Historical data indicate a strong relationship between the age distribution of the U.S. population and stock market performance. A key demographic trend is the aging of the baby boom generation. As they reach retirement age, they are likely to shift from buying stocks to selling their equity holdings to finance retirement. Statistical models suggest that this shift could be a factor holding down equity valuations over the next two decades.In summary, as baby boomers retire they will be selling stocks to fund their retirement. Due to the sheer size of the boomer population, this selling will hold down equity prices for the next 20+ years. You can read the whole article here.
While a very compelling argument, we have no way of knowing for sure whether it will come to pass. This highlights the need to have an investing strategy that can adapt to market conditions. That way, whether we remain in this secular bear market for an extended period of time or we start a new secular bull market in the next few years you are positioned correctly.
