Friday, July 30, 2010

Demographics

Paradigm Shift Explained by Demographics

The single most important question in the world of finance is who will buy the product?

Baby Bust
Very simply there are not enough buyers aged 25-45. Demographics promise that it will be a long time before housing returns to the highs of 2007. Somewhere along the line everyone forgot about the baby bust that started in the USA in 1965 and ended in 1990. The group shuttered schools and retired teachers. Now they are closing building companies and retiring contractors.

No one noticed that the baby bust might buy fewer things. No one considered that the impact of 15 years of one small population segment similar to the population drop between 1930-1945. The baby boomers and the echo boom were so overwhelming in numbers that it was easy to forget the group. But now they are old enough to contribute to the market place, and there aren't enough of them to buy all the houses available.

1930-1945 marked the closing square of the previous Uranus Pluto conjunction (1850). 1963-1969 Pluto and Uranus were conjunct in Virgo. 2009-2014 they will arrive at the opening square. The conjunction reduced the number of babies born and it appears that the opening square might do the same. Conjunctions, squares and oppositions of Pluto and Uranus seem to foretell economic birth control.

Does this single statistic change how you invest? Does it change the type of stocks you buy for the long term? There is an article in Barrons and on the Yahoo Financial page concerning the demographics of real estate sales. It only talks about housing, but think of the related industries that suffer with fewer households forming.

This is just the beginning of the Pluto transit through Capricorn. He is determined to Whack the housing business. He has a few other businesses in mind check the article on Astrological Investing.

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