The article below is an excerpt from our Q2 2025 commentary.
The financial world, like the social world, has its fashions. At cocktail parties, there are seasons of martinis and seasons of Manhattans; in markets, there are seasons of growth stocks and seasons of commodities. We have been living in the season of the “carry trade.”
Now, “carry trade” sounds obscure enough to frighten off the uninitiated, but in practice it is something far more human: the irresistible tendency to borrow cheap, bet on calm, and to lend long. As defined in The Rise of Carry—authored by Tim Lee, Jamie Lee, and Kevin Coldiron---it is essentially one vast, levered short-volatility position. When volatility falls, money flows toward assets that benefit from its decline. Those gains beget fresh flows, which in turn beget more gains. The cycle, like a good party, has no natural closing hour—except when someone turns on the bright lights at evening’s end.
In this climate, the anomalies pile up: big companies, rather than small ones, come out ahead. Growth trounces value. Technology blooms, while resources and commodities wither. The pattern is not new. Extend the tape back a century and a half, and you will find the same sequence repeating itself with almost cruel precision. No wonder resource investors today, through no fault of their own, have spent the last decade feeling like wallflowers.
The difficulty is that once these cycles begin, they only end with a shock—something strong enough to break the self-reinforcing loop. And here, perhaps, we arrive at our first “teaser.” In our next letter, we will set forth the argument that the Trump administration’s trade and monetary policies—call them, if you like, the much-rumored “Mar-a-Lago accords”—will supply precisely that shock. The carry regime, for all its staying power, is not eternal. The rotation back into the real, the tangible, the resource-heavy could come with startling abruptness.
For now, we ask only this: imagine it. Imagine a world no longer entranced by technology and finance, but suddenly reacquainted with the dirty glamour of oil, copper, and coal.
To bring the thought to life, consider the Forbes 400-the compendium of the richest people in America. When the magazine first published the list in 1982—at the tail end of the last cycle’s “anti-carry” regime—the balance of power and distribution of wealth looked very different. Just 48 fortunes stemmed from technology or finance, the sectors most favored by today’s carry environment. Energy, by contrast, accounted for 92 fortunes, fully a quarter of the list. Even more striking, energy fortunes were behind 6 of the top 10 people on the list.
Fast forward to the present, and the wheel of fortune has swung. At the apex of a carry bubble, only 24 fortunes remain tied to energy—a meager six percent. Technology now boasts 81 places, finance 97, and between them they command two-thirds of the group’s total wealth.
Such is the rhythm of markets: what is unfashionable becomes indispensable, what is indispensable becomes passé. We suggest—again, only a teaser—that by the time the next commodity bull market exhausts itself in the late 2030s, at least a quarter of the Forbes 400 will once again be energy barons. Of today’s 178 technology and finance grandees, perhaps fifty will remain.
The arc is long, but the turn may be sudden. The wheels of fate grind faster than most expect.
And so, we invite you to our next quarterly letter, where we will attempt the perilous task of prediction: the full outline of a world no longer ruled by carry, but by its opposite—the “anti-carry” regime. If you would like to be notified when we release the letter, sign up here.
Curious to learn more now? Read more in our Q2 2025 research newsletter, available for download below.
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