Baby Boomer population demographic

[Maverick]

With the aging population closing in on the retirement age, what individual stocks and stock sectors (for example: big pharma, retirement homes) are you going to play this massive population shift? Alternatively, do you believe this is an overrated ideology and won't be a significant factor in the next 5-20 years in the stock market?

[NATHAN LLOYD]

Japan had a stock sell off of 85% when their baby boomers retired because they were able to take their stock profits home; e.g., IRA's. Our baby boomers are about 3-5 years from starting to retire.

[loslobos71]

I like ELOS in this space. Aging baby boomers--> Increased wrinkles ---> we live in a vain society---> people will want them removed. In addition, laser treatments are not only for the rich--70% of Syneron's clients make <$50,000 a year. Thats my best play. I also like Starwood Hotels (or a hotel management trust, such as SHO) and Royal Carribean. Old people love to travel, period.

[Maverick]

Do you believe that J&J, Pfizer and Merck would be a good play on the population demographic? If not, do you have a better recommendation.

My feeling is that the drug subscription will only increase with the baby boomers getting older.

[optimus25]

In my opinion and personal experience, retiring baby boomers will need to stay invested in the stock market as our mortality has gone up a lot since the early 1900's. So, they'll need to stay invested to keep up with their standard of living.

Here is how its gonna look for baby boomers that still have a pension in terms of their income:
1. Social Security
2. Pensions
3. 401K's
4. other IRA's
5. Personal Savings

This is assuming, of course, that they've saved enough for retirement.

[optimus25]

Do you believe that J&J, Pfizer and Merck would be a good play on the population demographic? If not, do you have a better recommendation.

My feeling is that the drug subscription will only increase with the baby boomers getting older.

I agree with the above investments. Merck, Pfizer, and JNJ have all been beaten down as they've gone out of favor. I like Merck and JNJ. They should benefit with aging baby boomers.

I heard about a company that created artificial hips...that might a good play. Also, the vanity play with company's that provide Botox and plastic surgery.

[loslobos71]

I think that they will do well, but unless you are buying a bunch of these or an ETF, its just a bet on a specific drug or two. How about buying a company that operates hospitals or some type of healthcare information company that performs well when many people buy drugs but it doesnt matter which they buy. I remember reading about a prescription-label maker, but I cant remember the name. Quality Systems seems like a good candidate, fast growing and semi-reasonable valuations. Companies like Tenet or UNH might work as well. Good luck!

[Maverick]

My current play on the demographic boom (which will broaden out to more securities) are the following:

FMD.UN on the TSX - is a supplier of medical supplies and equipment to long term care facilities. 7.5% yield

CLC.UN on the TSX - diagnostic services business providing laboratory testing services such as x-ray, ultrasound, MRIs etc... for physicians to assist in the diagnosis of disease and patient treatment. 7% yield

CSH.UN on the TSX - owns and manages senior housing properties. 7.5% yield

What's great about trusts is that it gives me a good yield while I wait for the assumed healthcare boom in the market.

I would like to invest in the U.S markets but currency value is what's preventing me from doing so.

(For example, I would have been down 30% on an investment if I invested in the States two years ago. The Canadian dollar is on a tear right now because of the vast resources in energy and materials. Also the consensus by analysts is that the U.S. dollar will drop when the interest rates stop or decline. At the same time they speculate that the price of gold will sky rocket when the U.S dollar declines.)

[Maverick]

I think that they will do well, but unless you are buying a bunch of these or an ETF, its just a bet on a specific drug or two.


That's a very good point, I'll do a lot of research IF I choose to invest in the drug companies. The ETF is a good and probably safer choice.

[Maverick]

I agree with the above investments. Merck, Pfizer, and JNJ have all been beaten down as they've gone out of favor. I like Merck and JNJ. They should benefit with aging baby boomers..

Yeah. Additionally, Merck and Pfizer give a very good dividend - roughly 4.25% which is very appealing.

I heard about a company that created artificial hips...that might a good play. Also, the vanity play with company's that provide Botox and plastic surgery.

Botox and plastic surgery I view as a wild card. It could have a huge upside but I don't view the public at large spending tens of thousands of dollars on plastic surgery. I'm not an expert in this area at all so my statement is based solely on my perception.

[NATHAN LLOYD]

When I was talking about Japan, I was just throwing that out there, as something I read recently. Thanks for the feed back Optimus.

