Except that calling it a "casino" is too kind by far. In the summer
of 1998, when the "Asian flu" was hitting the markets hard, a number of
prominent market analysts pointed to the huge amount of new money flowing
into the market through retirement accounts. They concluded that the money
provided a bulwark against a market catastrophe -- "it has to go
somewhere."
At that point I downloaded some demographic breakdowns of the U.S. labour
force and some historical profiles of participation rates by age and
loaded them into a spreadsheet program to project when the inflow could be
expected to peak. The answer was right about now. What this means is that,
potentially at least, money is still flowing in to buy stocks but not at
an increasing rate anymore. The rate of inflow may even be declining
(leaving aside all subjective decisions about whether to "invest" it in
stocks, municipal bonds or pork bellies).
A ponzi scheme requires an increasing inflow of new money to keep going.
Tom Walker
(604) 947-2213
