The page we never signed

Joel Litman’s Altimetry presentation, which we reviewed in full here, opens with a historical claim. In 1776, America got two founding documents. One was the Declaration of Independence. The other was Adam Smith’s The Wealth of Nations, published four months before the Declaration.

The first document was about political freedom. The second was about economic freedom. America signed the first one. We never signed the second.

The “Second Declaration” thesis is that the economic independence the Founding Fathers intended was never completed, and that the consequences of that unfinished business are catching up with us now, in the form of a $10 trillion shift that is already moving through Washington.

What economic independence means

Litman defines the concept through the Founding Fathers’ own words. Thomas Jefferson, 17 years after the Declaration of Independence, was still writing to Congress about Britain’s influence over American trade and manufacturing. James Madison drafted the Bill of Rights partly to protect citizens’ right to build businesses and benefit from their own work.

The concern was mercantilism, a system designed to make one country rich by making another dependent. Britain controlled what the colonies could refine, what they could build, and what they could sell. The colonies produced raw materials, shipped them to England, and bought back the finished goods at a markup. The colonists paid twice.

The argument is that America is doing the same thing to itself now. We dig rare earths in California, ship them to China, and buy back the finished product. We cut down massive logs in our forests, ship them to Asia for manufacturing, and buy them back at a markup. We grow cotton in Texas and Georgia, export it, and buy back the shirts at the mall.

The $10 trillion shift

The scale of the problem, as Litman presents it, is staggering. Since 2001, when China joined the WTO, more than $6 trillion in American wealth has flowed to China. Morgan Stanley puts the real figure above $10 trillion when you add the offshore factories, the stagnant wages, the copied intellectual property, and the lost tax revenue.

The Information Technology and Innovation Foundation found that if American manufacturing had simply grown at the same rate as the rest of the economy from 2000 to 2010, we would have 13.8 million more jobs. MIT economists found that if the “China shock” had been just 50% smaller, the economic map of the country would look completely different. The hollowing out of towns across Michigan, Wisconsin, and Pennsylvania might not have happened.

The $10 trillion shift Litman describes is the reversal of this flow. Money, manufacturing, and supply chains moving back to the United States, driven by government policy and private investment. It is already underway.

The chokepoint companies

The investment thesis is about chokepoints, companies that sit at critical nodes in the supply chains being rebuilt. Litman’s methodology, which we explore in our forensic accounting analysis, identifies companies where the official accounting numbers hide the real economic value, particularly companies that do business with the government.

The examples Litman provides from his own track record illustrate the pattern. Generac, a backup generator company, looked boring on paper. But when Litman ran it through his system, the real numbers showed it was roughly 3 times more profitable than Wall Street saw. The stock went from around $90 to nearly $500, a 447% gain.

Oracle, when Litman analyzed it in March 2021, received the highest grade his system can give, top marks on quality, value, and overall. The real numbers showed earnings of 38 cents on every dollar of assets, versus the 31 cents Wall Street reported. The stock has climbed as high as 418% since.

IQVIA, analyzed in April 2020 at the market bottom, showed a reported return on assets of 2%. The real number was 75%. The stock produced a 218% gain in just over 12 months.

The government contract edge

The specific edge Litman claims is that government-adjacent companies are the most likely to be undervalued by standard accounting. The reason is structural. These companies grow by acquisition, pour money into research and development, and sign contracts that run 10, 15, or 20 years. Standard accounting rules, written a century ago for steel mills and railroads, handle all three of those activities badly.

The result is a “distortion,” as Litman calls it, a gap between the reported numbers and the real numbers. And that gap is widest in companies that do business with the government, which is exactly the sector that the $10 trillion shift is directed toward.

The November 27 catalyst

The presentation names a specific date: November 27. This is when, Litman says, the market will be “forced to wake up” to the $10 trillion shift.

As we note in our review, a specific date is the strongest urgency device a promo can deploy because it is falsifiable. But the presentation never says exactly what happens on November 27. It could be a budget deadline, a Treasury announcement, a policy event, or something else entirely. The vagueness is both the weakness and the strength of the date-driven framing.

What is clear is that the underlying shift, the bipartisan commitment to bringing manufacturing home, is already underway. The CHIPS Act, the Pentagon’s investments in MP Materials and Intel, the tariffs on Chinese goods, these are real policies with real money behind them, regardless of what happens on any specific date.

The investment opportunity

The economic independence thesis is one of the more grounded investment ideas in the financial newsletter space. The numbers are real. The bipartisan commitment is real. And the companies that stand to benefit from the rebuilding of American manufacturing are identifiable and public.

The main risk is timing. Rebuilding a supply chain takes years, and the stocks may not move as quickly as the presentation implies. But the structural direction is clear, and the government money is committed. For investors looking for a multi-year thesis with real policy backing, the economic independence story has genuine substance.

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