5th Post - Future of Stocks

Here are my thoughts on the future of stocks. Now, like I have stated before, nobody knows what is going to happen in the future, so my guesses are as good as a monkey guessing what is going to happen in the future. I normally would not put credence into many of the theories about the future of the market, especially ones that say everything is going to crash. But it seems that everything that had less than 1% of happening are now happening. Who would have thought last year that Lehman Brothers and Bear Stearns would no longer exist. I had never checked to see if a bank was FDIC insured before, but now I do. I just want to point out a couple things that I have read about.

• Baby boomers retiring - This one comes from Robert Kiyosaki. He believes that as more people retire, they will take out money from the market. He says the law says that 401k have required distributions and when you sell the market goes down. He says that after 2016 (I think) more people will be taking out money than putting money in, causing the market to fall. Now, this makes sense to me. The only problem I have is that he assumes that all the money that comes out will not go back into the market once it is distributed. Another reason this may not come true is that we now have a large amount of international money coming in the market from sovereign wealth funds. I don't know if that will blunt the effect of the required distributions but it is something to think about. Also, I have heard rumors that with the recent downturn they may be changing the rules requiring distributions and it is possible the government might let people keep money in their retirement accounts.
• 40 Year Cycle - This one is a little out there, but it seems to have come true in the past. It seems every 40 years the market crashes. And it looks like from year 36-40 of the cycle is the worst part. The last crash was 1974, so that makes 2010-2014 the worst of the next 40 year cycle. If this is true, Obama is going to have a tough time. I like the 3rd chart that the link shows. Click here for chart.
• The Obvious - There are also the obvious reasons why the market will go down. I have heard that we still have a commercial real estate crash and a credit card crash coming. And then there is the inflation that is coming with printing all this money. We'll see what happens.