillion dollars worth of American assets, liquid and illiquid, and it's about 34 trillion of liquid portfolio assets. Now, for those, and it's a good question, is 34 trillion still a lot of money? The answer is yes, it's bigger than US GDP. Uh now we look at who's provided that portfolio capital, and in terms of the uh the big nations, it's Japan and Germany. Interestingly, in just the last couple of quarters, Germany now surpasses Japan in the ownership of total overseas liquid assets with a focus on the US. So if these guys need to repatriate and the Japanese obviously need to repatriate to buy their bond market, keep those yields down, allow it to finally escape its debt trap, then what are they going to sell? And whenever you look at that, the number one asset to be sold is American assets. Now it might surprise people listening this to know that the second most asset most likely to be sold is France. When you think about this, foreign investors are most likely to own the two biggest currency blocks. And you when you own the dollar, you win the dollar. When you own the euro, however, you have a bit of a choice as to which of the euro assets you want to own. And you might want to choose one that yields slightly more than Germany. And it turns out, like for instance, the Japanese, if you look at their portfolio ownership in Europe, it is more than two times, nearly two and a half times more in France than Germany. So in this world of repatriation, which I think will include Germany based on recent announcements, yes, absolutely selling of American assets, but also selling France. And 53% of the French debt market, government debt market, is owned by foreigners. 70% of all the debt instruments issued by the French banks are owned by foreigners. Actually, that's beginning to sound a bit like another country we know in 2007, with a lot of the bank debt actually provided by foreigners. When I say foreigners, obviously, I mean other, mainly other European nations and other members of the EU, but nonetheless, countries that may have to repatriate uh capital. So this tide, if it comes back in again, the beneficiaries would be people like Japan, who would you know would not have to sell their own equities to fund their bond market. They could be selling somebody else's equities, and the losers would be those countries where they have large deficits in that portfolio account, where foreigners own many, many more portfolio assets in their country than their savings institutions own in foreign countries. So the two that jump out actually are the USA and France.

SPEAKER_03 16:42

Just a couple of couple of final questions, Russell. In relation to, you know, we're really talking about a seismic sea change in portfolio construction here, in the sense of, you know, the S P 500 government bonds, the 6040, is in most institutional portfolios. I deal with private wealth clients, it's they're just stuffed with them. And what we're talking about here is that you need to be looking at gold absolutely in the context, and you know, this isn't financial advice, but you have to look at gold through the prism of the changing monetary order, and you have to be brave. I saw I saw another one of your presentations where you mentioned bravery as an attribute as opposed to intelligence. But we know that people are governed by fear and greed, fear, bravery can be in short supply, particularly during a stressed environment like we're potentially going into. So, how do we get that message across about you know, five percent in gold may not may not do it for you?

SPEAKER_02 17:46

Yeah, I've uh I'm surrounded by books here, as you know. One of my favourite is I think it's the man who said a uh famous fund manager in his book is called Character Counts. Uh, it is nice to think that intellect is everything in uh investment and intellect is everything in life, but actually uh I think when you get to a certain age, you know that that is not true. So character now counts, and I think the best way to look at that is to go back to say 66, 1966 to 1968. We know now, with the benefit of hindsight, that the global monetary system was gonna break down in 1971. There were people at the time who forecast that. They could see that that system was uh gonna break down. And a famous Belgian economist had forecasted it even in the early 1960s, so it wasn't as if it came as a complete surprise when it happened. But going into that, people still had the kind of 6040 portfolio, even though it was going to happen. Now, let's say that you'd had um a really bright guy in the office who walked in and laid out how it was all going to break down and said, Well, look, the asset we need to own is gold. Now that's a radical suggestion because remember, gold is pegged to the dollar, it's not going up and it's not going down. It doesn't have a yield. It's kind of like the worst thing you could have in a portfolio in 66 to 60, 68. No, no prospect of capital gain, no yield. Who the hell wants uh gold? Uh but but you said, well, you know, you're a very smart guy, so we're gonna take you up in full on this. We're backing you to the hilt on this, we're gonna have 10% in gold. Well, that was intellectually correct, but lacking bravery. Bravery would have been to say, yes, it is breaking down. The consequence is inflation, and bonds certainly don't defend us from inflation. The more difficult bit was working out that equities wouldn't defend you from inflation, and I admit that was more difficult. Many smart people went into that period thinking we'll have more equities, that'll defend us from inflation. So we even if you saw it coming, you were constrained or anchored on the asset allocation of your competitors. And of course, you're in business, so you don't want to radically get too far away from that. So that's what I mean about courage and bravery. At a period of structural change, it's not that you're gonna own risky assets, it's that you're gonna own them in risk, you're gonna own them in risk, you're gonna own risky quantities relative to everyone else. But I think the answer of all breakdowns in in the global monetary system of all structural change is to own certain assets in high quantity rather than to own what is necessarily risky assets. But to do that, particularly as a professional, takes extreme bravery, because to stand out from the crowd, which people always talk about, but actually very few people are prepared to do. So so ironically, it's actually easier to do it with your own money than it is for a professional to do it for you. So that's what I mean by courage, not necessarily intellect. And just one final thing on that. Today so much of the wealth of the nations is run by machines. And machines are effectively trend following instruments, momentum-oriented instruments. I think they're even less likely to spot a structural change. Or more worryingly, they're they're likely to spot it all on the same day. That's pretty worrying. So I do think there's an advantage now for the human being because whatever a machine has, I'm still reading using a diary and a pencil, Alan, so I'm not really the best person to talk about algorithms, but I can assure you of this the whatever they have is they don't have courage. And that is what's now necessary. And that is the advantage of the human being. And if these algorithms all on the same day pick up the new trends within the structural change, it all begin to move money, then this all begins to happen very, very quickly indeed.

