15 Year Bear Market Predicted for Stock Market
Economists working for the San Francisco Fed have come out with a research paper bounding the upcoming retiring baby boomers and current stock prices together. Their analysis is that the baby boomers will continue to reduce their stock holdings as they retire and dip into their savings for basic necessities during their retirement years.
This finding predicts the actual S&P 500 P/E ratio should decline from about 20.31 as of August 2011 to about 8.3 in the year 2025 with the actual bear market having already started in 2010. Basically, following the Secular Bear Market of 1966 through 1982.
The model-generated trajectory for real stock prices implied by demographic trends is quite bearish for the stock market. Real stock prices are predicted to follow a downward spiral until 2021 when real stock prices should begin to climb.
Investors should expect a strong stock price recovery by 2030, where data suggests the real value of equities will be about 20% higher than in 2010.
Suggesting that there is a 15-year bear market in front of us by the San Francisco Fed, where multiples will fall by another 59% is just unimaginable — and then waiting another 20 years to see an improvement in stocks, it’s the worst kind of “Fed Speak” to come out in years.
There is now no wondering why the economy hasn’t improved — if these San Francisco Fed economists would work on model-generated improvements for the economy, we might just have a Secular Bull Market in our future with the right solutions presented and carried out.
Tags: Baby Boomers, Bear Market, Bearish, Demographic Trends, Economists, Economy, Fed, Fed Speak, PE Ratio, Predicted, Real Stock Prices, Retirement, S&P 500, San Francisco Fed, Secular Bear Market, Secular Bull Market, Stock Market, Stock Price Recovery