Joshua M. Brown, Backstage wall street, 2012
[p.102]
In the modern era, no one has been more vocal about the inferiority of actively managed funds versus their passive peers than Vanguard's John Bogle. Bogle's contrary (if biased) take on the actively managed fund industry is one of the few that has ever been heard above the cacophony of marketing noise. There is one statistic that he and his faction want every investor to be aware of. In his 1998 book 'Common Sense on Mutual Funds: New Imperatives for the Intelligent Investor,' we are told that around 80 percent of all mutual fund managers fail to even MEET the return of the S&P 5000 every year, let alone exceed it. This inconvenient truth would be a dagger in the heart of the fund industry--if only the industry weren't so good at misdirecting our attention elsewhere.
While it's true that the appeal of the mutual fund has diminished over the last 10 years, the industry is still very much alive and well. [...]
[p.108]
The bottomline is that while the total assets under management at mutual fund companies has never been higher, it is unlikely to grow much from current levels ever again. Demographics have a funny and unstoppable way of thwarting the best-laid plans of entire industries at time.
('backstage wall street : an insider's guide to knowing who to trust, who to run from, and how to maximize your investments', Joshua M. Brown (2012), copyright © 2012, [332.6097 Brown], )
(Brown, Joshua M.; 'backstage wall street', copyright © 2012, publisher McGraw-Hill Companies, [332.6097 Brown], p.102)
____________________________________
Four Keys for Decoding
Four Perspectives (momentum, trend, cycle)
1. Fundamentals regress to the historical mean (financial markets) (Jeremy Grantham)
1.5 the tendency for all bubbles to revert to the mean ~Jeremy Grantham
1.7 the tendency to revert to the mean
2. What is unsustainable tends to stop (fiscal projections)
3. Demography is destiny (global aging) (Warren Buffet)
4. Generations and history have rhythems (the fourth turning???)
Neil Howe on Four Keys for Decoding America's Future
http://www.youtube.com/watch?v=PfcFhgVyNik
http://www.youtube.com/watch?v=PfcFhgVyNik
[p.371]
There is a math concept called "reversion to the mean"; this states simply that an extreme event is likely to be followed by a less extreme event. This is not a law, only a probability . . . .
So just as it seemed that the virus would bring civilization to its knees, would do what the plague of the Middle Ages had done, the virus mutated toward its mean, toward the behavior of most influenza viruses. As time went on, it became less lethal.
(The Great Influenza, the story of the deadliest pandemic in history, John M. Barry, © 2004, p.371)
____________________________________
[pp.107-108]
As can be expected, the majority of the mutual fund households are headed by members of the baby-boomer generation. They've been treated well by their involvement with funds over the years, at least until the year 2000 when the bull market in stocks that began in 1982 came to an abrupt and shocking end. Even still, boomers make up 44 percent of fund-owning households, followed by the Gen Xers, who make up only 24 percent of the total. (44 + 24 = 68, 32?) A big piece of the current mutual fund ownership pie consists of investors who first got involved with funds prior to 1990 (38 percent). Another large chunk of holders (21 percent) first brought mutual funds during the "Irrational Exuberance" Era between 1995 and 1999. Finally, 26 percent of fund investors have come in after the year 2000, and many of these have little or nothing to show for their purchases since stocks have essentially round-tripped during the last decade. (2012-2002)(38 + 21 + 26 = 85, 15?)
And now, much to the chagrin of the fund complex (and thousands of Boston Red Sox fans, thankfully), this dynasty over the investment business is coming to an end.
The fact that the boomers will be liquidating their equity funds over the next decades as they settle into retirement is lost on no one in the industry. About 58 percent of mutual fund--owning heads of household are between 40 and 64, and the median is tilting further toward 64 with every passing day. Boomers were the perfectly buy-and-hold, bread-and-butter investors that mutual funds lived off for the last three decades(30 years). Fund families learned how to market to them and what make them tick. And now they are going away.
