Debunkery: Learn It, Do It, and Profit From It—Seeing Through Wall Street's Money-Killing Myths

BUNK 31

BABY BOOMERS RETIRE, WORLD ENDS, ETC.

If you, dear reader, aren’t a baby boomer—you at least know what one is. And you know the greatest threat mankind has ever faced is . . . gasp . . . retiring boomers!

The story goes: The post-World War II “baby boom” left us with a giant clump of folks who are now in their mid-40s to mid-60s—so a huge wave of boomers will retire all at once, selling stocks to buy safe bonds for retirement—or burying cash in their backyards. And there won’t be enough productive younger folks to do all the work to keep those doddering old dependents in geriatric diapers. Hence stocks will fall hard and forever. Or at least for a long, long while.

Boomers Have a Long Time Horizon

Without our stout-hearted boomers propping up stocks as they did when they were younger and accumulating assets, stocks are doomed to fall, right? This is utter nonsense. The market is an exceedingly efficient discounter of well-known information. That the boomers exist has been well known since they started existing. That they would retire one day has been known just as long. Folks have fretted boomer retirement just as long. We can bicker about how fast stocks price in future events, but anything that long is clearly “long enough.”

Plus, if you’ve read Bunks 3 and 4, you know 65-year-olds (i.e., boomers retiring now) should live longer than any previous generation and have a long time horizon—20 years if not more. Much more if they’re healthy and/or have a younger spouse. ...