What are the analysts saying about the next twenty years of investing in America? From Wall Street comes just about any answer you want to hear. Below are some of the trends people are talking about and the divergent views on what they mean. All of them boil down to one question, "What will the Baby Boomers do?". If 80 million Boomers all decide to follow the same route into their retirement years it could be the biggest shakeup in American business and finance since cheap imports. When will they retire? What will they do with their financial assets? How will that impact Wall Street? What will happen to government budgets. What does this mean for stock investors and mutual funds? As you will see, It's very difficult to say.
The Boomers will mostly retire on schedule. They were more apt to save and invest than their parents and therefore have more financial security. They will take that security into retirement to enjoy life and travel. That means that they will have to start selling their investments, but to who? Gen X although nearly the same numbers (75 vs 80 Million) as the Boomers are not as rich and do not have nearly the disposable income of the older Boomers. Where will the investment capital come from? If Gen X can't afford to buy will more investment come from outside the America. Prices may well tumble as desperate Boomers unload their stock at any price to recover what they can of their investment. Their consumption will drop in hard goods and increase in services. The influx of affluent retirees will spend their money on travel and leisure. The boom in this sector will include airlines, hotels, cruise lines, casinos, and especially the motor-home industry. Those should be stocks to watch. Paradoxically, the increase in medical services as Boomers age may not show up in an increase in medical stock value. Medicare is on the verge of bankruptcy and employers, large and small, are cutting pension and health-care benefits. Many health-care companies will have to cut prices to remain competitive. Medical stocks will collapse as companies fight for what dollars are available to the consumer.
The Boomers will not retire on schedule, but instead stay on the job longer than their parents. They are healthier and living longer and have no trust that the promised government security will be there for them in their older years. They have become more materialistic and will not give up their high paying work and lifestyle. Most Boomers still have some sort of financial responsibility for their children and parents. Those Boomers that do retire will return to the work force. They will hold onto their investments longer and cash them out more slowly. The slow dispersal of their stocks will have no great impact on the market. They will continue to spend in all areas and continue to be the driving factor in the economy. Medical stocks will hold steady or grow and the travel industry will see no great increase consumer spending.
There is no history to make any valid prediction on future Boomer investment behavior. Serious stock investment by the middle class didn't start until the 1980's. What is your prediction? Will the Boomers drop out of the work force and consume less or will they continue to work and spend? Will stock groups such as travel and medical boom or bust? Will the Gen Xers, who have no faith in government or company pensions invest heavily in the stock market for their future or .....................
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