Yet the long-running story of boomers dumping their portfolios en masse on to the market and depressing equity values is mostly a red herring.
Baby boomers own an outsize helping of the market and are constantly reducing it, a process with significant implications for the supply and demand for equities, the interpretation of fund-flow statistics and the kinds of stocks likely to perform better and worse in coming years.
This means the long-running story of boomers dumping their portfolios en masse on to the market and depressing equity values is mostly a red herring.Harley Bassman, a longtime fixed-income executive at Merrill Lynch and elsewhere who now writes the Convexity Maven newsletter, notes that a large and growing flow of selling is mandated by law. IRA assets, for instance, are subject to mandatory withdrawals beginning at age 70 1/2. More than a quarter-million Americans turn 70 each month.
Again, this is all an overhang of supply of shares on the market but not in itself enough to drive sharp declines. For one thing, individuals control less than half of all U.S. equity value, so the demographic tidal shifts are one among many factors. But it helps explain the slow leakage of cash out of equity funds in recent years, illustrated here since the start of 2018.
Of course, this huge, slow-moving transfer of shares might not always match up so smoothly. For one thing, younger investors have had a harder time ramping up their earnings given two employment shocks in a dozen years and slower wage growth.
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