patrick.net

that's the Harry dent argument

Because interest rates have been kept low-boomers are not leaving the market

They should be selling stock and moving into CDS but they can't live off .05% interest

smaulgld says

Because interest rates have been kept low-boomers are not leaving the market

splain that.

bob2356 says

smaulgld says

Because interest rates have been kept low-boomers are not leaving the market

splain that.

Older people should be retiring and pulling money out of the stock market but they are not because low interest rates don't provide them with enough income to live off, so they keep money in the stock market.

Also if you'll take a look at the BLS job report - nearly ALL the growth in jobs is for 55+ and its part time work which means because even if they have sold stocks and cant live off interest they are taking part time entry level jobs that the younger generation should take.

It's clear this is happening. Go into any grocery chain store or Home Depot and you will see tons of senior citizens working there.

When I was a teen ager there were absolutely no people over 30 other than the managers of the departments working in the grocery stores. All the baggers, cash register operators, carriage boys, stock clerks etc were mostly under 20. The other day I saw a 70 year old pushing shopping carts back to the front of the store

Bob
You may recall the age appropriate portfolios that they used to show people. For the younger investor they advocated a heavily weighted stock portfolio with little in fixed income.
A middle aged person would have something close to 50-50 and a retiree almost all fixed income.

Not today. Fixed income pays next to nothing and doesn't even cover the inflation as measured by the CPI

A crash today vs 2008 would be worse as there are more senior citizens now that would get wiped out

"Because GAAP (Generally Accepted Accounting Principles) standards have been completely perverted over the last decade, it’s impossible to compare current S&P 500 earnings with 1999/2000 S&P earnings (2000 being the widely and incorrectly regarded at the all-time high p/e ratio for the S&P 500)."

"restating the current S&P 500 earnings using 1999/2000 GAAP standards, that the current S&P 500 earnings/per share would be at least cut in half."

"Therefore, the current P/E ratio using 1999/2000 GAAP accounting would be higher than 1999/2000 and therefore the highest P/E ratio in history. Thus, the current stock market is the most overvalued of all time using an “apples to apples” comparison."

What I missing it seems that he is being redundant?

Either way it seems that the stock market is in for a big time correction?

smaulgld says

Older people should be retiring and pulling money out of the stock market but they are not because low interest rates don't provide them with enough income to live off, so they keep money in the stock market.

Ok I see, you were talking about rebalancing portfolios not drawdowns. Very true, way too many people are still in stocks for their age.

But the other side of the equation that no one talks about is how the explosion in IRA's and public emplpyee retirements in the last 30-40 years has affected the stock market. Prior to the 80's private employees either in defined benefits or had nothing and public pension plans were just starting to come up big. Also most of the defined benefits plans in those days weren't nearly as invested (many weren't really funded at all) in stocks as IRA's and today's public plans. Any thoughts on how that is driving the market? I can't seem to find anyone looking at it.

bob2356 says

Any thoughts on how that is driving the market? I can't seem to find anyone looking at it.

I haven't seen any data or analysis. My anecdotal view is that more and more companies offer plans that are mostly stock based.
The amount of stocks bought in the coming years will be a function of how many people have jobs. The amount sold may be muted if interest rates stay low.
If somehow there is a shortage of stock buyers, central banks and the Fed will step up their purchases.

real (2010 dollars) per-capita corporate profits.

Neoliberalism FTW.

smaulgld says

If somehow there is a shortage of stock buyers, central banks and the Fed will step up their purchases.

While this is the hope and the assumption of many analysts today, I doubt the Fed will invest any more into the overall economy than they already have. At some point they will resort to protecting their own interests, which does not include saving the rest of the world from itself. The $4 trillion dollars (that we know about) on their balance sheet is more than enough to do them in if Treasury rates (which they have no control over) expand beyond acceptable limits.

I watch the 10 Year T-bill yield as benchmark for economic health. I believe that if the 10 YR yield goes beyond 4%, economic collapse is inevitable. From the gambling/over leveraged investment banks to real estate hedges, the 10 YR is a major player. I see the 10 Yr yield expanding significantly in 2015, which is likely to take a lot of institutions down.

They shouldnt invest anymore but then they shouldnt have dumped $4 t already
Will be hard for them to resist next year will an all dove board, other central banks doing it and esp if there is a market correction or slow down in housing or the economy

smaulgld says

correction or slow down in housing

smaulgld says

When I was a teen ager there were absolutely no people over 30 other than the managers of the departments working in the grocery stores.

That's true!

smaulgld says

Also if you'll take a look at the BLS job report - nearly ALL the growth in jobs is for 55+

50 is the new 30!

What about the cooking of the books that skews the stock market numbers?

I wulda thunk one of you smart fellers would have a comment on that?