Baby Boomer Switch
Rosey had a great post on his outlook of how the aging baby boomers will affect the economy.
I have taken some very hard financial hits doing the supposedly "right" things. When I critically looked at what had happened that some how doing what you are supposed to do to prepare yourself for financial security had not worked out that way, it came down to demographics, and I suppose bubbles.
So, I put a great deal of thought into how I thought the market would change and I came to similar conclusions. The first baby boomers hit 65 this year and with that comes reduced income. The very first place and biggest cut to "spending" would be savings. So, the biggest hit from the reduced income is going to be less money being put into the stock market.
At the other extreme, as these people start drawing pensions, the pension funds will not only have an increasing decline in contributions, but they will also be paying more and more. So, maybe a new retiree figures they don't have to touch their investment savings right away, but if they have pensions, investment savings are going to be hit by the increasing draw on pensions.
Overall, as we get further into an aging population, we moving into a declining rate of increase of savings, and that is negative for stock prices.
Why are home prices in Detroit so cheap? Because the population to buy those houses has been declining. The population investing will be decling and population drawing will be increasing relative to each other. That is a given.
Now, how it plays out, I have no idea, but I don't see where all the buyers come from for that increasing population of sellers and supply and demand suggests it isn't so great if you are selling.