Tags: baby | boomers | bear | stocks

Don't Fear the Boomer Reaper

By    |   Wednesday, 22 May 2013 07:49 AM

Now that Europe, North Korea, Cyprus and Chechnya seem to have faltered as potential triggers of the next 90 percent decline in stocks, bears are falling back on the hoary argument that baby boomers will send prices lower as we dump all the millions of shares we bought since ... well, since Eisenhower was president, I guess.

Funny argument, that is. I was in diapers when people started liking Ike, and while I would make quite a precocious E*Trade baby if we had them back then, I don't really remember buying any stock when I was in the nursery. Even a few years later, playing with my hula hoop and guarded by my Spoon-Man while I ate Shredded Wheat for breakfast, I honestly can't remember buying a single share of anything.

In fact, one of the premises of those Cassandras who tell us how bad the future will be is that we boomers never put money aside for investment and retirement. You've heard the alliteratives: "50 percent of people turning 50 have less than $50,000 set aside for retirement" or whatever. Well if we never bought how can we now deluge the market by selling?

The other weak leg of this two-legged stool? People forget that foreigners are big buyers of U.S. stocks. Millions of people are entering the middle class in countries throughout Asia, South America and even Europe (really ... no kidding!). They have a strong need for international diversification, just as U.S. investors do. And our market is the largest and most liquid by far. It will continue to attract quality and flight capital for decades to come.

There is a subtler flaw to the bears' argument, and that is the false concept they have about wealth. To liberals and socialists, wealth is a fixed quantity, like water in a bucket. All we can do is spread it around; and no matter who has it, its total value remains fixed.

Hog wash. Most wealth is created out of nowhere. And it can also similarly be destroyed. Ya want to create wealth? Take a textbook on nuclear physics and give it to a graduate student. Ya wanna destroy wealth? Give the book to a longshoreman. The former might use it to unlock mysteries of nature, while the latter would use it as a paperweight.

Give a copy of the Bill of Rights to President Obama and you'll see the genius of our Founding Fathers destroyed in a flash.

But as long as American entrepreneurship runs amok and generates billions of dollars of new wealth, stock prices can and will continue to rise. Don't let us boomers scare you.

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Gary-Jakacky
Now that Europe, North Korea and Cyprus seem to have faltered as potential triggers of the next decline in stocks, bears are falling back on the argument that baby boomers will send prices lower as we dump all the millions of shares we bought since ... well, since Eisenhower was president, I guess.
baby,boomers,bear,stocks
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2013-49-22
Wednesday, 22 May 2013 07:49 AM
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