Does The Bull Market Have Staying Power? CNBC Theme Of The Day -- May 9, 2024

Locator: 47107INV.

This was the big discussion on CNBC -- whether the "bull market" has staying power. And not once -- oh, there it is -- the Bank of America spokesperson -- he's got it exactly right -- said what is said below, posted back in April 7, 2024. Says to look back to the 1990s -- an incredible decade.

Is anyone paying attention to the oil sector and AAPL:

• CVX: up $2.47, up 1.52%;
• AAPL: up almost 1%; up $1.59
• it still boggles my mind what Buffett sold in the past six months.

Re-posting -- Locator: 46941INV -- April 7, 2024

This has been a common and recurring theme on the blog. 

Link here.

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Re-Posting

Locator: 46855INV.

The US market.

• S&P 500 closes at 5,248, a new all-time record.
  
• AAPL: up $3.60 today; up over 2%. See if you can connect the dots with this one below.
  
• This sure doesn't feel like an impending recession. CNBC analysts and talking heads have pushed concerns for a recession out to 2025.

Where's all this money coming from?

• Covid-19 stimulus money;
• Milton Friedman's velocity of money;
  
• my favorite chart;
• IRAs: see below
  
• southern surge: a $7 trillion gift
  
• (this would require a stand-alone blog -- but elevator speech: federal and state aid; a new agency within the Department of Homeland Security?) 
• TSA: $11 billion budget; 60,000 employees
• Citizenship and Immigration: <$1 billion; 4,000 employees
  

Baby boomer age wave theory: link here.

• baby boomers: note the size of this demographic at the link;
• who has all the money? who has all their medical care expenses paid for? whose houses are paid off?
• birth years: 1946 - 1964
• ages (2024): 60 years old - 78 years old; mid-range: 69 years old -- today, 2024
  
• IRS: RMDs -- about 4% annually

• ICYMI: in the box above, it's trillion with a "t." That's even more than Elon Musk's bank account.
  

Addictions:

• baby boomers: booze, cigarettes, gambling, muscle cars, sports, making money, malls, products,
• big families, extended families (inherited money diluted to "barely enough to live on"))
  
• millennials, Gen Zers: tech, travel, home delivery, services
• small families (inherited money remains concentrated)
  

Quick: name a time in the history of the US with the same data points, demographics, and addictions.

Updates

March 27, 2024: one year later ...

• "Max" chart:

Original Post
January 22, 2023

Key dates to remember with regard to IRAs:

• 1970
• 1981
• 1997

When did IRAs truly start to impact the economy? I would argue, 1995, to some extent, but then took off in 2007:

• 1970: traditional IRA introduced
• 1980: folks became comfortable with IRAs
• 1997: IRAs improved by a huge amount with the introduction of Roth IRAs
• 2007: another ten years of traditional IRA / Roth IRA growth in popularity

Now, look at this graph:

 Same chart with markers and comments:

Demographics, US:

Look at this, and no one seems to be mentioning this.

Age when one can start taking distributions from one's IRAs: 59.5 years of age.

IRA RMDs by demographic (note, data is somewhat old):

• silent generation: minimal impact on economy with regard to RMDs
• those who have IRAs are probably using RMDs for nursing home expenses
• baby boomers: biggest impact on economy with regard to RMDs
• those born in 1964: turn 78 years of age this year
• those born in 1946: turn 60 years of age
• in other words, every -- repeat, every baby boomer can now take RMDs
• my wife has been taking distributions before they were required and now RMDs for maybe ten years and despite the withdrawals year-after year, her IRA continues to grow
• I start taking my first RMDs this year 
  
• almost all baby boomers can now tap into their social security benefits
• almost all baby boomers are covered by Medicare. Medicare benefits got even better in 2024 (thank you, Mr Biden), seniors will spend less money on healthcare (all things being equal)
  
• 529s: a lot of baby boomers (GRANDPARENTS) are going to look for tax-advantage accounts to place RMDs they don't need for current expenses
• 529s have vastly improved starting this year (or last year?) making these investment vehicles look even better -- I'm having trouble finding a better place to re-invest my RMDs
• interestingly, one can argue that 529s are even better than IRAs
  
• generation X: will start to make impact this year but not much, but it will continue to grow every year for the next decade or so
• those born in 1980: turn 44 years old this year; no impact on economy with regard to RMDs but starting to hit max income / max productive years of their lives
• the younger Xers, now in the best years of their lives, financially, are now more likely to fund IRAs and that will help set a floor for the equity market; 
  
• those born in 1965: turn 59 years old this year!
  
• this is the biggie
• starting this year, generation X folks can start tapping their IRAs; it doesn't mean that they will but it means that if they don't, they have enough other income to offset any need for IRA distribution (meaning strong financial status for those folks)
  
• again, this is huge
• Roth IRAs have been around 27 years and the last 27 years have been great for investors, but
• even better: the way the market behaved last year and how the market is now behaving in the second half of January, 2024, a lot of folks are getting excited
• my hunch: a lot of folks are taking some / all of their RMDs this month; if not their entire RMD, taking a fourth to half of their annual RMD
• only a few more years and Xers will also be able to access social security benefits, also 
  

On top of all this, this "RMD story" is not going to go away. Year-after-year RMDs will increase in dollar amounts, but whether they increase or not, they will never quit.

And we haven't even begun to talk about "inherited RMDs":

• "inherited RMDs"? Reminder, oldest baby boomers turn 78 years of age this year -- IRS life expectancy for IRAs tend to trend toward 100 years of age -- taking only minimal RMDs, the vast majority of IRAs will still be funded and growing when their own dies.
  
• unlike owners of IRAs who can spread their RMDs over a life expectancy (26 years or longer), beneficiaries (those who inherit IRAs) must deplete those IRAs in ten years.
• one word: wow.

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Disclaimer: Briefly

Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.

See disclaimer. This is not an investment site.

Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here. 

All my posts are done quickly: there will be content and typographical errors. If anything on any of my posts is important to you, go to the source. If/when I find typographical / content errors, I will correct them. Reminder: I am inappropriately exuberant about the US economy and the US market, I am also inappropriately exuberant about all things Apple.