Here’s a prediction for you: Baby Boomers are going to bring about a bear stock market over the next 15 years.!!!
The reason? Well, to put it simply, the argument is that as the boomer generation ages they’ll dispose of their equities so that they can use up that cash in retirement. Obviously, when money is taken out of the market, stock prices drop.
Seems straightforward enough. But, there’s another side to the story that is being ignored:
What the guys at the Fed are assuming is that the baby boomers will have enough of an impact on stocks to reduce the relative price of shares by almost half by 2025. This, according to Bruce Krasting, would be akin to the “tail wagging the dog”.
If the fundamentals of the economy remain strong over the next 15 years, then we can assume that stocks will rise accordingly.
Which, of course, would be the markets following the performance of the economy, as markets have done since time immemorial.
Let’s all hope the dog wags the tail.
What do you think? Can boomers themselves cause a bear market?