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last year the federal reserve released their beliefs that markets would face stiff head winds as baby boomers retire .
to be honest they havent been the ones to call things right for a long time.
its hard enough predicting what the markets will do tomorrow so predicting what baby boomers might do is streching things a bit i think. there are so many variables that i think trying to predict things on sheer number of boomers isnt going to be very accurate.
what are all the things that can make that theory not hold true?
the big wild card is many baby boomers planned to finance their retirement with their home equity.
well that plan went south for many pre-retirees.
the only way those folks can retire is to invest in the markets or else they most likely wont get the returns they need.they may not be able to retire and have to keep saving and investing .
no one can predict what china and india will dump into markets as their populations grow wealthier and wealthier.
pension funds make up a huge part of the markets and they will be under pressure to generate returns to pay out to baby boomers.
the biggest point i think thats missed in this theory is more than two-thirds of boomer savings is held by the wealthiest 10%, who will likely be able to support themselves from dividends or without selling much in assets. about a third of boomers have no financial assets to sell.
interesting enough right now a statistic that blew my mind was in households headed by someone over 70 that hold market investments they are still a staggering 70% equities. thats higher than i would have ever guessed at for that age. that means they either have other income and dont need to liquidate stocks or they are spending down bonds, cash and other sources without having to liquidate stocks even by age 70 so the percentage of equities is creeping up as they spend other assets.
with all the billions boomers are putting into annuities many boomers may not have to sell much to generate inccomes and the annuity companies will have to keep investing to pay the boomers..
baby boomers are also retiring later and later and some not at all as they cant afford to cash out and stop working.
if i remember correctly generation y (those born 1980-1990) are a very very large generation and they have big potential to fund markets.
you could argue less demand for buying stocks would = less new issues going public because of less demand and poor pricing.. just like homes,the construction of supply dwindles until things get into balance again.
with mergers, companies failing and aquisitions the supply of stocks gets diminished each year and requires new issues to keep supply level. thats why markets usually take off when aquisitions are announced. with one less major company around to invest in that money has to go into the remaining stocks instead.
i think its far to speculative to reach any conclusion about things so far off in the future with so many variables.
I hear all you are saying but the underlying reality generating much of the discussion is the multi year trend of more money coming out than going into equity funds and that is part of current investment pattern. Will and when it reverses is surely up a topic of debate.
Regardless of the mix while working they are putting new money to work. Are they still doing that once they retire and if so what is the mix then? Also consider what you said. As people get older they rebalance and come OUT of equities into more stable assets. So as the boomers age they will be doing as you say coming out of assets and since we are a bubble it is a known progression of increased monies coming out of equities.
Yes, but it is not all at once. That's the point. Doesn't matter to me what others do. My money is professionally managed and I have continued to grow even through the market turmoil of the past few years.
Yes, but it is not all at once. That's the point. Doesn't matter to me what others do. My money is professionally managed and I have continued to grow even through the market turmoil of the past few years.
Of course its not going to be at one point of time. The OP made a general statement that I read was a sorta not accurate representation of a topic that is of much discussion. Thats why I linked some meat on the topic. It is something that if it does play out will play out over a decade or more.
Yes, but it is not all at once. That's the point. Doesn't matter to me what others do. My money is professionally managed and I have continued to grow even through the market turmoil of the past few years.
professional money manager... is that an oxymoron term like jumbo shrimp, pretty ugly and happily married?
Yes, but it is not all at once. That's the point. Doesn't matter to me what others do. My money is professionally managed and I have continued to grow even through the market turmoil of the past few years.
By turmoil do you mean one of the greatest bull runs ever? It didn't take much other than doing nothing to see a historic runup from the 2009 lows. Mathjak would have told you in March 2009 to have stayed put and he would have done it for free.
thanks... any strategy with the words buy in it would have been a winner since 2009
Or that said don't sell
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