Will you be able to blame the Baby Boomers for taking the market down when we start to cash out of our retirement plans?
Robert T. Kiyosaki, the incredibly successful author of "Rich Dad, Poor Dad" and a leading edge Baby Boomer himself, set up that scenario in a 2002 book, "Rich Dad's Prophecy," but since then other forecasters have found less cause for alarm.
Robert Kiyosaki noted that the laws that created Individual Retirement Accounts and 401(k) plans require people to start taking withdrawals from these tax-favored accounts at age 70 1/2 , which is in 2016 for the leading edge of the baby boom. He predicted that dynamic combined with "millions of Baby Boomers needing money for medical expenses" could create a sell-off.
Kiyosaki said he is still worried about such a prospect today, but he lists it as only as one of many ills that he thinks could undermine financial markets. His current list includes the declining value of the dollar, followed by the cost of the war, the price of oil, the growing deficit and the fact that the dollar is no longer pegged to gold. "It's not the biggest thing. It's just a factor," he said of the concern that the Baby Boomers could start a market meltdown.
The Real Estate Market's Impact on Financial Markets
Has housing hit bottom? Not if history is any guide, says Hugh Moore, a partner at Guerite Advisors, a money manager in Greenville, S.C. Using data from the seven previous housing cycles since 1959, Moore concludes that the sector will fall further and land hard.
Take housing starts. In the past, they fell an average 51% from peak to trough. So, the current downturn, with housingstarts off about 30% from the January 2006 peak, has further to go. And it may meet recession on the way. That's because in six of the seven cycles, when starts fell more than 25% from their most recent peaks, the economy tanked.
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