I have been saying this for the last few years, that there is no need to jump in and buy stocks now. You will be able to buy the SPX at these same exact levels in the next 10-20 years. I have been repeating this over and over that this is NOT a buy and hold market. Anyone who thinks the markets are going to take off without them shouldnt even worry. Even if the SPX were to climb back to 1400 or 1500 it wouldn't be long before you can buy the SPX back at 1000. This study is very impressive and I believe every word or if. Stock prices arent going anywhere for a LONG, LONG, LONG, LONNNNNNNNNNNNNNNNNNNNNNNG TIME!!!!!!!!!!!!!!!!! Boomer Retirement Could Slow US Recovery: Fed Study Reuters | August 22, 2011 | 01:39 PM EDT The aging of the U.S. baby boom generation may slow an already weak recovery as boomers sell stocks to pay for retirement, according to research released Monday from the San Francisco Federal Reserve Bank. Many baby boomers have already sold some assets in preparation for retirement, research adviser Zheng Liu and Mark Spiegel, vice president of economic research, said in the latest San Francisco Fed Economic Letter. "Still, it is disconcerting that the retirement of the baby boom generation, which has long been expected to place downward pressure on U.S. equity values, is beginning in earnest just as the stock market is recovering from the recent financial crisis, potentially slowing down the pace of that recovery," the two wrote. Demand for U.S. stocks from overseas, especially China and other fast-growing countries, could alleviate the pressure from the expected baby boomer equity sell-off. But the tight historic correlation between demographic trends and the stock market "portends poorly for equity values," the researchers said. Real stock prices will likely decline until 2021, to about 13 percent below the 2010 levels and will not return to their 2010 levels until 2027, according to the researchers' model, based on historical patterns. From there, they said, stocks should rise to about 20 percent higher than 2010 levels by 2030.
Nice to trade though - buy em at 1000, sell at 1500, short at 1500, cover at 1000, repeat for next 10-20 yrs .
1. Lay off the coffee. Your post reeks of a hyper-active, A.D.D., public school child. 2. If markets will end up in the same place as today, shouldn't we buy and just collect dividends?
Actually, that last part re the demographics makes sense. Also makes sense as a contrarian play as far as this: the largest cohorts will reach retirement age in 2020 and beyond, so probably around that time there'll be a lot of doomsday scenarios around (They have to sell! Oh my!). Buying around that timeframe as a long-term investment, for those still young enough for that to matter who are reading this now, will likely prove to be nicely profitable.
The demographics argument has always made the most sense to me, as it represents a constant form of buying pressure during peak earnings years. In many ways, I'm always amazed that it was so overlooked... The second part of your hypothesis regarding great deals for the upcoming generations is a bit more debateable. I get the feeling that the prolonged recession/depression (which it will most certainly be 9 years from now) will have profound affects on birth rates. Without a future generation of buying power, pretty difficult to continue asset inflation (in the absence of a large clumsy central bank doing all of the inflating).
While I do not know where the market will be heading in the future, the content that was mentioned in the brief extract is a typical fallacy. Regardless of whether the market is a bull or bear, for every sell order to go through, there is always a buy order on the other side. The real cause of market trend (or non-trend) is market sentiment. In other words, it is the amalgamation of volume and price dynamics, not volume alone.