The first baby boomers were born in 1946 when the war ended and America
s sailors and soldiers came home filled with, well, let's just say SPIRIT. If you add 65 years to 1946, you arrive at 2011--which means the first boomers have just started to hit retirement age now. Beginning in January 2011, there were 10,000 boomers per day who started turning age 65. This will continue until the year 2030 or when the robots enslave us, whichever comes first (I'm betting robots).
According to statistics supplied before the U.S. House of Representatives by Vanguard's John Bogle, more then 30 percent of investors in their sixties(60s) have greater than 80 percent of their 401(k) invested in equities, most of which is through mutual funds. The fund families will not be able to count on these assets for much longer, as required minimum distribution trigger redemption that our ongoing bear market couldn't. <skip one sentence> The mass exodus will leave no corner of the fund industry untouched.
('backstage wall street : an insider's guide to knowing who to trust, who to run from, and how to maximize your investments', Joshua M. Brown (2012), copyright © 2012, [332.6097 Brown], )
(Brown, Joshua M.; 'backstage wall street', copyright © 2012, publisher McGraw-Hill Companies, [332.6097 Brown], p.108, pp.107-108)
____________________________________
highly predictable nature of consumer spending based on a family's formation pattern
United States and like regions formation of family pattern:
● minimal spending as young adults,
● increased spending while rearing children,
● peaking their spending as their children leave home, and then
● slowing spending during the last 15 years of working life (48-63) while saving more and preparing for retirement.
Name: Harry Dent, Author of 'The Great Crash Ahead'
http://en.wikipedia.org/wiki/Harry_Dent
Dent says the combination of aging Baby Boomers exiting their big spending years and a shift toward debt reduction and austerity around the world will cause the economy to suffer another severe leg down, making it more difficult for the government and Federal Reserve to avert a new meltdown. He has not always been bearish. In 1993 he wrote The Great Boom Ahead. ([ there is another layer to this in how the spending pattern was given a little push after the 2nd war, for the able-mind-and-body men and women that came back home and did not come back home to the United States, I shall not explore it here. ])
The basis of Dent's research is the highly predictable nature of consumer spending based on a family's formation pattern: minimal spending as young adults, increased spending while rearing children, peaking their spending as their children leave home, and then slowing spending during the last 15 years of working life (48-63) while saving more and preparing for retirement.
In Japan, Dent was using their peak of 45-50 year olds (1990–1994) as the beginning of a long slowdown. In the US, he used, and continues to use, the peak year for 48-year-olds, 2009, as the top of a long term growth pattern.
http://en.wikipedia.org/wiki/Spending_wave
Dent popularized the baby boomer spending wave theory.[1] According to him, after baby-boomers' children leave home, they begin paying down debt and saving for retirement, which means spending less. That means the stock-market would have plateaued between 2007 and 2009, and remain basically flat through the fourth quarter of 2011.
____________________________________
how is the market being prop up?
who are the people who replace the baby boomer?
if the baby boomer generation is retiring, how large is the baby boomer generation?
by large, we mean the relative size in relation to the rest of the total population, the disposable asset and income
why an appreciation in asset price like a house or stocks or commercial organisations or ... is not called inflation
____________________________________
• ‘’Technological forecasting and social change‘’
Nathan Rosenberg, Inside the black box: technology and economics, 1982
pp.163-177
p.163
Chapter 8 Technical change in the commercial aircraft industry, 1925─1975
David C. Mowery and Nathan Rosenberg
p.163
this paper was originally published in ‘’Technological forecasting and social change‘’, 20, 1981, pp. 347─58. It is a much condensed version of “Government policy and innovation in the commercial aircraft industry, 1925─75”, written with David C. Mowery to appear in Richard R. Nelson (ed.), ‘’Government and Technical Change: a cross-industry analysis‘’ (oxford: pergamon press, in press).
“”─“”‘’•─“”
(Inside the black box./ Nathan Rosenberg, 1. technological innovations., 2. technology─social aspects., HC79.T4R673 1982, 338'.06, first published 1982, )
··<---------------------------------------------------------------------------->
