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moneysense.ca, 16/05/05
Will Boomers Cash Out?
In a recent interview with MarketWatch.com Prof. Jeremy Siegel says that as the aging baby boomers retire in the next 20-40 years, stocks could suffer a meltdown, unless investors from developing nations step-up and buy the equities that the boomers are selling. Is this scenario possible?
Donald Luskin, on the other hand, suggests that investors should ignore the doomsday prophets and invest in equities (which he says are really cheap).
I don’t know which of these arguments will turn out to be true. But I do believe that if I buy pieces of good businesses at decent prices for a diversified portfolio, I am likely to do just fine.
moneysense.ca, 16/05/05
The Jeremy Siegel scenario is possible, but a little overblown. Two things will provide a little friction to the theory: (1) a higher pace of immigration; and (2) the efficiency and transparency of the US market economy versus it’s alternatives.
If the planets align in all the wrong places, then Mr. Siegel is a genius. Well, he’s pretty damn smart anyway.
Don’t be too terribly complancent about the finding good companies theme– Warren Buffett is having a very tough time doing just that these days…
There are many possibilities and it is very difficult to predict what will happen in the future. Our retirement is many decades in the future. Not investing in the markets is not a option for us. Note that Warren Buffet is aiming for returns that beats the pants off the S&P. I will be happy with market returns.
My retirement could be only seconds away or 20 years away, but the compliment to the “The Boomers will suck the financial world dry” is all these old folks are going to need MANY more services which aren’t in place yet, so the opportunities are going to be VAST.
I also believe that the Boomers generation may be the only one that will actually be able to retire ever. No one retired before them because they DIED, and after them, who knows?
c8j
Big Cajun: Good point. There’s an opportunity in every scenario. Like Assetman says there could be more immigration that brings in a lot of young people. Maybe, people in developing countries will diversify and buy developed market assets. So many different scenarios are possible that it is pointless to make that long range forecasts.