‘Baby boomer’ is not a phrase that I particularly like, but
then I’m not over-fond of putting labels on groups. It also sounds a bit American, not that there
is anything wrong with that of course, but it just jars a bit on my English
sensitivities. Anyway if you were born
between 1946 and 1964 you fall into that category, like it or not.
Statisticians, as is their wont, come up with all sorts of
information and figures about Baby Boomers.
There are the obvious implications including more competition to get
into school and university, more job applicants, greater demands on social
services and so on. However, there are
also more nefarious statistics. For example,
as we reached middle age we had an impact on the stock market because there
were more of us buying shares with our income and savings. It has been argued, with some logic, that we
were responsible for the boom years because we bought more ‘product’ and
invested more in stock markets. House
prices forged ahead because the population bulge created a demand that exceeded
the supply.
The doom mongers are now predicting the opposite
affect. As we come up to retirement we
are more likely to downsize our houses, consume less ‘product’ and we are
likely to sell our shares to finance our retirement. This apparently is going to result in
depressed stock markets in those countries that actively participated in the
Second World War. Some doom mongers are
predicting a fall in the American S & P 500 of something like 40% over the
next 10 years or so. Pessimists in
general are having a field day. Not only
are stock markets going to be affected by Boomers selling shares, but companies
will be less profitable; P/E ratios will fall; double-dip recession is
inevitable, and all this is on top of a very shaky financial situation within
the EU likely (according to the doom mongers) to bring about the demise of the
Euro and/or the EU itself, at least in its present form.
So, what to do? Where
to invest? How to rebalance our
portfolios? The answer is to buy
pharmaceuticals; cruise companies; care home providers and other sectors that
are likely to benefit from an aging population.
You might also like to think about income generating asset classes. Consider investing in areas like South
America; sub-Saharan Africa; the Middle East or the northern parts of Southeast
Asia (ex-Japan) where working populations are expanding.
On the other hand, be an optimist and say to hell with it
all and just enjoy your retirement. The
next generation are unfortunately going to bare the brunt of this demographic
anomaly because the longer-living Boomers are rapidly spending their
inheritance.
It’s a hard life.
