Brent Johnson: The Investing Rules Have Changed — Power Now Matters More Than Economics

Summary

• Paradigm Shift to Power: The core investment framework has shifted; power, national security, and secure supply chains now matter more than pure economic efficiency and spreadsheet valuation. The "law of one price" is breaking down.
• US-China Competition: The global struggle is a central driver. The goal for the US is to contain China's rise without causing its collapse, making energy control (e.g., via the Strait of Hormuz) a key lever in this contest.
• Iran Conflict Portfolio Implications: The situation creates multiple potential outcomes impacting portfolios: disrupted energy/fertilizer flows raising future food prices, potential US energy export bans benefiting US consumers but hurting Europe, or a crisis forcing Fed intervention.
• Market Sentiment Paradox: Despite only a ~10% market drawdown, investor angst is extremely high, suggesting deep underlying uncertainty. Markets are stuck in a range, with a breakout unlikely before the US election.
• Investment Mandate & Conviction: Emphasizes investing for "what will happen" vs. "what you want to happen," separating personal views from fiduciary duty. Current priority is capital preservation into the election.
• Dollar Milkshake Theory Update: The thesis (strong dollar attracting global capital into US assets) has broadly played out since 2018, though the predicted sovereign debt crisis has not yet fully materialized. Believes the process can continue longer than many expect.
• Stablecoins as Geopolitical Tool: Initially dismissed, now sees dollar-denominated stablecoins as a powerful, voluntary mechanism for global dollarization, potentially co-opted by the US government to bypass traditional banking channels and enhance financial power.
• Structural Shift: Proposes that the current "fourth turning" may not end with the fall of the US, but rather a transition from the American Republic to a more authoritarian, transactional, and enduring "American Empire," leveraging its superior resource base.