How the baby boomers have blown up the stock market

[Jay_Gatsby]

Not sure I agree with all of his conclusions, but the core principle sounds somewhat plausible - stocks are higher because of demand. When the Boomers really start to retire en masse, we may see a flatline (or decline) in the stock market indices.

Jesse Felder's Tumblr — How the baby boomers have blown up the stock...

 

[REWahoo]

Pffttt. Blowing up the stock market is just a sideshow. If you want to know what we've really been up to, Google "it's all the baby boomers fault"...

Edit - Hasn't this market theory been hashed, rehashed, and beaten to death over the past couple of decades?

 

[CardsFan]

It is an interesting conclusion, given all the recent articles about how the Boomers have not saved enough. So we Boomers haven’t saved enough, but we have artificially driven up stock prices?

However, I have wondered a similar thing: What will happen to stock prices as Boomers liquidate assets to live in retirement? My unscientific response is: At least some Boomers had DB plans. With DB plans basically extinct for new workers in the private sector, I suspect (hope for?) a much higher participation rate.

 

[CardsFan]

Pffttt. Blowing up the stock market is just a sideshow. If you want to know what we've really been up to, Google "it's all the baby boomers fault"...

WOW! 226,000 results. I guess I need to start reading to see what else I screwed up.

 

[Jay_Gatsby]

It is an interesting conclusion, given all the recent articles about how the Boomers have not saved enough. So we Boomers haven’t saved enough, but we have artificially driven up stock prices?

However, I have wondered a similar thing: What will happen to stock prices as Boomers liquidate assets to live in retirement? My unscientific response is: At least some Boomers had DB plans. With DB plans basically extinct for new workers in the private sector, I suspect (hope for?) a much higher participation rate.

Here's a flip-side way of looking at DB plans. It's quite possible that DB plans will continue supporting the stock market, simply because they have to keep their assets invested so they can grow and make current/future payments to plan participants. Plan participants, in turn, don't have any way to pull their DB stake out of the markets, since they have no independent claim to the DB plan assets (with the only exception being the option to take a lump-sum payment).

Additionally, while Gen X may be smaller than the Boomer generation, Gen X doesn't carry nearly the same load of student loan debt that subsequent generations do. Gen X is also entering its peak earning years, which may provide some additional support to the markets. The real time bomb may be Gen Y and Millenials (are they the same thing?)

 

[Masquernom]

Remember when all the baby boomers were going to sell their big suburban homes and all move to lofts in the inner cities? You wouldn't be able to give a 3,000 square foot house away for free!

Didn't happen. Isn't going to happen. That's about the same way I see the boomers and the stock market. Boomers all selling their stock at once and crashing the market is about the same concern as selling all their mcmansions at the same time.

 

[mickeyd]

we may see a flatline (or decline) in the stock market indices.

Phooey. For every boomer that sells a share of stock there is a boomer or son-of-a-boomer that is standing in line to purchase it.

 

[highlow65]

I am technically a gen- xer but will retire with the baby boomers so doesn't apply to me but if the stock market drops because of boomers retiring then that reasoning implies there must be lots of good jobs coming available as we retire .This isn't happening.

 

[MRG]

WOW! 226,000 results. I guess I need to start reading to see what else I screwed up.

+1

 

[Lsbcal]

If one really believed that the future is 50% lower, that would be an argument for market timing or maybe call it tactical asset allocation. I'm not saying MT is the right path, but that would seem to be the logical next step if one believed this demographic/equity valuation model was near correct.

There are many ways to a lower market like (1) way up and then a severe break some years from now, (2) steadily down starting from today, (3) 1 step per year up and 2 steps per year down, etc. etc.

Probably this sort of idea as in the article is akin to enjoying a scary horror movie. Personally I don't like horror movies.

 

[Chuckanut]

Nothing new here. I have been reading about people making this prediction for at least 5 years.

