Q: What do baby boomers have to do with boatanchors? A: Anything, and -- not to put too fine a point on it, everything.
Let me explain. A baby boomer is a person born between the years of 1946 and 1964. Every country on Earth has a significant baby boomer generation. In the USA, the baby boom generation is over 26% of the population. The current aggregate income of USA baby boomers is $4.1 trillion. They (we) use this income to account for 40% of total demand and almost 50% of all discretionary spending. Boomers hold 80% of the cash and 79% of all the assets that exist--including --ta-da-- boatanchors. So what? Well, 46 + 65 = 2011. The boomers are retiring soon. Actually, due to early retirements and other factors, significant increases in retirements will begin between 2006 and 2008. By 2011, retirement-mania will be in full swing. Sometime shortly thereafter, "the largest wealth transfer in history" begins to take place. A minimum of $41 TRILLION will begin transferring "from parents to children and from philanthropists to charities." Economists only have this figured out in the broadest terms. But sometime between 2011 and 2021, the baby boomers will become what is called "net sellers of investments". That means that you and I will unload more boatanchors than we buy. Economists disagree about what this means for the financial markets. The gloomy ones say that this will usher in a "structural bear market that could last throughout much of the second quarter of the 21st Century." But let's deal with boatanchors here. I changed the wording in the paragraph below to say "boatanchors" everywhere it used to say "financial holdings". But this is from an insurance industry report: "At first, the older Boomers will begin selling some of their BAs, but the sales will be absorbed rather easily by the larger number of younger Boomers who are still eagerly buying. Eventually, though, even the middle and younger-aged Boomers will want to liquidate some of their boatanchors. Who can they sell to? The only options seem to be the much smaller and more financially pressed "Generation X" that grew up in the shadow of the boom, or the potentially larger and more promising market of buyers from overseas." This is why you and me have anything and everything to do with boatanchors. We own practically all of them. And we all need to get rid of them over the next 15 to 25 years. Worse, the only market we have for them is "much smaller and financially pressed". A word to the wise should be sufficient. Keep your collection in touch with the demographics and the concepts of supply and demand. BAs are fun. But they are not good long term investments. It's just that simple. Since no one is going to want them, I am planning to be buried with mine--like the ancient Egyptian mummies with their cats. 73, Don Merz, N3RHT Quotes are from various insurance industry reports on the web and the World Future Society. The information contained in this e-mail may be confidential and is intended solely for the use of the named addressee. Access, copying or re-use of the e-mail or any information contained therein by any other person is not authorized. If you are not the intended recipient please notify us immediately by returning the e-mail to the originator.(A)
