January 11, 2012
A Houston-based investment manager warned Tuesday in Colorado Springs that U.S. stocks likely will suffer through several difficult years starting later this year as an aging population reduces the consumer spending that accounts for about 70 percent of all economic activity.
Michael Robertson, CEO of Robertson Wealth Management LLC, said the number of U.S. residents reaching their peak spending years will fall sharply in the next several years, which likely will mean reduced consumer spending and declining stock prices. He made the comments to about 70 local business owners, entrepreneurs and others attending the first of a series of speeches hosted by the El Pomar Institute for Innovation and Commercialization at the University of Colorado at Colorado Springs. The monthly series will bring in national speakers to discuss economic vitality with local business leaders.
Nearly two-thirds of the nation’s adult population were between the ages of 45 and 64 and 12 percent were 65 or older sometime during the previous decade; nearly 70 percent will be 65 or older and just 7 percent will be between 45 and 64 sometime during the current decade, Robertson said.
“When you retire, you stop spending. These people are not going to spend no matter how much you want them to,” Robertson said. “When we stop spending, it has an impact on the world because the world wants to sell to us. We are slowing down our spending.”
Robertson compared the impact of U.S. demographic trends likely will have on the nation’s stock markets with what happened to the Japanese stock markets during the 1990s, noting that Japan’s population peaked in 1989 and steep declines in its real estate and stock prices soon followed. While immigration into the U.S., much of it illegal, will help offset some of the impact of an aging population on the nation’s economy, he said the affect of a smaller generation reaching their top spending years cannot be avoided.
“I am not guaranteeing that the market will do down, but I think we are headed downward,” Robertson said. “Unless things change I am taking my clients out of the market in June. If I am wrong they will miss two or three quarters, and in the past decade the market has gone nowhere. If I am right, they will miss two years of pain. The whole thing about making money is not losing it. Nobody gets it all right, and generally the best money managers are only right 40 percent of the time. Those who make money limit their downside.”
Robertson said he plans to move most of his clients into short-term U.S. Treasury securities, which he believes will benefit from continued debt problems in Europe but avoid losses even with very low yields. He added that he plans on not charging fees to clients for the second half of this year.
The next talk in the EPIIC series is scheduled Feb. 13; no speaker has been named.
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