I agree about beat down health companies like JNJ, PFE, and MERK. They seem like good places for institutions to move money into. They're relatively safe with out much volatility and they've got plenty of upside with a dividend on top of that.

[MoMoney4Me]

With the aging population closing in on the retirement age, what individual stocks and stock sectors (for example: big pharma, retirement homes) are you going to play this massive population shift? Alternatively, do you believe this is an overrated ideology and won't be a significant factor in the next 5-20 years in the stock market?

I've got an article you really need to read that answers this question very well.

It points out the reasons that you should be investing in four sectors that are benefiting from demographic and economic trends of historic proportions. They are financial services , healthcare, leisure, and technology.

It gives a list of 4 mutual funds you can buy and hold and their ETF alternatives.
-----------------------------------------------------------------
Here are several excerpts from the article:

Consider these statistics:

According to Standard & Poor's, people over 50 will, by far, be the fastest growing age group in the United States in the coming decade. S&P estimates that between 2003 and 2015, the number of people aged 50 through 54 will grow 17%; the number between 55 and 64, 46%; and the number 65 and over, 29%.
At the same time, the 35-to-50 cohort in the U.S. will actually shrink, and younger groups will grow much less than the oldest ones.
Among the implications is that this over-50 set -- the richest generation in American history, largely in its peak earnings years -- will flood banks, investment companies and insurers with money.
the oldest age cohorts will spend much more on pharmaceuticals, medical equipment and health-care facilities
Once geezers have taken care of their finances and their health, they will turn to what retirement offers the most of -- leisure. And they won't be the only folks looking to be entertained: In the developing world, youthful cadres are growing rapidly, adding their spending power to those of America's elderly.
The world also relies on technology to increase productivity which, you'll recall from Economics 101, is the only way wages can rise without inflation. Technology stocks have fared disastrously in the last five years, but that's because of the bursting of the Internet bubble. Going forward, the entire world will depend on technology to raise standards of living, just as it has since the invention of the steam engine.Aside from increased returns, this blend of funds does an excellent diversification job, because these sectors move independently of each other. When financial services were booming in 1998 and 1999, health care was lagging. When leisure declined sharply in 2000, both finance and health care were up. None of the three experienced anything like the spike technology enjoyed in 1999.

To read the full article: http://moneycentral.msn.com/content/P125131.asp

[Maverick]

Thanks MoMoney for the article and insight.

Healthcare and financials, I'm currently and planning on investing in the future. I don't like technology even though technology is one of the three main components of the growth of a nation's GDP. The reason why I don't like technology is because:

1) In general, the stocks have little to no yield

2) I don't see why and through what current innovation the technology sector will result in a bull market. Until that happens, I'm sitting on the sidelines.

I agree with the article emphasizing leisure because Stats Canada and other survey companies have found that baby boomers want to enjoy their retirement years. Some of the retirement homes (such as CSH.UN on the TSX) have altered their assisted living homes to have beautiful golf courses, tennis courts etc. to appeal to the new generation of retirees.

I could be completely wrong but the sectors that I like for the future are financials, energy, utilities and healthcare through stocks that have a high yield..... yeah.... I'm a pretty conservative investor.....maybe too much. :roll:

[Lou]

Zimmer Holdings is the company you want to be in. They do bone replacements, knee's, hips, etc.

Also, check out last months Fortune Magazine about this. People will need to stay invested in the market much longer. And if the dump stocks at a bargain price, rich people will be there to buy them. I wouldnt expect much of a drop due to this.

[aiki14]

I like Lou's angle on this better than the leisure spending angle, I'll bet on what the population will be forced to spend on rather than bet on what they might spend on, and even though the older boomers may be the richest generation thus far they are notoriously poor savers compared to their parents. I'll check out Zimmer, thanks.

[Lou]

Zimmer Holdings is a home run. Its pulled back quite a bit but this whole sector has been under pressure.

I also have been doing some homework on Mettler Toledo. I like this one too.

Ive read people say gaming stocks in Vegas but Im still not sold on that angle.

[Maverick]

On Report on Business, an analyst said that there as been significant job loses in the auto industry while he mentioned that the healthcare sector has shown a significant rise in new employment. He said that the companies are expanding as a result of the growing demand from the aging population demographic.

This has only increased my ambition to expand my weighting in the healthcare sector.

Please post any recommendation on healthcare or health related stocks that you believe have strong potential.

I'm going to do research for the next couple months and decide which health stocks to invest in.

