As the first wave of that pig-in-a-python generation — the 79 million Americans born between 1946 and 1964 — move into retirement, experts warn a boomer stock sell-off could cause equity valuations to plummet, likely sending the portfolios of young investors into a tailspin.
"The peak of the valuation in U.S. equities was 10 years ago," says T. Doug Dale Jr., an adviser with Security Ballew Wealth Management in Jackson, Mississippi. "Valuation levels are coming down. You have a lot of baby boomers selling off assets as they need to liquidate for retirement and that will further exacerbate the decline in valuations."
Researchers from the San Francisco Federal Reserve recently said that demographics actually point to a bearish trend in stocks. Aging populations create headwinds in the market, they said after studying the link between demographics and asset prices.
The Fed researchers looked at the ratio of investors aged 40 to 49 (those likely trying to build equity) to those aged 60 to 69 (those likely to be shifting allocation toward safer investment vehicles such as bonds).
They then compared this ratio to the year-end price/earnings ratio from 1954 to 2010 and found a strong correlation between shifting demographics and stock prices. Their results spell bad news for a full market recovery:
The model-generated path for real stock prices implied by demographic trends is quite bearish. Real stock prices follow a downward trend until 2021, cumulatively declining about 13 percent relative to 2010. The subsequent recovery is quite slow. Indeed, real stock prices are not expected to return to their 2010 level until 2027.
Preparing for the Worst
Research suggests Generation Y investors may already be shying away from equities, adopting a conservative approach thanks to the psychological baggage of the Great Recession. A recent survey by MFS Investment Management shows 40 percent of Gen Y investors said they agreed with the statement: "I will never feel comfortable investing in the stock market," while another 30 percent said protecting principle was their primary investment objective.
"Will that generation wind up being more conservative than the generations ahead of it? I would say yes," says Dale. "The generation that went through the Great Depression is what they're going to wind up looking like."
Advisers tell younger investors to steer a path between abject fear of stocks and blind allegiance. Here are some of the ways they say Gen X and Gen Y can build their own fortunes without getting slammed when the older folk sell.
发表于 2011-9-25 17:54
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发表于 2011-9-25 17:57
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