Demographics Say Bull Market Could Last Until 2035

What can we learn by overlaying demographic data on top of a long-term chart of the stock market?

Demographics play a significant role in shaping the economy and financial markets in several ways. The composition of a population, including age, income, education level, and geographic distribution, can have profound effects on economic growth, consumption patterns, labor force dynamics, and investment trends. Here are some key ways in which demographics impact the economy and financial markets:

Labor Force and Productivity: The size and age distribution of the workforce directly influence economic productivity and potential growth. A young and growing population may contribute to a larger labor force and increased productivity, which can fuel economic expansion. Conversely, an aging population with a shrinking labor force might lead to reduced productivity and slower economic growth.

Consumption and Saving Patterns: Demographics influence consumer behavior and spending patterns. For example, younger populations often have higher consumption rates as they enter their peak spending years, while older populations tend to save more and reduce their spending. These trends can impact various industries, from retail to healthcare and leisure.

Housing Market: Demographic shifts can affect the demand for housing. As the population grows or migrates to certain regions, housing demand may increase, leading to higher property prices. Additionally, changes in household compositions, such as more people living alone or multigenerational households, can impact the types of housing demanded.

Social Security and Pensions: An aging population can put strain on social security systems and pension funds. With more retirees relative to the working-age population, there might be a higher dependency ratio, potentially leading to increased government spending and financial pressures on public budgets.

Investment Patterns: Demographics influence investment trends. For example, as the population ages, there may be increased demand for healthcare services, pharmaceuticals, and retirement-related products. Understanding demographic shifts can help investors identify sectors and companies likely to experience growth.

Interest Rates and Inflation: Demographic changes can affect interest rates and inflation. A large working-age population may lead to higher demand for credit, potentially resulting in higher interest rates. Conversely, an aging population with reduced demand for credit and increased savings might contribute to lower interest rates.

Long-term Economic Prospects: Demographics also play a role in shaping a country's long-term economic prospects. For instance, a youthful and educated population may foster innovation and economic dynamism, while an aging population may face workforce shortages and challenges in maintaining economic growth.

Immigration and Globalization: Demographic factors influence migration patterns, which, in turn, can impact the economy and financial markets. Immigration can bring new skills and labor to a country, contributing to economic growth and diversifying consumer preferences.

Understanding demographic trends is crucial for policymakers, businesses, and investors to make informed decisions and prepare for future economic and market developments. By considering the potential impact of demographics, stakeholders can develop strategies that align with the changing needs and demands of the population.

[Dantecrypto]

The best investment one can do right now is investing on Forex trading though stocks are good but ever since I swapped to Forex, I've seen so much difference

[sanshuma]

Brilliant episode! Chris spending significant time on one chart diving deep from several angels was new; and this format was very effective for wholesome digestion of the argument made ...

[jon]

A couple things here. 1) The 2nd largest demographic - boomers - are going to cash out their 401ks which means constant selling pressure for 20 years. It will go into sectors like leisure and healthcare, but it will be a drain on the rest of the market. 2) our debt to gdp is dangerous and could create major financial problems in the next decade. 3) interest rates went from 20% from 1980 to 2008. Now they are going back up. 4) huge wealth was created by globalization and there are new geopolitics stresses jeopardizing the bretton woods status quo. 5) millennials peak earning years could be completely upended by AI.

[johnmason]

Chris, always great content. This week is excellent. Thank you much!

[KTTatara]

I'm skeptical this will play out this closely to the past. It may be closer to 2028-2032 as an end. The reason is there are other demographic things to consider that are different that the previous green boxes. The avg life expectancy after retirement for the boomers may be longer than the greatest generation in 1980-2000. This will increase healthcare costs that may offset the distribution spending.

Another thing is the amount of births of the boomers (and millennials) are not evenly distributed. So its not "more and more each year until 2035 taking distributions". Boomers peak births were in 1957, turning 72 in 1929. Births decline after that. Add to that the oldest boomers will be 83 and that's one of the most common ages of dying, you also will start to lose the 401k effect going forward after that. Granted this itself may be offset by the fact the millennials will just be inheriting this wealth

Another thing is children. In 1980-2000 the boomers were having the millennials, peaking in 1990. The Millennials are not having a similar baby boom so far since 2014.

In short I believe it's not just about a generation being in the 35-54 age range alone but how well that group does in addition to how many old people you have and how many kids you have during that age range

[adriang]

Terrific video. Very informative . Thank you

[jeffreylindley]

Well, opinions are like you know what. Everybody has one. The fact is we have interest rates higher than they have been in 16 years. The FED isn’t going to stop sticky inflation without putting a bunch of people out of work. This will hit earnings eventually. Stocks are over valued and WILL come into equilibrium. Don’t buy this market. Just buy treasuries and wait for a better entry point.

[nengnengnengable]

Interesting analysis, but we are facing a different macroeconomic and geopolitical environment compared to the past 60 years. In 1989, we still had more modest equity valuations and reasonable sovereign debt ratios. I would be interested in seeing this analysis performed from the 19th century.

[louisyeung]

It appears the channel likes to talk about long term drivers when there is short term pull back risk

[JohnWayne-soct]

I don't like logarithmic charts they scew the information... imo unless it's a percentage

[sruler]

Interesting that the dip in 87 about lines up with the dip last year

[GaryHor]

Really interesting analysis, Chris. Been a long-time watcher but this is my first time commenting. :) I'm curious as to why isn't Gen X taken into consideration? Especially when that generation entered its own peak productivity period (ages between 36-54, starting from 2001 to 2016). Digging deeper (and I'm just postulating right here), that it's because Gen X has a lower population count when compared to Boomers and Millennials, hence their impact on the overall economy/stock market is not that consequential. Would that be the case? Love to hear your take on this.

[sashaziramov]

I feel invisible and useless right now. GenX.

[stevenk]

...and GenX retires early (FIRE) and quietly sails away under the radar. No handouts, no need for institutions.

[Lizparzen]

I'm glad I got into crypto when I did because it’s been a turning point for me financially, been my best decision so far.

[christopherstewart]

If you want to know how to position during those sideways orange boxes, take a look at gold during those time frames. A case could be made that you should be in either stocks or gold for years at a time.

[billmc]

Maybe, but no one can predict what's going to happen, especially that far out, making this prognostication pointless.

[GaneshD]

Excellent work! Great analysis of main street and wall street, using both qualitative and quantitative data. Thank you Chris and Kathy for your weekly postings!

[rl]

Excellent research and presentation. Thank you.

Another consideration is with skyrocketing obesity rate, a following spike to the mortality rate will soon be expedited. I'm going to overweight (ahem) Healthcare.

[luismunozizkerdo]

Great video with a really interesting approach! Thank you!👏