In his latest MarketWatch column, Mark Hulbert takes a look at some interesting demographic trends and predictions that could impact stock market moves over the next decade.
“For years now, there has been a drumbeat from economists about the increasing proportion of the U.S. population that is in or approaching retirement,” Hulbert writes. And that is indeed a powerful demographic trend. “But the increasing proportion of the population in the below-15 cohort is a powerful trend as well, and it will have dramatic effects on the long-term health of the U.S. economy.”
Using data from Ned Davis Research, Hulbert says that, contrary to what many assume, by 2020 a greater portion of the U.S. population will be under 15 than will be under 15 in China. And the U.S. is also projected to have a higher percentage in the under-15 bracket than most European and other Asian countries. But while the over-65 and under-15 cohorts will be expanding in the U.S., the portion of those who fall in between will be shrinking, according to Davis’ projections.
“The investment implications of these trends are enormous, according to these researchers, since the typical individual’s peak earning power, as well as expenditures, occur within these shrinking cohorts,” Hulbert says. “Among those companies that will be most adversely affected are retailers that depend on the U.S. luxury market — such as Nordstrom and Coach.”
Hulbert also points to a study that shows that even if long-term demographic trends are known and predictable, they often don’t get baked into stock prices. That means big opportunities await those who take note of the long-term trends, he says.