I'm starting to think there's more than a few boomers looking to get out and get out quick. Sell their overpriced house. Sell all their stocks. Get into cash and bonds. Raise cash quick. Especially the ones who never saved for retirement - their remaining home equity (what they didn't raid the housing ATM of) being their only asset of substance.
So, once the bommer selling momentum kicks in, how bad will it get for asset prices?
The boomers (as represented by their incompetent and corrupt leadership) have already been the worst generation in US history, with their overall self-serving, greedy, reckless and arrogant ways. Adding a stock market and real estate collapse to their CV will only inflame the fires of the generational war to come.
Will the stock market crash when the boomers cash in? Some baby boomers would get hurt if the stock market slumped as they approached or entered retirement. But what about this scenario: Could the impending retirement of millions of boomers by itself cause a meltdown in stock prices?
The question has dogged some market observers ever since demographers noted the approaching retirement of 78 million Americans born between 1946 and 1964. As boomers leave the job market, the thinking goes, they will liquidate their stock holdings and mutual funds en masse to make ends meet, and the selling could push the market into a tailspin.
GAO researchers noted more boomers own homes than stocks, and boomers carry high debts compared to previous generations. Both factors could make many members of this broad generation vulnerable to housing-price trends.
"This suggests that a price decline in housing," the researchers wrote, "could have a much greater impact on the overall wealth of boomers."
September 12, 2006
Will the baby boomers crash the market?
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Boomers lost their shirt in the last bubble, need to hold jobs a bit longer than expected.
No Crash.
Just a few pissed boomers.
And a few pissed X / Y ers that do not get the jobs boomers are still in. I do see people working later in life. Uncertainty in SS, taking care of slacker X'er kids who do not have the income to do so themselves, high medical costs that are not fully covered by medicare.
They're all gonna sell their houses and buy motorcycles with the profit. There will be baby boomer motorcycle gangs terrorizing the fruit stands and wineries of this great nation before you know it. Mark my words. They love to pretend they're rebels, those baby boomers.
This rat in the snake will finally get crapped out, but it's the rest of us that will have to clean up the mess. Yes, as individuals we don't know what they will do, but on a macro level we have a good idea. Yes, they are soon to sell their retirement nest eggs, homes, stocks, etc. To pay for medical care, vacations, lifestyle choices etc. Since there are fewer of us left over to support them, woe is unto us. Falling home values, falling stock values and rising taxes to pay for it all. And unfortunately the politico's will be kissing their arse.
ummm, it all depends. if they cash out and spend that cash to pay off bills, or buy more things, it can only help the stock market. behavior is hard to change and I can imagine that the boomers will have a few good years off, "blow it all," and be back to working.
I also think that george bush wants to end social security so "stock market demand is created."
The bigger problem, in my opinion, is: our economy rewards "achievers" and if these "achievers" stop working then the "underachievers" are running the show.
To remain a world class economy, the "achievers" must stay in the game in some way.
With all that said, I truly believe that the stock market is a pyramid scheme-- even though I have a 401k and make maxium contributions to it and my roth.
The bigger problem lies with the pension funds since they use the stock market in an effort to achieve "10% annual growth."
The paradox is that unions are betting on capitol gains instead of labor! So things could be bad if the "capitol gains" don't translate into "future delivered labor at a reasonable price."
For the public pensions, especially, I saw that NY wanted capitol gain predictions to be based on the interest of state bonds instead of the stock market since, if the stock market doesn't perform then, theorhetically, the state would have to issue bonds. I truly see that happening since it might save the stock market by pushing off the repayment of debt into the future, yet again.
The way I look at it: half of what I put into my 401k was taxes that I "should have paid but didn't" so if the stock market takes half my money, what did I lose?
Rich Dad's Prophecy is about that very thing. The fact that IRA laws *force* you to take distributions after a certain age. I think for baby boomers it would happen in the early teens of the 2000s.
http://www.amazon.com/Rich-Dad-Prophecy-Coming-Yourself/dp/0446690341/
So, either the boomers:
1) Don't have anything saved
2) are going to cash out all their stocks and crash the market
These are somewhat incompatible. If they don't have savings they can't crash the market selling shares they don't have.
The owners of the shares will incresaingly be foreigners, Asians and petro-moguls who will get wealthy of the work of increasingly impoverished working people.
The "savings" of the boomers are in their homes
[i]The boomers (as represented by their incompetent and corrupt leadership) have already been the worst generation in US history, with their overall self-serving, greedy, reckless and arrogant ways. [/i]
Bravo, Keith.
A couple of years ago I asked a boomer relative what was going to happen to housing prices when his generation started retiring. His response was "we won't sell".
Guess what? He's since retired and put his house on the market. I know other boomers in the same position, except that many of them also have vacation properties they want to unload.
Gen-Xers have not acheived the high incomes (plus pension, rfree insurance, etc.) their boomer parents did, and high inflation is eating up much of what they do earn. The younger generations simply can't afford to fund the boomer's retirement by buying their overpriced RE.
Baby boomers are ready to leave California for the cheaper west and south. I talk to them all the time. I hear statements like- "I only paid $120k for my house and even with prices down, I can still sell it for at least $500k. So why should I pay the high taxes here since my kids are grown. To hell with this state!"
When they retire in a few years look out!
Wall Steet Ponzi Scheme has been bloated by Boomers. That 401K money pouring into Wall Steet Casino was the best financing the house ever saw. But the Baby Busters (Gen X, etc) just do not have the money or the numbers to keep the Ponzi going. Hence, the scheme to get Social Security money (financing). Who can take the place of the largest, fatest, richest group in the history of the USA?
Don't worry about the boomers, your worry should be the 12 million plus gate-crashers along with their anchor babies and their ageing parents. All on medicare, medi-cal, and SSI, that you will be paying for.
I heard on NPR that about 65% of boomers haven't got enough to retire and the ones that do have savings have a low average amount.
When they retire en masse they'll turn us socialist overnight rather than live badly.
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