Investing in a Changing World Order: Part 1

Written By Brian Schreiner

Weekly Investment Update | By Brian Schreiner

A number of analysts we follow have presented a compelling case that we are in the early stages of a “new world order,” that will include major societal, economic and geopolitical changes that will have major impacts on our everyday lives and our investments.

Over the next few weeks, and in our upcoming Quarterly Outlook (download free here) we will explain the forces at play and how we are adjusting our clients’ portfolios to prepare for new risks and to take advantage of emerging opportunities.

The Four Societal Turnings

In 1997, William Strauss and Neil Howe published a book titled, The Fourth Turning: An American Prophecy, which proposed that history unfolds in four primary and recurring cycles that together span roughly 80 to 100 years.  Each cycle or “turning” tends to last about 20 or so and are characterized by a distinct societal shift.  The turnings are influenced by generations as they move through different stages of life.

  • The First Turning is a “high” period of strong institutions and social cohesion.

  • The Second Turning is an “awakening;” a time of spiritual and social rebellion, where people challenge existing institutions.

  • The Third Turning is an “unraveling;” an era of individualism and weakening institutions.

  • The Fourth Turning is a “crisis” period of major upheaval, often involving war or revolution, in which society is transformed.

William Strauss passed away in 2007, but Neil Howe continues to write and speak about the current cycle, which he believes is part of a fourth turning. He describes a period of significant societal crisis and transformation including:

  • Shifting power dynamics where some countries may become more influential, while others lose influence.

  • New alliances and partnerships where countries form new relationships or break existing ones.

  • Economic changes where global trade, financial systems, and the distribution of wealth are being restructured.

  • Technological advancements that are reshaping industries and societies and creating new global challenges and opportunities.

  • Social and cultural changes including increased global migration, an increase in the speed of information sharing, and changing values that are leading to major cultural shifts.

The Five Big Forces

Ray Dalio, one of the most successful investors of our time and the founder of Bridgewater Associates, has studied and written extensively about the changing world order, particularly in his book, Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail. I haven’t heard Ray speak or write about a fourth turning per se, but his analysis also focuses on long-term historical cycles and the major forces that drive them. Dalio says that there are five big forces driving the changing world order:

Debt and Money Cycles. Dalio emphasizes the importance of understanding long-term debt cycles and how they influence economic and political stability, highlighting the dangers of currency manipulation, excessive debt accumulation and the potential for debt crises.

Internal Conflict. He identifies internal conflict, particularly the rise of populism, due to widening wealth and values gaps, as a significant factor. 

External Conflict. Dalio has studied the cycles of rising and declining world powers, focusing on the competition between nations for economic and geopolitical dominance and sees the current competition between the United States and China as especially impactful.

Acts of Nature. He recognizes the impact of natural disasters, such as droughts, floods, and pandemics, on societies and economies and believes that the changing climate will have significant impacts on current world order.

Technology. Dalio understands that technology is a major driving force that the development of new technologies and the death of old technologies will play major roles in deciding winners and losers across the global economy.

Dalio's work centers on the concept of a "Big Cycle" that drives the rise and fall of empires. This cycle includes economic, financial, and political phases. By studying historical patterns, we can gain insights into the current and future state of the world order.

The role of currencies and commodities, for example, and how their supply/demand dynamics shift over time will drive changes in global power structures, society and asset markets.

Investing Time to Understand

The work of Dalio, Strauss and Howe provide a useful framework for understanding the complex interplay of economic, political, and social forces that are shaping the world order.

Many investors will ignore the changing world order either out of ignorance or because it’s just too overwhelming to consider. Trying to understand the forces at play and developing an investment plan for how to manage your investments in a world that will be fundamentally different than it has been for decades takes a great deal of time and effort.

In the coming weeks I’ll dive deeper into these topics to help you understand our thoughts on the changing world order and how we seek to reduce risk while seeking new opportunities. α

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Alpha Rock offers a compelling alternative to traditional buy-and-hold investing by offering active, risk-managed portfolio management services focused on alternative investments and risk management.

To learn more about how we are investing for clients and for our current views on the global investment landscape, download our 2025 Investment Outlook.


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Brian Schreiner
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Investing in a Changing World Order: Part 2
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