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Ed, I will give you my 2 cents, as this has been one of the areas
where I have preached the bearish case many times.
Boomers are saving for
retirement at almost the same rate corporations are no longer investing
for employee retirements. In other words, companies have shifted the
pension burden to the employees and that is the money going into the
market while the previous flows into the market
from large pension funds have
diminished. There may be some net inflow, but it is minimal. Also,
the boomers, new to the market, don't know what risk really is. They
will find out. In general, the worst investors in the institutional
world have been pension funds, but even they have done better than
individuals will do. Individuals, on balance,
will always buy high and sell low.
That is what makes a contrarian style so profitable. And they will
buy funds that buy high and sell low. Pension funds at least had
actuaries hired who forced them to keep some money in conservative
investments to meet payouts. Now, for your specific questions: 1.The
bubble will burst several times before boomer retirement. We are still
in a market and tech bubble right now, but I see some ragged edges.
When the market falls 25 percent or so, there will be a panic.
The boomers have been taught to buy on 3 or 4 percent dips and many
are even suckering into this concept
on margin. However, I don't think we
will have any long term bursting like the Depression. You have to
remember that global investors are growing in importance and the US
is still the most powerful nation on Earth. If the value ever returns
to our markets, foreigners will buy even if the boomers are pulling
out. 2. The signs to look for have already happened for this bubble,
IMHO. Netscape, Presstek, US Robotics, and even Micron selling at
levels they could never attain in a rational market have proved that
the ducks are quacking and we should feed them. BTW, the baby boom
is an American phenomenon, not a world phenomenon. Good luck, MB |