SPEAKER_03 21:17

I think it that's a great way to kind of conclude. And it's very I agree with you, it's it's really refreshing that all these smart, so-called smart intelligent large language models, they're really only trading historical data. I've yet to see a forecast using future data. So I think uh, you know, as long as people have a respect for financial history and listen to people like Russell Napier, you know, are even embedded into their process, we can get an a an edge or some alpha. Just in terms of in terms of finishing up, Russell, I I just want to mention a couple of things you're involved in, right? Interesting to me was uh you set up a charity in 2002 which provides scholarships to people to attend university. You don't really hear much. Of that in finance. Can you speak a bit about that? And also, if you don't mind, talk about the library of mistakes, your courses.

SPEAKER_02 22:08

Yeah, so the uh the the scholarships are there to try and create more equality of opportunity, which is a great problem in all of our countries, that there isn't more of it. Something that I personally benefited from. Uh, you probably know from the accent where I come from, but my uh dad worked in a butcher shop in Belfast uh summer holidays. I used to work with him. But I went through a grammar school system at a fully funded university education in Belfast and Cambridge, all funded by the state, sheer luck. You know, very lucky to be in that situation, and now very lucky to have made some money and been able to pass that luck on to some other people. So that's where the that's why the scholarships are run. And scholarships as well, you may have picked up through the course of our discussion a certain reluctance I have to get involved with institutions, which is why I'm sitting in this room all by myself, Alan. So I like to back the individual, give them the money, let them get on with it, and see what they can can do with it. And that is anyway, that's the sort of rationale behind it. And you know, really lucky to back some of those in Belfast, but also in Scotland and England, and some of them go to people from other countries, but a lot of them could now go to uh people from um uh from from from the UK. That's the scholarship. In terms of the uh the course, you can learn more about the course just by going to librarymistakes.com, you'll see it there. Uh, we run it in lots of different versions. So it runs on campus at Harriet Watt, but I don't think anybody listening to this is going to sign up for an in-person degree at Harriet Watt to take the course. So there are kind of two other ways you can take it. One is we run an in-person session in London, two and a half days. We've been running it for 22 years now. So you might think that we'd made the market more efficient, but I'm afraid uh there's not a lot of evidence of that. So uh but during COVID, when we were a little bit less busy than usual, we created an online version. So there's also an online version of that. And the only thing that really alarms me about our course is there isn't much competition. You know, we 22 years we've been trying to sort of bang the table, saying it's called the practical history of financial markets. Or uh when it runs online, it's called advanced valuation in financial markets. You might have thought that lots of people, given what we've all lived through over that period, would set up courses, try to teach this. Now there's a few, but there's really not very many. So uh there aren't many places you can do it, and particularly without a focus on the practical. I mean, our students are primarily investment practitioners. Uh they're not undergraduates for that two and a half day diversion. So that's the course, that's why it exists. Uh and I shouldn't then get into our library mistakes, and perhaps the motto of our library mistakes, which I won't try and repeat in Latin because my Latin is appalling, but translated into English, it's changing the world one mistake at a time. The name of this course, the the academics pushed back against it and said, Nobody who's involved in business will buy a course with the word history in it. I think that may have changed over the last 20 years. I think there's a realization that we do need to learn something from history. So if you if you think there's something in there you need to learn, uh come and join us in a long time.

