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Strategies & Market Trends : Tech Stock Options
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To: Patrick Slevin who wrote (41343)4/26/1998 2:55:00 PM
From: Robert Graham  Read Replies (2) of 58727
 
You have made a very interesting observation here that I have not considered before about a large segment of the population arriving at a retirement age. Now that you have mentioned it, I can see that there may be many of the "baby boomer" crowd arriving at retirement age where they are withdrawing their monies from their IRAs. I think over time this will become a bigger factor as far as it impacts market liquidity. I also agree that it is this aging population that remembers what market corrections are like and have experienced economic recessions unlike the younger crowd who has experienced "soft landings" in the economy and "market adjustments" instead of significant market corrections in this market that continues to move upward. I also think the foreign investor is made up of more conservative market players. This will add to the mix of conservatives to risk takers in the market.

You then have the funds that may be running into problems finding value in the market and have changed to a more shorter term and aggressive approach to the market. For that matter many funds are managed by people in their 20's who have never experienced a major market correction. This is where the liquidity in the market is coming from, the fund monies. But it is the individual investor such as the "baby boomer" crowd and the foreign investor that are in control of a significant portion of the holdings of the mutual funds. Movement of monies between funds lets say from aggressive growth to a more conservative position, and redemptions of fund money into cash by these individuals definitely can change the current market picture. The historically low cash position of funds can magnify the effect of this kind of money movement out of funds.

Just some thoughts.

Bob Graham
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