Liz Ann Sonders and Scott Minerd Poo Poo Demographic Concerns

By on April 3, 2013

Liz Ann Sonders - Charles SchwabLiz Ann Sonders, chief investment strategist at Charles Schwab, and Scott Minerd, chief investment officer at Guggenheim Partners LLC, discussed the prospects for future stock market gains with CNBC’s Joe Kernen, Becky Quick, and Andrew Ross Sorkin yesterday.

Sonders said the most telling thing from talking to Schwab clients is there are no signs of euphoria you see at the late stage of a bull market.

Much fun was then made of bears Alan Abelson and Nouriel Roubini.

Minerd said we were in the early phases of a long-term secular bull market which could last another 10-15 years. Minerd quipped that the demise of paper money was a positive for equities, as stocks can serve as “a pretty good proxy as a place to store value.” Minerd said their study of stock performance in different inflationary environments indicated equities do well when inflation is high. Minerd believes the stock market could rise 30-35% over the next three years.

A 20% correction would not be unusual in the bull market Minerd foresees. Minerd said he senses a lot of complacency he hasn’t observed in the four year bull market and we could experience a 5-10% pullback in the next 3-6 months.

Kernen brought up concerns regarding the baby boomers retiring and needing care with the entitlement state building up.

Sonders said demographics are important for understanding what the trends mean to health care, financial services, income generation, etc., however, when you add up the echo boomer generation it’s a “hefty chunk of folks.” The millenials tend to be more entreprenurial and weren’t burned by the two bubbles and they’re investing earlier in 401k’s on an automatic basis, Sonders noted.

Regarding demographic trends, Minerd said the working age population of the U. S. would increase by about 30% over the next 30-50 years and it was a myth that the retiring baby boomers would overwhelm the growing work force. This compares to Japan, Europe and China where it is going to contract, Minerd added.

Back in early January, Sonders correctly forecasted the debt ceiling debate would not have a calamitous effect on the markets [link].

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