Baby Boomers Retiring

On GDP vs Equity Returns, Bill Gross Is In Fact Right… With A Twist | ZeroHedge.

This analysis shows that the stock market is like a Ponzi scheme in that the returns of present investors depend on future investors wanting to get into the game. If more people want in than want out, the stock market will rise. The converse is also true; if more people want out than want in, the stock market falls. All of this happens regardless of the economic situation at the time.

Now, let’s extend this line of reasoning to the demographic realities of the US. As the baby boomers retire, they will be buying less stock and selling more stock to fund retirement; that is, more people will want out of the game. Meanwhile, there are less Gen-Xers and millenials to take their place in the game with less money due to the recession.

Remember when Greg Brady bought that lemon? The stock market is like that transaction played over and over again. Buying stock is just like buying an old jalopy. To get out with a profit, all you need to do is find a bigger idiot than yourself.


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