Will Boomers’ Retirement Lead to Stock Market Bust?
With baby boomers turning 60, an old and disturbing idea hasresurfaced: Will the retirement of that generation cause a lengthy bearmarket in stocks — or worse?
It’s a simple enough idea. Just as the 78 million Americans bornbetween 1946 and 1964 helped fuel a spectacular bull market in the1980s and 1990s by buying stocks, they will have just as big an impacton the downside when they retire and begin selling stocks to live on.
The concept of demographics as destiny has spawned a number of booksover the past decade, based on the idea that the human life cycle fromchildhood to old age provides predictable patterns in spending and, inthis case, saving and investing.
That’s why some experts contend the stock market is destined tostruggle with below-average, single-digit investment returns for anadditional 10 or 20 years before post-boomer investors bid up stockprices again.
Not so, say other market experts.
Mutual fund executive Milton Ezrati, senior partner and strategistfor Lord, Abbett & Co., calls it the “baby boom market myth.”
For one thing, Ezrati says, “demographic forces are not the only influences on financial markets, even in the long run.”