 

[Lsbcal]

Nothing new here. I have been reading about people making this prediction for at least 5 years.

Jeremy Siegel discussed this (the "age wave") in my 2002 edition of Stocks for the Long Run. It was an old topic back then. Don't know what his latest edition of that book says but he felt back then there were some possible mitigating circumstances.

 

[kombat]

Phooey. For every boomer that sells a share of stock there is a boomer or son-of-a-boomer that is standing in line to purchase it.

With what? All the tip money they're making at Starbucks?

 

[Dash man]

With what? All the tip money they're making at Starbucks?

My son works at Starbucks. He gets to buy Starbucks shares at a discount and does contribute enough in his 401k to get the full match.

 

[marko]

Nothing new here. I have been reading about people making this prediction for at least 5 years.

WADR....Why did I just waste four minutes of my life on a sunny, warm Florida day to read this thread?

Doom and gloom of all sizes and shapes never seem to materialize.

Going to the beach now.

 

[Jay_Gatsby]

My son works at Starbucks. He gets to buy Starbucks shares at a discount and does contribute enough in his 401k to get the full match.

More importantly, do you get free coffee?

 

[marko]

It is an interesting conclusion, given all the recent articles about how the Boomers have not saved enough. So we Boomers haven’t saved enough, but we have artificially driven up stock prices?

A few months ago the 401K/IRAs were going to break the country with all that money not paying taxes; now, there's an average balance of only $18K. Which is it?

IIRC we just had a notable stock 'blow up' about 6 years ago. Just a memory now, isn't it.

But wait! Didn't those boomers withdraw all their IRAs to keep spending through their unemployment?

Ok, NOW I'm going to the beach.

 

[Tadpole]

The boomers will, inevitably, die. The world as they knew it will go poof. Nothing can exist without a boomer in it.

 

[audreyh1]

WADR....Why did I just waste four minutes of my life on a sunny, warm Florida day to read this thread?

Doom and gloom of all sizes and shapes never seem to materialize.

Going to the beach now.

LOL!!!!

 

[audreyh1]

Inheritances! Those boomers may end up leaving a lot behind in the form of money passed to the next generation which will turn around and madly spend it.

But then again..... maybe they didn't really save enough to leave juicy inheritances.

Not too worried here......

 

[2B]

Pffttt. Blowing up the stock market is just a sideshow. If you want to know what we've really been up to, Google "it's all the baby boomers fault"...

Edit - Hasn't this market theory been hashed, rehashed, and beaten to death over the past couple of decades?

+1

I have had several conversations with Gen X and Y ers that basically have the boomers as the reason they don't have great jobs with big pensions and were forced to take out student debt. Part of the thesis is why couldn't we be more like "the greatest generation."

My answer is that I:

• had student debt,
• will get a trivial pension unlike "the greatest generation" who are far more likely to get a richer pension than any boomer,
• most of my career was working for one of "the greatest generation" who blocked my promotion with their presence like I block theirs,
• will not get all of the value for my SS taxes unlike "the greatest generation" that receive several times the value of their contribution,
• "The greatest generation" is a title bestowed upon them by one of their own.

 

[48Fire]

With what? All the tip money they're making at Starbucks?

+1

Sent from my SCH-I535 using Early Retirement Forum mobile app

 

[mickeyd]

With what? All the tip money they're making at Starbucks?

Sorry, I forgot that many S-O-Bs are not employed like my DS and making 6 figures annually.

 

[purplesky]

With what? All the tip money they're making at Starbucks?

And after they move out of their parents basement.

And buy a house.

After student loan debt is paid off in 15 years.

Actually its not funny.

 

[bingybear]

why blame the boomers (although it may be fun to do)? Blame the FED! rate have been cut so low that there was little else to move to in order to find returns.

There use to be articles noting that stocks would crash when boomer pulled money out of stocks to put into fixed income and spend in retirement. There are many reasons given for what is happening... actual cause??