A reader's notes plus a USA article gives us some investing food for thought.
Here is what a reader wrote:
Dear Gary, I read your article about mass action by boomers perhaps (likely?) affecting the Dow, and I've got to agree. More worrisome, however, is that all of the boomers will want / need to sell their houses at the same time as they enter retirement. Who is going to buy these four-bedroom detached houses in the suburbs? Immigrants from Mexico? Out of work high-tech types just five years out of college? The cadre of functional illiterates following close behind them? I don't think so. Meanwhile, the cost of housing in nicer retirement venues will skyrocket. This is why I've been working on finding an offshore pied a terre for the last three years. I want to build a bridge, to promptly(after the kids are wel launched) get out from under my over-priced New England home in favor of a wonderful base of operations for world-wide exploration. This is why you, Merri, and I have bumped into one another in Ecuador a few times. Well, you (and I) and can't save everybody. We do well when we exhort folks to open their eyes to the possibilities, instead of just sitting there and taking whatever "life" or "fate" serves up. Here's to freedom! Best regards,
This reader is not the only person concerned about 2010. Harry Dent the popular demographics commentator expects the Dow to rise to 35,000 as baby boomers spend more and more then crash as they retire in 2010.
Others agree. An article in Monday's USA TODAY by John Waggoner, entitled “Baby boom retirees may set markets teetering” at says:
"Baby boomers — the 79 million people born from 1946 through 1964 — fueled the housing boom in the 1980s and the 1990s bull market for stocks. But now they're starting to approach retirement age, and that means cashing in on what they've gained. Boomers may not sell all their stocks, or sell them all at once, when they retire. But even if they move just a part of their retirement portfolios from stocks into conservative investments, some say they could send the stock market into a decade-long bear market..."
The rest of the article is at http://www.usatoday.com/money/bcovmon.htm and suggests that the selling could even start early.
These concerns added to the 100 year Dow history suggests it could be ten years before the 1999 bubble recovers and then we must face boomer retirees. These thoughts must make even the most staunch equity investor wonder. The message here is that market timing is not the way to go. If you want to invest in shares, try Warren Buffet's advice.
Better still increase your income and eliminate retirement worries with your own enjoyable business. Turn your passion into profit so you never want to retire.
Until next message, good global business and investing!