In the era of populism, how to get rich?

Accumulate gold for stability, hold Bitcoin for appreciation.

Written by: Tulip King, Messari Analyst

Compiled by: Luffy, Foresight News

Alpha First：

• Maximize your human capital: find a high-paying job and work hard. Nowadays, your career is the best way to hedge against inflation.
• Shift assets from traditional finance to unrelated alternative assets. The stock market may remain stable or decline for decades.
• Hoard gold for stability, hold Bitcoin for appreciation. In an era of deglobalization and financial repression, both will outperform the market.

The legendary bull market has ended

We have just experienced the longest bull market in history, rising from the ruins of World War II all the way to Donald Trump's victory in 2024. This epic bull market has made several generations of passive investors accustomed to believing that "nothing will happen" and "the market will only go up." Unfortunately, the good times are over, and many are about to suffer severe losses. The structural tailwinds that have driven this decades-long prosperity are not only stagnating but are also sharply reversing. The populist revolution has arrived, and it will come at the expense of capital to make labor great again.

Populists seize control

The globalist neoconservative political agenda led by Presidents Clinton → Bush → Obama → Biden has officially declared its end. Trump has strangled it, and its remnants will not be revived.

By the way, the shift towards populism is not happening only in the United States

A brand new populist political agenda has emerged in the United States. Now, Trump has completely taken control of the Republican Party in a way that he did not in 2016. Meanwhile, the Democratic Party is experiencing the kind of internal strife that the Republican Party has just concluded, and you can expect that the populist faction will ultimately defeat the globalist faction.

Populist politics and globalist politics are fundamentally different. You need to update your view on the goals of the two parties. There will still be differences between the Republican and Democratic parties, but they will increasingly converge on the core populist agenda:

• The admiration for blue-collar jobs. Both sides are now competing over who loves factory workers more. The era of "learning programming" is over.
• Reindustrialization. Everyone hopes that factories, supply chains, and key industries will return to the United States.
• Tariffs. The next president, whether from the Republican or Democratic party, is expected to continue a foreign policy centered around tariffs.
• Free trade has become poison politically.
• Nationalism. The distinction between "citizens and non-citizens" is re-emerging with greater momentum. Both parties will continue to restrict immigration and deport illegal immigrants. The difference will only be in the scope and speed, not in direction.

The elite consensus that promoted policies from the Reagan to the Obama era promised prosperity through free trade, open capital flows, and globalization under U.S. leadership. For financiers and tech moguls, this brought astonishing results. However, for large areas of the United States, especially the industrial core regions, it resulted in community hollowing, wage stagnation, and the proliferation of fentanyl. Populism is not an accidental phenomenon; it is a foreseeable one.

The Value of Labor

Two powerful forces are converging, driving wages up significantly:

Reindustrialization has caused a surge in labor demand. Even with automation, the return of factories and supply chains to domestic soil will create huge demand for workers. Every new semiconductor plant or electric vehicle battery factory requires engineers, technicians, construction workers, and logistics personnel. The CHIPS Act and the Inflation Reduction Act alone have injected hundreds of billions of dollars in opportunities into domestic manufacturing.

Immigration restrictions have simultaneously reduced the labor supply. Whether through border control, deportation, or reduced visa approvals, the influx of new workers has been limited. Republicans want to deport all illegal immigrants; Democrats are at least conceding by agreeing to deport illegal immigrants with criminal records. In any case, the trend is clear: fewer and fewer workers are entering the job system.

Review the supply and demand curves in the basics of economics

This is a basic principle of economics: when demand for labor increases and supply contracts, wages are bound to rise. This is not a temporary phenomenon, but a structural change that may last for decades. For the first time in many years, you will see wage increases surpassing the inflation rate and financial asset returns.

Even in an inflationary environment, this is the case. I expect that over the next decade, due to de-globalization, tariffs, and labor shortages, the inflation rate will be between 3% - 9%. But if your salary grows at a rate 5% faster than the inflation rate each year, rising prices won't keep you up at night. While asset owners watch their portfolios stagnate, your real wealth is increasing.

