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reddingrunner (92.15)

Those Forgotten Boomers!



November 30, 2007 – Comments (5)

With all the negative talk about the credit crisis and how it will lead to recession, pundits opining on demographics and economics seem to have totally forgotten about baby boomers.  That's pretty amazing, since for the last 40+ years almost no one ever discussed the effects of demographics on the economy without focusing on boomers.

Their blind spot is our opportunity.

Baby boomers are currently 45-60 years old.  Few of them took out sub-prime loans. Most of them are fully employed and at their prime earning stage.  Most of them are entering the empty-nest, no more college tuition bills, no more mortgage phase of life.

They are ready to fix up the house, travel, buy RVs and other toys and make up for all those financial sacrifices that raising a family create.  Few of them are planning to get out of stocks as they approach retirement since most of them plan to be around for another 30 to 50 years.

Investors who are expecting a recession and stock market crash aren't taking these facts into account.  That's why they're wrong and that's why this is a great time to invest in businesses that cater to boomers. 

5 Comments – Post Your Own

#1) On November 30, 2007 at 4:53 PM, hondo928 (97.43) wrote:

I think to a degree you are right, but isn't recession more of a cyclical thing, in my opinion it tends to happen at least once every decade, then slowly the U.S. returns and grows, and is better than it was before, or at least the stock market is.  Then after a few years the same thing happens the actions by the fed don't really keep us from recession or force us into it, but instead attempt to limit the downside, and in cases where growth may be to much they trim it down.  While the baby boomers are starting to retire their are a lot of them that will be depensind on Social Security because they didn't save properly thus I think they will be sp;ending less than some of us may suspect.  And now that their kids have managed to mess up their motgages they can't pay for them either.

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#2) On November 30, 2007 at 8:52 PM, MakeItSeven (31.70) wrote:

It seems RV facts do not bear out your baby boomer thesis, at least for another year or two:.  Personally, I think it will last much longer with the MEW gone:

" Recession Signs Grow as Winnebago Leads U.S. RV Drop

Nov. 27 (Bloomberg) -- Winnebago Industries Inc., Thor Industries Inc. and other U.S. recreational-vehicle makers will probably say shipments fell in 2007 for the first time in six years, a sign the U.S. economy may be headed for a recession.

For the past three decades, deliveries of motor homes and travel trailers have dropped before each decline in the U.S. economy, giving the $15 billion industry a reputation as a bellwether. As the U.S. housing slump worsens, gasoline prices rise and consumer confidence wanes, RV sales are forecast to slide this year and next.

Recreational vehicles ``are at the swing end of discretionary spending because no one needs an RV, and certainly no one needs a new RV,'' said Ron Muhlenkamp, whose Muhlenkamp & Co. fund manages about $1.8 billion including shares of Winnebago, the biggest motor-home maker, and Thor, the maker of Airstream trailers. Muhlenkamp started unloading shares in 2006.

A University of Michigan forecast for the RV industry in June predicted 2008 sales would rise 3.5 percent; a revised version of the forecast today swung to a 4.8 percent decline. The revised 2008 outlook was released during the industry's largest trade show, which began today in Louisville, Kentucky."

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#3) On November 30, 2007 at 10:01 PM, abitare (29.56) wrote:

Most boomers can read and have parents, who lived through the Depression.  In the Austrian view it was this inflation of the money supply that led to an unsustainable boom in both asset prices (stocks and bonds) and in capital goods. By the time the Fed belatedly tightened in 1928, it was far too late and, in the Austrian view, a depression was inevitable. Does this sound familiar? It sounds very familiar to us lving in the US.

The artificial interference in the economy was a disaster prior to the Depression, and government efforts to prop up the economy after the crash of 1929 only made things worse.

In a recession or depression, asset values fall including stocks and real estate. The US dollar is in free fall and commodity prices are hitting record levels. The US is borrowing $3 billion a day to maintain its lifestyle. This will end.

