Baby boomers cause another worry
As the baby boomer generation starts hitting retirement age not only are they going to put a drain on social programs, the new worry is that they might drain wall street.
When nearing retirement most people start taking cash out of speculative investments and into safe havens like bonds and other fixed income. The baby boomer generation invariably holds trillions of the net asset value of the US markets through mutual funds and other collective purchases. As they age, it is likely that this generation of retirees will take the money with them. Out of the market and into cash is a likely transition.
The outflows of money is an important thing to watch on Wall Street. You can predict where the markets are headed just by watching outflow data. Last September, Hedge fund outflows were making records. In November, the market hit it high and now we’re making a new bottom.
As society ages, the amount of money in the market is going to fall. The transfer of wealth from one generation that grew up with a “save, save, save” mentality to this generation of the “buy anything shiny” mentality is likely to cost the markets a few trillion in asset value.
The best way to protect your investment is to buy into corporations that will be in demand no matter what. Companies like Proctor and Gamble which makes many household products will have a solid revenue stream regardless of how the market goes. Luxury is usually the worst investment in a time like this, automakers and other large purchase products will suffer as well.
Medical companies should benefit the most from an aging America. This is a solid field with a strong revenue stream and growing profits for as long as the public ages.
