The Independent Market Observer

The Fourth Turning: A Book Review

Posted by Brad McMillan, CFA®, CFP®

Find me on:

This entry was posted on Jul 30, 2012 2:34:19 PM

and tagged Debt Crisis, Europe, On My Bookshelf

Leave a comment

I do not normally read, much less review, books that self-characterize as prophecy. Most such books, especially those written more than 10 years ago, are kindly described as being of historical interest only. To find one that actually got quite a number of things right—both in specific types of events and time frame—is therefore pretty interesting.

It gets even more interesting when the book’s next set of predictions is not only scary, but also in line with its earlier forecasts that proved largely correct.

In The Fourth Turning: An American Prophecy—What the Cycles of History Tell Us About America’s Next Rendezvous with Destiny by William Strauss and Neil Howe, the underlying framework is not prophecy, of course, but applied historical analysis. The core hypothesis is that generations proceed and react in definable ways, resulting in periodic cycles that can be predicted. The authors walk through Anglo-American history over the past several hundred years to define four phases of history. According to their argument, we are now in the crisis phase, which can be expected to get worse and last until around 2025 before resolving in a dramatically changed American society. The last two crises they define in American history were World War II and the Civil War.

So far, so depressing. What makes this interesting is that the book, written in 1997, called for the crisis to start around 2005, give or take a couple of years, and specifically mentioned a global financial crisis as a probable cause. Other predictions have been similarly indicative.

The argument itself smacks of narrative causality, a trope that I find funny in fiction but ridiculous in real life. The scope of the narrative and examples, however, as well as the predictive success thus far, lends a level of plausibility that suggests it should be taken seriously.

The outcome of this analysis is consistent with others that used different analytical methods. Carmen Reinhart and Kenneth Rogoff, for example, in This Time is Different: Eight Centuries of Financial Folly, give time periods for financial crises and recoveries that seem to be consistent with the assertions in The Fourth Turning. I need to look at this a bit deeper, but at first glance, although they arrived at their predictions from different directions, their results seem to be consistent.

The analytical methodology also seems to lend itself to other societies. Using the authors’ generational analysis on China, for example, would suggest some sort of reaction from 1949 to around 1989—which of course happened. Furthermore, I have dealt with Europe’s problems enough in this blog to suggest that European society may well be in a crisis phase as well—which is also consistent with the book.

Finally, over the months before I read this, I had heard several high political officials on both sides of the fence describe the current situation in Washington, DC as “the worst since the Civil War,” which certainly makes the comparison to that crisis resonate.

At a minimum, this book and its analysis provide both a different way of looking at the current situation and a longer historical framework in which to view our problems. Although I think the book could have been shorter, the details provide the context needed to really understand the full depth of the argument.

Overall, this book is worth a read for a different way to look at the world. Much of it can be skimmed rather than read, but the end result will be a different prism and, hopefully, some additional insight.

Subscribe via Email

Crash-Test Investing

Hot Topics

New Call-to-action



see all



The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.


Please review our Terms of Use

Commonwealth Financial Network®