Will an Aging America Cause Lower Stock Returns?

The relationship between supply and demand is widely understood in economics. But does an aging America mean future stock returns will be lower as older Americans sell stocks for day-to-day needs in retirement?

Most economists I’ve spoken with on the matter in recent years have expressed concern about this very dynamic. It’s also a rational, simple explanation for several things. But while supply and demand are still present forces, this thesis makes a number of implied assumptions. The foremost being that baby boomers will be the only supplier of savings (capital) to the productive businesses that need it (in the form of stock purchases in the primary/secondary markets).  Read the rest of this entry »