This means: It is now time to fully commit and focus on your career. Work hard, learn valuable skills, especially those related to domestic production and physical infrastructure. Your human capital (your ability to earn money) is appreciating. This is a generational opportunity to accumulate wealth through income rather than asset appreciation.

The Wall Street trend is gone

During the implementation of the globalist political agenda in the United States, Wall Street was the most important interest group. Their interests were regarded as equivalent to national interests. Free capital flow, deregulation, and bailouts when necessary were all enjoyed by Wall Street. It seems that every Secretary of the Treasury came directly from Goldman Sachs.

Today, as the process of de-globalization advances, Wall Street is rapidly losing favor in political and public spheres. The financial elites have not yet realized this, but they no longer have the allies and power they had 5 to 10 years ago. They are like dinosaurs looking up at the strange light in the sky, not understanding that their era is about to end.

This idea (that the Fed's shift to interest rate cuts is inevitable) is wrong, the Fed will not shift

Due to Wall Street's failure to recognize its declining status, they still expect the Federal Reserve to come to their rescue when they encounter trouble. They assume that the famous "Fed put" (the central bank's implied commitment to cut interest rates to save the market) is still in effect. But that is not the case.

Since 2021, every politician has learned a crucial lesson: if you are an elected leader and there is inflation at home, you will lose your re-election campaign. It’s that simple. This has completely reversed the political motivations surrounding monetary policy. Clever politicians are now pressuring the Federal Reserve to maintain high interest rates, as lowering rates could lead to renewed inflation, and inflation could cost them their jobs.

Even if the market crashes, the current political consideration is to prioritize combating inflation rather than saving asset prices. Wall Street can cry all they want, but in a populist environment, their tears won't translate into votes. In fact, many voters will cheer for Wall Street's setbacks. This reality has yet to be reflected in market prices.

The Decline of Financial Assets

It's time to stop pretending that the stock market and the real economy are the same thing. While financial assets and the stock market are declining, your salary and quality of life can completely improve. For those under 30, this is actually an ideal situation; you finally have the opportunity to buy housing and stocks at reasonable prices with your steadily rising salary.

You may never see Apple's stock price hit a historic high again.

Taking Apple Inc. as an example. In the fourth quarter of 2024, Apple Inc.'s price-to-earnings ratio is approximately 40, and its gross margin is about 46%. In other words, if Apple Inc. has a revenue per share of about $100, a profit per share of around $46, the stock price would be approximately $1960.

Now, let's assume they have to bring production and labor back to the United States. Due to lower domestic production efficiency, their profit margins will be compressed. The gross margin drops to 20%, and in a high-interest-rate environment, the market will no longer accept such an aggressive price-to-earnings ratio, so the P/E ratio drops to 25 (still above the historical average). Assuming that over the next decade, as Apple Inc. remains an outstanding company, they manage to double their revenue. By 2035, their revenue per share will be about $200, but their earnings per share will only be $40, with a stock price of $1000.

This is how financial assets can fall into a long-term bear market (over 10 years), while companies are still making profits and giving employees raises. Even with business activity growing and wages increasing, stock prices can actually drop by 50%.

This is not just talk, but a real situation that occurred in Japan after 1989. That year, the Nikkei index reached nearly 40,000 points and then crashed. Today, 36 years later, it still hasn’t fully recovered. If you had bought Japanese stocks at the peak and held them for a generation, you would still be at a loss in real terms. This happens when a financialized economy built on loose monetary policy and globalization has to adapt to a new reality.

Financial assets in the United States can easily fall into a "lost decade" (or even two decades). Passive investment strategies that worked for the baby boomer generation may yield dismal returns for the next generation. For index fund believers, this will be a nightmare.

So, who is the loser?

