The surge in retiree ownership could worsen market downturns

  • Retirees now own a record 80% of the U.S. stock market
  • This could pose a threat during the next market selloff
  • Demographically induced selling by older Americans could exacerbate the downturn
  • Heavy ownership of stocks by retirees could impact consumer spending
  • Stock market ownership by retirees has increased from 60% in the 1990s to 80% now
  • Losses in the stock market could lead to a decrease in consumer spending

Retirees now own a record 80% of the U.S. stock market, which poses a threat during the next market selloff. This surge in ownership by older Americans could exacerbate the downturn, as they may rush to sell their stocks. Former Merrill Lynch economist David Rosenberg warns that demographically induced selling could have a powerful impact on the market, with ripple effects on consumer spending. The heavy ownership of stocks by retirees has increased from 60% in the 1990s to 80% now. If stocks start to drop, retirement-age investors may be forced to rebalance their portfolios, leading to losses and a decrease in consumer spending.

Public Companies: Merrill Lynch (N/A)
Private Companies: Rosenberg Research
Key People: David Rosenberg (Former Merrill Lynch economist, Founder of Rosenberg Research)

Factuality Level: 7
Justification: The article provides information from a market economist, David Rosenberg, who warns about the potential risks of a high percentage of U.S. stocks owned by retirees. The article includes data on the ownership of stocks by age groups and discusses the potential impact on the market and the economy. However, the article lacks additional perspectives or counterarguments, and it does not provide a comprehensive analysis of the potential risks or the likelihood of them occurring. Therefore, while the information presented is based on the economist’s viewpoint, it may not provide a complete and balanced understanding of the situation.

Noise Level: 4
Justification: The article provides some relevant information about the potential risks of heavy ownership of stocks by retirees and how it could impact the market and the economy. However, it lacks in-depth analysis, data, and evidence to support its claims. The article also includes some irrelevant information about stock market futures, which is unrelated to the main topic.

Financial Relevance: Yes
Financial Markets Impacted: The article highlights the potential threat to the U.S. stock market and the economy due to the heavy ownership of stocks by retirees. If a downturn occurs, the rush of older Americans to sell their stocks could exacerbate the spiral and impact consumer spending, including areas such as elective medical care, leisure, travel, and hospitality.

Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses the potential risk to the U.S. stock market and the economy, but it does not describe any extreme events or their impact.

Reported publicly: www.marketwatch.com