Many Baby boomers, who had planned on retiring to a life of recreation and vactions while the younger generation pays off the nationial debt are dreaming. Printing of money is not going to make everything work out. It will eliminate the dollar as the worlds reserve currency. 

“I'm in the process of -- I hope in the next few months -- getting all of my assets out of the dollar,” Jim Rogers told Bloomberg yesterday. “I'm that pessimistic about what's happening in the U.S.''

The yuan is “the best currency to buy right now,” Rogers said. “I don't see how one can really lose on the renminbi in the next decade or so. It's gotta go. It's gotta triple. It's gotta quadruple.”

The dollar is just about the worst performing currency this year. Of the 16 actively traded currencies, only the Mexican peso has fared worse in 2007.

“It's the official policy of the central bank and the U.S. to debase the currency,'' said Rogers, “The U.S. dollar is and has been the world's reserve currency, the world's medium of exchange… That's in the process of changing. “The pound sterling, which used to be the world's reserve currency, lost 80% of its value, top to bottom, as it went through the whole period of losing its status as the world's reserve currency.''


  “I think the credit situation is worse than anybody realizes,” said Julian Robertson on CNBC.

Robertson’s a bit of a legend. In 1980, he started his Tiger Management fund with $8 million… and grew it 875 fold into $7 billion over the next 16 years. He then closed it when he ceased to understand valuations on Wall Street during the tech boom… and bust.

Now he’s sounding the alarm for the economy at large. “I think we’re going to have a doozy of a recession,” he predicted. “The Federal Reserve and our government will trash the dollar until such times as there is some turnaround in the economy or until they realize that this policy is self-defeating.”

You can watch the whole Robertson interview here.


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#4) On December 04, 2007 at 12:07 AM, reddingrunner (92.15) wrote:

You all make some good points.  I like bears, a market of all bulls would scare me to death.  OTOH, here's Irwin Steltzer:

     "But doom and gloom is only part of the story. The gyrating stock market has indeed plunged--but only to the level it was when we took time off from work in 2006 to give thanks for our myriad blessings. And the value of their homes remains well above the wildest dreams of avarice of all save the newest buyers.

Which may be why businessmen on the economy's front line seem more optimistic about 2008 than do their bankers. One British banker, fresh from a visit to his U.S. clients, reports himself astonished by their bullish outlook. A leading globe-trotting British businessman/entrepreneur reports that his private equity clients around the world are gloomy--because they are unlikely to earn the 45 percent return on equity to which they have grown accustomed.

And I found that 46 of the 50 CEOs of major companies who attended a closed-door meeting expect profits at their companies to increase by double-digits in 2008. 

And this was before consumers descended on the nation's shopping malls last Friday--the day after Thanksgiving that has become known as Black Friday because it is the day retailers' red ink is replaced with the black ink that signifies profits. ShopperTrak, which tracks sales at more than 50,000 stores, reports that storekeepers were all smiles after a long hard day swiping credit cards: sales were up 8.3 percent over last year. That's about double what even the optimists were predicting.

The interesting fact buried in these numbers is that almost all of the increase occurred in stores that cater to low- and middle-income consumers--those customers supposed to be under greatest strain from high gasoline prices and mortgage rate re-sets. The truly affluent, not interested in the bargains on offer, will show up later in the shopping season." 

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#5) On December 17, 2007 at 3:14 PM, jdwco (57.86) wrote:

Perhaps you are a bit too optimistic.  Regarding house valuations, the boomers, if reports I have been getting are correct, have been doing their share of refinancing and not just for the value of their current mortage, but for the increase in house valuation too.  They liked the extra spending money and thought housing would never level off.  Regarding Black Friday, what does ShopperTrak follow?  Credit card sales. What has the lower and middle income consumers been using to supply their purchases?  More and more credit card debt.


Go for high quality stocks don't play a quick recovery scheme. 

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