The Baby Boomers are a bubble generation. By that I mean that their size compared to previous generations naturally tends to cause bubbles to occur. If this doesn’t necessarily sound convincing, look at the graph below that shows the percentage of the US population over age 65 from 1950 to 2050. The percentage over 65 in 2010 was around 13%. By 2030 the percentage will be 20%. This might not sound like a big change, but the growth between 13 to 20 is nearly 54%!
A 54% increase in the population over 65 years old in the U.S. will cause a number of industries to experience a major amount of growth. This will be equivalent to running with a strong wind at your back. Even if you’re not that great of a runner, you’re going to do much better because nature’s force is on your side.
As I’ve said before, a trend like this enables you as investor to be able to make some strategic decisions that have a very high probability of coming true. One example that I like to use because it’s pretty obvious is REITS that have a large exposure to retirement communities and assisted living facilities. No only will you see more of these properties, but they will need to expand.
This all sounds great, except it might not be the best idea to go out tomorrow and wager all your money on a handful of REITS. What you need to be doing is looking at REITS that serve this ‘bubble’ population and study where a dream buy price would be. We are in 2016 and 2030 is still a ways off. The market is going to have some form of correction between now and then, possibly multiple. Based on this assumption, it would be prudent to wait until a sell off arrives before dedicating a significant amount of capital to these investments.