Population growth is slowing, and that's going to put a damper on GDP growth and profits during the next 50 years, says Byron Wien, vice chairman of Blackstone Advisory Partners.

A new study by the McKinsey Global Institute estimates that population growth will drop to 0.3 percent a year during the next half-century, after growing six-fold in the last 50 years.

"If productivity continues to contribute 1.8 percent, overall [economic] growth will decline to 2.1 percent, a rate 40 percent less than during the past half-century," Wien writes in an article for Barron's.

"The implications of this slowdown on global changes in the standard of living and investment opportunities could be enormous."

In the United States, productivity growth shrank an annualized 1.8 percent in the fourth quarter, and the economy grew 2.4 percent last year.
As for investors, "this means that profit margins are likely to be under pressure if the boost from productivity improvements diminishes," Wien says.

"It also means that revenue increases may be modest as the population grows more slowly. Because these factors will have a negative impact on earnings growth, companies will focus more on financial engineering . . . to increase earnings."

U.S. companies are on track to execute more than $1 trillion of stock buybacks and dividend payouts this year.

Innovation will be crucial, "and investors will seek out the industries and companies that can provide it," Wien explains.

As for the here and now, you can count investor Wilbur Ross, CEO of WL Ross Holdings, among those who are concerned about the stock market's lofty levels.

Valuations are stretched "in general," he tells TheStreet.com. "The market is trading about 18.5 times earnings. That's a pretty high multiple driven by very low interest rates and a lack of alternatives."

Ross cited the unattractiveness of short-term bonds, long-term bonds and commodities relative to stocks. As a result, "you need to buy stocks or Picasso paintings," he quips.

Ross' firm is selling into the strength. "We've sold a little bit more than 2.5 times as much as we've bought in the last 12 months."

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