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Hi All, the word demographics as it relates to the market has come up lately. It involves the fact that the baby boomers are reaching retirement age and in 5 years there might be a drastic change in the market. Does someone have any thoughts about this? Should we be preparing for a change that may mean that less people will be investing in equities? I am almost 65, and I still invest in equities and plan to continue. Why should the baby boomer retirees suddenly change the way they invest?

fool on~~~~
follydolly
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I really cannot see a drastic change. Following the baby boomers are their children who are investing for retirement. There is a big swing away from company pension plans, so people have to provide for themselves. The only way most people can achieve a comfortable retirement is to invest in the market. Also, people are living longer and will need to keep up with inflation. Fixed income investments just don't do that. As people get older, they may buy more conservative stocks that pay dividends and reduce their explosure to high flying growth stocks.
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It seems to me that the fear is that the tradiditonal retiree has a bias toward income producing investments (e.g. bonds) over appreciating investments (Stocks). If the Boomers hold true to prior generations patterns, the concern is that that will cause a big shift out of stocks. So it is a change in the asset allocations of the aging boomers that causes the concern. I've not seen any research/data on the following generations savings patterns.
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saker writes,

It seems to me that the fear is that the tradiditonal retiree has a bias toward income producing investments (e.g. bonds) over appreciating investments (Stocks). If the Boomers hold true to prior generations patterns, the concern is that that will cause a big shift out of stocks. So it is a change in the asset allocations of the aging boomers that causes the concern. I've not seen any research/data on the following generations savings patterns.

Harry Dent, author of The Roaring 2000's, advises switching to 100% bonds by 2009. By then, the great demographic spending wave will start to peter out as the baby boomers age.

It will be interesting to see if the baby boomers hold fast to "Stocks for the Long Run" at the very time that their "grandfather's T-bonds" may be the best investment.

intercst
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intercst wrote:
Harry Dent, author of The Roaring 2000's, advises switching to 100% bonds by 2009. By then, the great demographic spending wave will start to peter out as the baby boomers age.

It will be interesting to see if the baby boomers hold fast to "Stocks for the Long Run" at the very time that their "grandfather's T-bonds" may be the best investment.


What will you do intercst? Will you switch to 100% bonds? 50%? X%? If yes, when?
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galeno asks,

<<<<intercst wrote:
Harry Dent, author of The Roaring 2000's, advises switching to 100% bonds by 2009. By then, the great demographic spending wave will start to peter out as the baby boomers age.

It will be interesting to see if the baby boomers hold fast to "Stocks for the Long Run" at the very time that their "grandfather's T-bonds" may be the best investment.>>>>>>

What will you do intercst? Will you switch to 100% bonds? 50%? X%? If yes, when?


If it looks like Dent's demographic analysis is still on track (he predicts 41,000 on the Dow by 2009), I'll probably start shifting 10% per year of my portfolio (currently over 90% stock) to 30-Year US Treasuries in 2005 with the goal of being 50% bonds by 2009.

intercst
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intercst wrote:
If it looks like Dent's demographic analysis is still on track (he predicts 41,000 on the Dow by 2009), I'll probably start shifting 10% per year of my portfolio (currently over 90% stock) to 30-Year US Treasuries in 2005 with the goal of being 50% bonds by 2009.

This sounds like a smart strategy. If there is a terrific bear (stock) market and bond run-up as Dent suggests, will you rebalance your bond/equity ratio at some point or will you let it ride?
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