Demographics
Amlan Roy reviews how the study of population affects many of our core investment and policy decisions.
How has the consensus among economists on such issues as deficit spending and population growth shifted over the decades?
As the population ages, who will be left to buy stocks?
Is a portfolio long or short volatility? That question is becoming more and more critical.
“People tend to think rules don’t change, but in financials, they’ve clearly evolved,” says Thomas J. Lee, CFA.
"Why on earth worry about demographics?” asked Clint R. Laurent, founder and CEO of Global Demographic. Because "Demographics change quietly in the background," he explained. "Suddenly, the target market that you thought Company X was going to do well in no longer exists." Laurent identifies four key demographic trends that investors should keep in mind.
For Andy Acker, CFA, portfolio manager of the Janus Global Life Sciences Fund, these are especially exciting times for investors in the health care sector. Opportunities abound, as significant advances in understanding the genetic causes of disease have resulted in a surge in new and more effective treatments. At the same time, risks remain and a disciplined approach to stock selection and portfolio construction is imperative for success.
Geopolitical expert Peter Zeihan foresees simultaneous political crises that will erode local state authorities, unleashing violence and terrorism. Capital flight, driven by geopolitical concerns, will surely follow. “The result is a world that will fragment," he said. "The result is a breakdown in global trade.”
Advances in medicine and technology, combined with other forces in society, are coalescing to propel average lifespans easily toward 100. Tracey Wilen asked delegates at the 69th CFA Institute Annual Conference to consider what that means for their career planning. For most people, it will mean having to build a revenue stream that funds their later years for at least 10–15 years longer than was the norm over the past several decades.
The global economy will never again experience the rapid growth rates seen prior to the financial crisis of 2007–2008, says economist Dambisa Moyo. Why? Because of technology and demographics.