The nerds are coming! The nerds are coming!
Demographic prophets warn that falling birth rates and an aging population will wreak havoc on the economy and lead to torpedo stocks.
But the dire scenario of zombie-like baby boomers devouring their working offspring turns the situation on its head. Aging is always and everywhere a sign of progress, not a threat to it.
Yes, America, like most developed countries, is aging. The Organization for Economic Co-operation and Development (OECD) estimates that in 1970, 9.8% of US residents were over the age of 65. At the beginning of 2023, he was at 17.3%.
In 2000, there were 20.9 people aged 65 and over for every 100 people of “working age” (what is known as the OADR or Old Age Dependency Rate). The current figure is 30.4, and the OECD predicts that number will exceed 40 by 2050.
This trend continues to be a major theme this century, with the Census Bureau predicting that America's aging population will peak around 2080. Would you like to invest in adult diapers?
No, let's celebrate.
All major economies age as they prosper.
Standards of living will improve and life expectancy will increase. Fertility rates decline along with infant mortality rates. American men born in 1900 lived to the average age of 46, and women to 48. Today, men are 73 years old and women 79 years old.
In the United States, in Europe, everywhere, we have had an even richer and more productive year thanks to incredible advances in health care.
Mick Jagger celebrated his 80th birthday before the Stones played at MetLife Stadium in May. AARP sponsors that tour, and I'm not kidding. However, many baby boomers spend a lot of money to get tickets.
Do you want “good” demographics instead? Be careful what you ask for. Countries with low aging rates (and therefore low OADRs) almost consistently suffer from poverty, short life expectancies, high infant mortality rates, and dire economies, markets, ecosystems, and lifestyles.
Still, demographics are not destiny. It's innovation. History shows that aging does not hinder growth or stock prices. In 1982, his OADR for America was 20. Since then, we have flourished rather than plummeted. GDP has tripled. Since then, the S&P 500 has returned 11.8% annually.
Yes, as always, there were cyclical recessions and bear markets everywhere. But growth continued and stock prices rose.
Catastrophic people imagine old people as penny-pinching parasites. Growth killer! mistaken. In 1984, Americans aged 75 and older spent only half as much as those aged 25 to 34. By 2023, that percentage had jumped to nearly 80% of her. Once again, this is the law of prosperity that comes from innovation. Longer lifespans and longer retirement ages allow older people to earn and spend more. Yes, people age 75 and older spend only 59% of what people age 45 to 54 spend (the highest spending group in America). However, this is significantly higher than the 39% in 1984.
We nerds invest and fund the magic of capitalist growth. Gift it to the descendants of those who spent it. Many of us continue to work into our 80s. (I'm 73 years old, and I don't see him retiring.) As the legendary investor Bernard Baruch once famously said, “Old age for me means he's always 15 years older than me.” .”
Age doesn't matter as much as it did when Baruch was born in 1870. Currently, physically demanding and dangerous agricultural and factory jobs are decreasing, and service industry and information-related jobs are increasing.
Accumulated experience and technology will make older people more productive, not less. (Yes, I know President Biden can't consistently string together a coherent sentence and that dementia is hitting a lot of people. It's all part of the statistics).
Demo destroyers also incorrectly infer recent trends. Who really knows whether birth rates in developed countries will continue to decline? Or how will immigration move skilled labor? Or what efficiencies will new innovations bring? ?
KK? They price the factors that affect a company's profitability from 3 to 30 months in advance. No more. Demographic trends evolve glacially over decades, and markets adapt over time.
So let the protesters continue talking. They are building a wall of fear brick by brick and only increasing this bull market.
Ken Fisher is the founder and executive chairman of Fisher Investments, a New York Times bestselling author, and a regular columnist in 21 countries around the world.