This is a useful reference regarding how much the baby boomer generation profits from globalist political agendas

At this point, you might be wondering who will become the unlucky ones in the new political and economic landscape, mainly there are two types of groups:

• High-profit-margin large companies. Those companies that have fully enjoyed the dividends of globalization (outsourcing production, optimizing global supply chains, paying extremely low wages) are facing painful adjustments. The return of production means rising costs, labor shortages mean higher wages, and tariffs mean higher input costs. All of this has compressed their previously extremely high profit margins. They will still be profitable, but profits will decrease, and investors will give lower valuations for these reduced profits.
• The baby boomers, who are too old to benefit from wage growth. The real victims are retirees and those about to retire, who have rich assets but meager incomes. After decades of policies catering to their interests, the advantages of the baby boomers have come to an end. They have exited the labor market, so wage increases do not help them. Their retirement accounts are heavily invested in stocks and bonds, and these assets may stagnate or decline for years. Meanwhile, inflation erodes their fixed incomes. This is a triple whammy: asset depreciation, rising costs, and the inability to earn more income.

This is not just an economic issue; it is a matter of intergenerational fairness. The baby boomer generation enjoyed the fruits of post-World War II prosperity, buying properties at low prices and watching their stocks rise by 10% every year for decades, only to burn bridges afterwards. Now, when they try to cash in on these gains, they find that buyers are fewer. The massive intergenerational wealth transfer that many expected may not be as plentiful as imagined.

So, who is the winner?

In this new paradigm, the winner is obvious:

• Labor, especially blue-collar workers. Electricians, plumbers, welders, mechanics, construction workers, anyone who manufactures or repairs physical items can expect to gain huge benefits. These jobs cannot be outsourced, are crucial for reindustrialization, and face decreasing competition for labor. The era of wage stagnation for these workers is over. They will earn high salaries and regain social status.
• Young people entering the workforce. If you are just twenty years old, this transition will benefit you. Throughout your career, you will earn higher wages. After asset prices decline, you will ultimately purchase assets (housing, stocks) at more reasonable valuations. You have decades to profit from a pro-labor environment. This is much better than the situation in 2010 when entering the workforce, when wages stagnated but assets were already very expensive.
• Individuals holding unrelated assets such as Bitcoin and gold. As financial repression intensifies, traditional assets are struggling, and alternative assets outside the system are becoming increasingly attractive. For thousands of years, gold has been the classic inflation hedge and safe haven. Central banks around the world have been stockpiling gold at a record pace. Bitcoin, as digital gold, offers a similar function and has greater upside potential. Both can thrive in environments of financial instability, currency devaluation, and geopolitical tension.

Central banks around the world are buying large amounts of gold

When it comes to Bitcoin, one thing must be made clear: it was created for moments like these, when people's trust in traditional financial institutions is shaken and governments are taking increasingly reckless measures to manage debt. When everything else is depreciating, the fixed supply of Bitcoin is extremely attractive. I expect Bitcoin to eventually reach 1 million dollars, but you need to be patient. This is not a get-rich-quick scheme.

New Economic Order

We are witnessing a historic turning point: the end of the neoliberal globalist order and the rise of populist nationalism. This is not a minor policy adjustment; it is a fundamental reshuffling of economic winners and losers.

For decades, capital has dominated labor, financial assets have outpaced wages, and Wall Street has called the shots in Washington. That era has ended, and we are entering a period where labor is regaining influence, wage growth is surpassing asset returns, and economic policies prioritize workers over investors.

This transition will not be smooth sailing; the market will experience sharp declines, and inflation will persist longer than most people expect. As countries prioritize their own interests over global cooperation, geopolitical tensions will intensify.

But within this turmoil lies opportunity. Focus on learning high-paying skills in the new economy, shifting from overvalued financial assets to unrelated alternative assets. Prepare for a world where paycheck, rather than investment portfolios, serves as the primary tool for wealth accumulation.

Populist revolutions not only change politics, but they also rewrite economic rules. Those who recognized this shift early and made the necessary arrangements will reap abundant rewards. Those who cling to old strategies will struggle to move forward. This is not the end of prosperity; it is a redistribution of prosperity.