Looking for a Demographic Dividend

Listen to the Non-Economists

A few years ago that noted economist P. J. O’ Rourke opined that deciding whether to buy stocks or not was easy. He pointed out:

“We baby boomers have caused everything since 1946. We’ll keep buyings stocks until we retire. But when we hit sixty-five, we’re going to sell stocks. And the stock market is going to go down. And we’re going to wet ourselves.” (Eat the Rich)

As usual, PJOR was more right than the real economists, whoever they are.

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The Case Against Re-Emerging Markets

Brave Punditry

If you’re of a contrarian viewpoint you might cast your eyes across the pundit’s tips for the best performing sectors of 2010 – or, indeed, any year – with a slightly jaundiced eye. This year’s favourite flavour of investment is emerging markets. There are strong and powerful arguments in support of this particular long-term trend but you’ll rarely find the short-term value counterargument.

Counterarguments are critical for sensible value investors, because they force us to consider what could go wrong despite what our deceitful and biased brains are telling us. Any idiot can see what can go right – and, indeed, they spend a lot of time telling us about it – but putting a purely positive spin on any investing situation doesn’t come close to providing a sensible basis for allocating our valuable and scarce capital.

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