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It's the demographics, stupid... and that's why a long bear market has begun, Michael Dolan...

It's the demographics, stupid... and that's why a long bear market has begun, Michael Dolan writes. Movements in the ratio of people in their prime saving years to both retirees and younger adults has presaged long cycles in equity prices from the 1970s swoon to the 1980s-1990s boom, as baby boomers swelled the ranks of prime savers. The worry for the U.S.: the ratio peaked in 2010.
Comments (9)
  • Tack
    , contributor
    Comments (13401) | Send Message
     
    I always love articles, like this one, and know they're up to shenanigans when they have to resort to talking about "real" gains. The problem is nobody gets to invest in "real" terms, only nominal terms, so the end result in real terms is out of their control.

     

    The only real question for investors will be, if not in equities between now and 2027, then, what? Notice he provides no recommendations. That's because there are no other investment classes likely to do better, at least ones that are foreseeable, and, especially, bonds are likely to perform poorly, as they're already priced up so high that yields have shrunk levels never before seen, hardly an enticing moment to squirrel away cash in bonds.
    7 Sep 2011, 06:37 PM Reply Like
  • Tom DiLello
    , contributor
    Comments (22) | Send Message
     
    Isn't the generation after the baby boomers even larger? What about people from emerging markets? Won't they want a piece of the US equity pie?
    7 Sep 2011, 06:58 PM Reply Like
  • Dana Blankenhorn
    , contributor
    Comments (5987) | Send Message
     
    Immigration means our ratio of young-to-old isn't shifting as it is in the rest of the world. Even in China, it's shifting rapidly toward an aged population.
    7 Sep 2011, 07:26 PM Reply Like
  • Old Trader
    , contributor
    Comments (5726) | Send Message
     
    Dana,

     

    That would be one of the longer term benefits of the influx of Mexican immigrants, legal and otherwise. Given that Mexico is predominantly Roman Catholic, and all that implies, regarding birth control, look for that population to grow by leaps and bounds.
    7 Sep 2011, 08:22 PM Reply Like
  • Dana Blankenhorn
    , contributor
    Comments (5987) | Send Message
     
    I'm seeing a lot more immigration from Asia than Mexico these days. Chinese, Korean, Indian. Also African, especially Somalia. Mexican presence in Georgia is way down.

     

    Catholicism has nothing to do with birth rate. European countries that are very Catholic also have low birth rates. What makes the difference is prosperity. Middle class Mexicans have lower birth rate than poor ones.
    7 Sep 2011, 08:27 PM Reply Like
  • Old Trader
    , contributor
    Comments (5726) | Send Message
     
    Dana,

     

    Here in Chicago, while all of the groups that you mention are growing in number, by far and away, the Mexican/Hispanic community is growing most quickly. People of Hispanic descent are also becoming increasingly prominent in politics, both at the local, state and Federal levels, although I suspect that's at least partially due to the fact they've been here in sizable numbers for so long (compared to Asians, for example).
    7 Sep 2011, 09:32 PM Reply Like
  • Dana Blankenhorn
    , contributor
    Comments (5987) | Send Message
     
    I note you write Mexican/Hispanic. Don't you know? Isn't that like saying, oh, German/European?
    7 Sep 2011, 09:50 PM Reply Like
  • Old Trader
    , contributor
    Comments (5726) | Send Message
     
    Dana,

     

    Yes, I do know, but we've got more than a few people from Puerto Rico, and the DR around, as well.
    7 Sep 2011, 11:22 PM Reply Like
  • Dana Blankenhorn
    , contributor
    Comments (5987) | Send Message
     
    Then we agree, which is good.
    8 Sep 2011, 09:08 AM Reply Like
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