The world has witnessed the unfurling of the Boomer Bull Market between 1982 and 2000, marked by impressive growth and buoyant optimism. Fast-forwarding to the modern era, we stand at the cusp of what can be termed as the “Millennial and Gen Z Bull Market.”
The Historical Playbook
In the era of the Boomer Bull Market, charts from that period distinctly showcase the demographic milestones achieved. This was a phase when the S&P 500 took an upbeat secular trend, fueling investments and market enthusiasm.
Yet, by the dawn of the 21st century, the financial landscape shifted. Between 2000 and 2012, we witnessed a ‘secular period of stagnation’, a phase where the S&P 500 experienced oscillations. This was exemplified by its pattern of moving above and below the 200-week moving average. The financial horizon brightened from 2013-2016, marking the early indications of a new secular trend.
Despite the bullish underpinnings, the market encountered challenges, such as the 2008 downturn, where it reversed and accelerated downwards. However, the trend has been shifting positively between October 2022 and early June 2023. The stand that the S&P 500 made in October 2022 at an upward-sloping 200-week moving average echoed the potential of a continued secular trend.
Demographics as Market Movers
Demographics have always played an instrumental role in economic shifts. Consider the adage, “You can’t stop demographics.” When we dissect the economic activities of different age brackets, patterns emerge. Younger individuals, fresh in their careers, usher in enthusiasm, while those in their mid-thirties to mid-fifties bring in experience and stability. This synergy holds vast potential for economic productivity.
Moreover, the intertwining of Millennials and Generation Z with the economic fabric is ushering in a double boost. This generation, characterized by its tech-savviness and global perspective, has shown trends of increased education and earning potential.
The AI Revolution
One can’t discuss the modern financial landscape without mentioning Artificial Intelligence (AI). Analogous to the introduction of the IBM PC in 1981, the adoption of AI has the potential to propel markets further. Widespread incorporation of AI tools is predicted to surge global GDP by 7% and escalate productivity growth by 1.5% over a decade.
The Future Blueprint of Housing
With an aging Millennial and Gen Z population, there’s a budding opportunity in the housing market. Post the financial crisis, there’s been a noticeable dip in housing supply, creating a ripe situation for homebuilders and the housing market at large. The bullish trend observed in housing stocks from 2017-2023 attests to this potential.
The Road Ahead
Considering these factors, asset allocation strategies need adaptability. The present trend suggests a demographically driven secular bull market poised to continue until 2034. While normal volatility is anticipated, the broader perspective remains optimistic. However, as always, the winds can shift, necessitating a pivot to more defensive portfolio allocations.
In conclusion, the blend of demographics and technological advancements like AI is intricately reshaping the financial markets. The dance between these factors will determine the contours of the global financial landscape for years to come.
