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Will boomers retire and place funds into CD's or other capital preservation investments?
Will boomers sell larger homes (If they can) and will trade down?
What will this do to both Markets?
Walt
How will Baby Boomers' retirement affect stocks? - USATODAY.com
But the big question: If Boomers follow the usual pattern of shifting their portfolio mix toward income-generating investments — bank CDs, bonds and dividend-paying stocks — will the stock market's long dry spell drag on?
The notion that Boomers will shift their assets to more conservative assets in retirement seems like a layup. Classic portfolio theory holds that you should shift your holdings to income-oriented investments the closer you get to retirement age. After all, when you retire, your own income ends, and you become reliant on Social Security, pensions and your investments to pay your bills. Income-producing investments also tend to be less volatile than growth stocks — and you can't make up stock market losses with your paycheck when you're retired.
Will Boomers Cause a Stock Market Crash? - CBS MoneyWatch.com
Why do you call stock-based retirement plans a ‘national Ponzi scheme’?
It is a Ponzi scheme in that early returns to early investors — the boomers — must come from money paid in by later investors, the younger workers. The boomers will need to sell to realize any gains. That puts the plans in the same category as Bernie Madoff’s operation. There will be too few buyers with adequate purchasing power and the will to pay adequate prices for the boomers’ stocks.
Senior moment for the stock market? What will the boomers do with their financial assets? - Michael McDonough - Seeking Alpha
As the level of withdrawals rises, mutual fund managers are forced to liquidate positions or use the fund’s cash position to pay investors, either way diminishing purchasing power. Since 1994, net outflows from equity funds have coincided with declining equity markets (see chart). Without question a portion of this is due to skittish investors looking to avoid further losses in not just the fund market. This, however, creates an adverse feedback loop: as selling continues, investors grow increasingly concerned, leading to further withdrawals. It is hard to isolate an instance when equity funds faced net cash outflows without a financial shock, but as the ratio of contributors to withdrawers declines the system may get its first test, as it seems a large chunk of the US$9.6trn fund market has been earmarked for retirement by an aging population.
Will boomers sell larger homes (If they can) and will trade down?
What will this do to both Markets?
Walt
How will Baby Boomers' retirement affect stocks? - USATODAY.com
But the big question: If Boomers follow the usual pattern of shifting their portfolio mix toward income-generating investments — bank CDs, bonds and dividend-paying stocks — will the stock market's long dry spell drag on?
The notion that Boomers will shift their assets to more conservative assets in retirement seems like a layup. Classic portfolio theory holds that you should shift your holdings to income-oriented investments the closer you get to retirement age. After all, when you retire, your own income ends, and you become reliant on Social Security, pensions and your investments to pay your bills. Income-producing investments also tend to be less volatile than growth stocks — and you can't make up stock market losses with your paycheck when you're retired.
Will Boomers Cause a Stock Market Crash? - CBS MoneyWatch.com
Why do you call stock-based retirement plans a ‘national Ponzi scheme’?
It is a Ponzi scheme in that early returns to early investors — the boomers — must come from money paid in by later investors, the younger workers. The boomers will need to sell to realize any gains. That puts the plans in the same category as Bernie Madoff’s operation. There will be too few buyers with adequate purchasing power and the will to pay adequate prices for the boomers’ stocks.
Senior moment for the stock market? What will the boomers do with their financial assets? - Michael McDonough - Seeking Alpha
As the level of withdrawals rises, mutual fund managers are forced to liquidate positions or use the fund’s cash position to pay investors, either way diminishing purchasing power. Since 1994, net outflows from equity funds have coincided with declining equity markets (see chart). Without question a portion of this is due to skittish investors looking to avoid further losses in not just the fund market. This, however, creates an adverse feedback loop: as selling continues, investors grow increasingly concerned, leading to further withdrawals. It is hard to isolate an instance when equity funds faced net cash outflows without a financial shock, but as the ratio of contributors to withdrawers declines the system may get its first test, as it seems a large chunk of the US$9.6trn fund market has been earmarked for retirement by an aging population.
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