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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.32

-0.1%

Jan 30 9:30 AM EST

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To: RetiredNow who wrote (64981)	10/18/2003 6:56:11 PM
From: Stock Farmer	Read Replies (2) of 77400

Almost 20% of our labor force of 147MM will retire by 2008 Take it a bit further mindmeld. This 20% is currently employed. Contributing a disproportionate amount of their annual income to savings either directly or through pension plans and savings schemes... Which capital is currently flowing into the market and helping to loft share prices by pumping up the demand side of the supply/demand equation. On retirement however, retirees inbound contribution to investment slows to a near halt. They stop contributing to pension plans. They no longer have a great deal of excess income to 'save', and instead consume most of the cash flow that they experience. Dividend reinvestment switches to dividend income. Capital gains aren't a paper computation any more, but are crystalized. And these represent outflows from the capital markets. Maybe they don't need 100% of their pre-retirement income to live off of... maybe they are frugal and can live on 10% or 20% of their pre-retirement wage... but this is all coming OUT of the market. So what you are also saying is that in 2008, 20% of the capital inflows to the market are going to have dried up and reversed somewhat. And that has implications on long term investment strategy. Companies that do not generate meaningful yeild that a boomer could live off of could find their shares on the wrong side of the boomer-dominated supply/demand curve.

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