SPEAKER_03 24:58

It's just fantastic uh syllabus, and I've seen the modules. But I mean, and I'm going to finish now because I know we're out of time, but in relation to people not giving much credence to history, I think if you Google Neil Howe or Neil Ferguson and likes of Russell Napier, I mean they're they're the leading minds that's driving you know intellectual thought on financial markets, in my opinion. And they're all financial historians, so uh and demographists and financial historians. So absolutely. Russell, I just want to say a huge thank you uh uh for the for the for the interview. I know people will take an awful lot out of this. Uh I will make uh the links available to your books, which are great as well. I've read uh Anatomy of a Bear. We didn't get it, maybe we'll get it another time, but also the library mistakes as well. And I definitely will see you. Hopefully, a few more listeners with it.

SPEAKER_04 25:49

Thanks, um fascinating, if complex, insights there from Russell Napier. Uh, let's let's deal with them. So he talks about imbalances in the global monetary system. Could you explain that in layman's language, please?

SPEAKER_03 26:09

Imbalances in terms of demographics, number one. Okay, so when you have too basically too many old people in ratio to young people, that has impact impact implications for growth. Uh imbalances in relation to debt. In the 1970s, the ratio of debt uh to GDP was a fraction of what it is today. Okay, so there's a huge problem with sovereign debt.

SPEAKER_04 26:34

It's sort of gone from 30, 40 percent to 100 and something percent.

SPEAKER_03 26:38

But not just in the usual suspects. I mean, France has got a big problem, as we know. Uh US 37 trillion debt. That's an on-balance sheet. We we talked previously about the off-balance sheet liabilities. Um, you know, you're looking at the likes of China. Total debt to GDP is is enormous. And he and Russell talks about that as well.

SPEAKER_04 26:59

One of the things that viewers to this and listeners to this series will be looking at from an investing perspective is asset performance. What did you glean from him about relative asset performance?

SPEAKER_03 27:12

That's the important question here, right? That's the killer insight from this. Russell frames how we should allocate resources through a monetary, through a financial history lens. So, what he says, if you listen, we listen back, he talks about what does this current environment regime most re relate to? And it and it's post-World War II, Ivan, right? So post-World War II, European countries were awash with debt because they all they financed the wars, okay? Uh, and the the reason the US came out as the dominant country was because the US came out pretty good after World War II, wasn't invaded, right? You look at Europe, it was decimated, right? So that's the debt problem. Uh, we saw that huge growth because the debt situation was much lower. We had lots and lots of more younger people as well. It's a completely different scenario now, Ivan, right? All of those dynamics have turned on their head.

SPEAKER_04 28:03

A constant pointer that's coming up in the series to me is that the golden era of American success may be on the wane. And uh people who just almost slavishly follow in terms of investing the SP 500, which is a reflection of the US economy, may not get it as good going forward as they've got it to date. But what I picked up from Russell Napier was that all is not rosy with China either.

SPEAKER_03 28:31

Correct. Firstly, on the US, so the US has benefited enormously from being the reserve currency, okay, and being the so-called safe haven asset. Because uh you had Chinese, uh Japanese uh investors lending money to the US government, buying their bonds, and then uh, you know, lending lending to the US government, and then that money was flowing back into the US, okay. But in an environment where we have heightened geopolitics, we're going to see national uh capital nationalism. So we're cup where capital is going to be returning to the places like Japan, to Germany, to Europe. And that tailwind of capital that has bolstered US markets could be in reverse. So that is what he's talking about there in relation to maybe the likes of Europe, maybe Japan on a valuation basis look a lot more attractive.

SPEAKER_04 29:25

In summary, uh from uh this interview, what is the most important financial learning from an investor's perspective?

SPEAKER_03 29:34

The most important thing that I took away from this, and his most important uh thing is that you cannot look at the current macroeconomic regime in isolation or in a vacuum, right? You have to be conscious of financial history, you have to be conscious of the structural imbalances of debt, demographics, wealth inequality is another big one. That's there's an imbalance in inequality which is getting worse, the richer are getting rich, uh, and that leads to social problems, that leads to countries competing with each other and classes competing with each other, right? Because the wealthy are just getting astronomically wealthier. So if you'll take that approach, gold becomes very attractive. Uh, other equities outside of the US look very attractive, and uh it's having that uh financial history lens in your asset allocation.

SPEAKER_04 30:26

Thank you, Alan, for extrapolating on that interview uh with Professor Russell Napier from Edinburgh, a lifetime's experience as a financial historian and in investing. I hope you enjoyed today's episode from me and from Alan and Professor Russell Napier. Uh, I do hope that you can check out the Truth Series, which is an e learning module of all of the distillation and learnings from this series of the most important thing. So thank you for joining us, and until the next time from Alan and me, goodbye.