Monday, November 27, 2006


Even after the strong market rally of the past 4 months, stocks remain cheap relative to bonds and real estate. Why?

Having written many times times about the pending retirement of 78 million American "Baby Boomers", I recently realized that I have joined a large "consensus chorus". I checked the books on my bookshelf and realized that virtually all financial books written in the past 5 years have at least one chapter on the pending "baby boom bust". The series by Harry Dent, including "The Next Great Bubble Boom: How to Profit from the Greatest Boom in History: 2005-2009" has been among the many books saying that once the boomers start retiring, the world is in for a lot of hurt. Dent and others who rely on demographics to forecast the future have been forced to adjust their calls year after year. Immigration was just one of several things to throw off the forecast.

A lot of folks believe in self fulfilling forecast but markets always ultimately defeat (write for the rest.)