Demographics and Markets

Demographics rule the world. Really. How did baby boomers gain such control? There are more of them than any other group. But lets put power and politics aside and look at demographics in terms of markets. I know, your first though is about who has money to invest, and that this is another advantage to baby boomers in the market over other generations, they have the money. This is a natural cycle. As you get older you accumulate more wealth.

But you do other things as you get older too. You require more healthcare access to maintain your health, you require less living space as your children grow and move out to start their own lives. Everyone has seen cycles like these. So why is this even interesting? It gets interesting when what you see in your family and surroundings gets rolled up into what is happening in the entire country, or planet.

In the US aging baby boomers are not selling their stocks to pay for their retirement. The ones with stock portfolios are more concerned they will outlive their money and continue to hold stocks. What they are doing is selling their huge homes and downsizing. Not to a one bedroom condo on the beach in Florida per se, but to large single story condos and penthouse apartments in smaller city centers.

This is where construction is growing. It is booming in the mid west. Sure there are single family homes being built for upcoming generations, but there is less need for them as baby boomers vacate nice sized houses in very good neighborhoods. Millennials don’t need to go on the building spree that the baby boomers did to find a place to live.

Can this impact home builders? Of course it can. Sure the population continues to grow and that means more housing needs to be built. But that does not mean that the builders need to be viewed through the same prism that has been used for the last 50 years. Demographics are changing that. This is just one example. Think about how demographics are impacting other parts of your life.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.