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I used to always think the boomers ruled. It worked in assessing the
demand led wage spiral 70s, homebuying 80s and investment boom 90s.
But lately I've realized that Generation Y (those born between 77-95)
far outstrip the boomers in sheer number and will make up a third of
the US population by 2020. These teenagers will be soon be entering
the workforce and will be huge consumers. Could be the mid 60s all
over again.
--- In realtraders@xxxx, "Gary Funck" <gary@xxxx> wrote:
> Attached, is a long term chart of the S&P going back to the
beginning of the
> two decade long bull market.
>
> Although an uncomfortable proposition for the bears (myself
included) this
> chart shows the Sept-2001 drop as being right on target in terms of
testing
> the long term trend support (a double about once every 6.5 years,
or about
> 11%/year). Further, the downtrend line stretching back to the Sept-
2000 high
> has been broken.
>
> As I type this note, Harry Dent is showing a similar chart using
the DJIA,
> showing that it tested the lower linear regression channel and
bounced. Dent
> is still holding to his demographic case that the boomers don't top
out
> until 2007/2008, and he thinks this is "the buying opportunity of
the
> century"; he still has a target of 35,000 on the DJIA by 2008 (19%
CAGR).
>
> Prechter offers the counterpoint. He showed that: (1) dividend
> rates are near all-time lows, consistent with a market top, (2)
Investor
> sentiment is at near all time highs, (3) wallstreet analysts on
average are
> recommending a 70% exposure to stocks (also a high). Prechter
countered
> Dent's demographic case by showing that birth rates mirrored the
market (as
> measured by the A/D line. Prechter's advice was to stay in cash.
>
> As an aside, when I look at the demographic data, I reach a
different
> conclusion than Dent,
> http://csf.colorado.edu/longwaves/2001/msg02125.html
> The way I interpret the data, the stock market more closely tracks
the rise
> and fall of a younger cohort (25-34) than Dent's aging (25-45)
boomer
> cohort. From this perspective, the top was made in 2000, and the
market is
> in for a long steady decline stretching all the way out to 2010. I
also
> showed separately, that relative to GDP and corporate earnings, the
S&P is
> still quite highly valued,
> http://csf.colorado.edu/longwaves/2001/msg02146.html
> and this is inconsistent with a major bottom in the market.
>
> Guess that's what makes a horse race. :)
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