Saw a podcast with Danielle DiMartino Booth that said when they start dropping rates, seniors will be pissed to lose their income stream and will start selling stocks to make up the difference. Sounds very plausible. I think over 60% of the money in the markets is quoted as being under control of the baby boomers. They will absolutely be spending over the next decade before they all die. I think we already see it in housing. They all need to cash out, either cause they died or are wanting to move, but not enough young people have money to buy their houses at these inflated prices. And the forced selling hasn't even really begun. If I was a senior and I had all these market gains, I know I have no time to go through another 2007 style 50% collapse, even if it does come back up. So many, when it hits -5% or -10%, will sell to lock in the gains. There won't be enough young dip buyers in my opinion. On the flip side, since money is going to be losing value even faster, holding stocks is better than holding USD, especially if the short term rates come down. So if stocks are the new high yield interest rate savings account, perhaps that could balance things out. But we can't overlook the boomers who will want their money in the coming decade.
Although it is anecdotal, so take it with a grain of salt, I know a few boomers up north who've sold to younger buyers that have then taken their houses and sliced and diced them up to multi-family residences so they could afford them. And one thing else to keep in mind as far as who has the money to buy higher priced homes, supply is way behind demand. So will some buy only to lose 'em years down the road? Of course. But someone else will be there to take their place.
The only time I can remember genuine fear among some of my investor friends (who to their credit (or the FEDs) have done very well) was after the covid plunge in early 2020. One of them said flat out he was hurting badly and expected that it could take years to recover... We all know how that went. From down -32,16 % in March to a year end close of 16,26 % at the very high end of the range. As for the rest of the year, from a technical perspective, I asked ChatGPT to help me using a daily data set of SPX: I've been using ChatGPT a bit this weekend (used Grok for a bit earlier, but ChatGPT seems much better now that I've used it a bit), but it's the first time I'm using it for these type of questions. Assuming a 20 % gain this year on a closing basis, we should hit 7500 SPX somewhere between year end. So, that number shouldn't surprise anyone if it materializes.
Not for foreigners (stocks and USD going up last few years -> double pleasure; both going down -> double pain)
It's scary good. Compared to Grok, ChatGPT will create Office documents from scratch or improve current documents with formulas and everything you need. If I had this years ago, I would have saved tons of time and money.