Demographics as Primary Force influencing Long-term Trends:
Yes, it's true that the positive influence of demographics on the Market has been well publicized, but most of the comments and analyses have been relatively superficial and over-simplified. I have a model of expected Market performance in the years ahead. If the Market starts to deviate significantly from it, I'll certainly reconsider my assumptions. For the next year or so, that model says the demographics are still positive but less strongly so than in the past. I don't believe future demographic influences have been fully "priced in", especially since my precise model is not in line with the consensus of the "experts" who tend to look for a continuation of positive influences till 2008, 2010, 2014 or beyond. I'm expecting weaker bull markets and deeper bear markets into 2005, but with a still positive bias. Somewhere around 2006, however, we'll start to look like the Nikkei in 1990. The end of their short but powerful baby boom was 1949, after which their birth rate plummeted. Our 5 yr peak area ended in 1961. For reasons too complicated to explain here, I believe we're about 15 years behind them, instead of the 12 years suggested by these figures. Time will tell. |