Thanks

[Stas1976]

On Report on Business, an analyst said that there as been significant job loses in the auto industry while he mentioned that the healthcare sector has shown a significant rise in new employment. He said that the companies are expanding as a result of the growing demand from the aging population demographic.

This has only increased my ambition to expand my weighting in the healthcare sector.

Please post any recommendation on healthcare or health related stocks that you believe have strong potential.

I'm going to do research for the next couple months and decide which health stocks to invest in.

Thanks

US population is not aging so quickly as you might think. All potential grow must be already part of the stock prices.

http://static.flickr.com/44/185929669_d4f3820f8e.jpg?v=0

[Svenwulf]

I saw a great special about the aging of the industrial world vs the "youngening" of developing nations. The name eludes me, but the conclusion the researchers came to was the US should do much better than its peers as far as the "age pyramid" because although we won't replenish our workforce with birthrate, we should continue to enjoy a steady immigration rate. But that's a whole nuther can o worms...

If anyone saw it and can remember the name, thanks in advance. It did several country case studies, like an inverted pyramid for japan, and the "pinched" one for angola.

Prolly not exactly on topic about how to invest in baby boomers, but i dont think they are as great an opportunity as cnbc reports. Most of their wealth is real estate exposed (i feel), and doing my monthly check of forclosures (another hobby i am just starting to learn) in my area, that's going to get worse before it gets better.

[Maverick]

US population is not aging so quickly as you might think. All potential grow must be already part of the stock prices.

The demographic of the elderly in the population is relative to what the current percentage is. In the next 10-15 years the elderly demographic is going to double or triple relative to it's current population number.

All potential grow must be already part of the stock prices.

This ideology I disagree with because there are several variables that go into a current stocks price including investor emotion, daily stock volatility, corporate and retail perception (bullish or bearish) , interest rates, corporate reports.........etc. Stocks can be underprices or overprices which is evident in their P/E numbers.

[optimus25]

I'd be bullish on bonds in the next 5-10 years. Baby boomers will need to park their hard earned money from qualified retirement plans and into bonds. Since technological advances have allowed us to live longer, boomers will still need to keep money invested in stocks.

I can tell you that we might see some downward pressure as some of the money leaving stocks/stock funds go into bonds and fixed annuities. There's a ton of money going to be rolled over.

[Maverick]

I'd be bullish on bonds in the next 5-10 years. Baby boomers will need to park their hard earned money from qualified retirement plans and into bonds. Since technological advances have allowed us to live longer, boomers will still need to keep money invested in stocks.

I can tell you that we might see some downward pressure as some of the money leaving stocks/stock funds go into bonds and fixed annuities. There's a ton of money going to be rolled over.


Could very well happen. Income trusts and high yielding dividend stocks (ie banks and drug companies) could be another avenue of generating a steady stream of income.

It'll be interesting to see if the baby boomers rebalancing their investment portfolios will have a significant impact on the market trend.

[optimus25]

I can tell you from personal experience and for future reference that that's where I'll be putting my clients' money. I've been putting money to work in high dividend payers, large cap, and bond investments.

[istrokedmine]

this may seem very bad to say but i could make money. is ther a stock company out there that makes caskets?

[Maverick]

I can tell you from personal experience and for future reference that that's where I'll be putting my clients' money. I've been putting money to work in high dividend payers, large cap, and bond investments.


Income trusts have been my favorite security to invest in. A great income trust that is below the radar of many investors is SDT.UN on the TSX (Sentry Selects Diversified Income Trust). It's a well diversified actively managed trust that invests in energy, utilities, real estate and business trusts. Gives a 16% yield.

Sandy MacIntire, the porfolio manager, is the man. He's percieved as a legend in the trust sector (from Bay Street analysts). He occationally gives special dividends during the year. Last month he gave a special dividend of .10 per share which is added onto the regular monthly distribution.

The stock IPOed in 1997 with top holdings in the portfolio including Penn West Energy Income trust, Canadian Oil Sands Income trust and Arc Energy Income trust. Assuming he bought and held those stocks in 1997, he would be presently making a yield of 50-81%!!!! This is why, in my opinion, he is able to give such a hefty monthly distribution.

It has a 6% weighting in my portfolio and I'm content to hold on to this stock for the long-term because where else can I get a 16% yield and have such low risk? As well, I'm receiving capital growth as I hold the stock.

[Maverick]

this may seem very bad to say but i could make money. is ther a stock company out there that makes caskets?

KNA.UN on the TSX

Keystone North America Inc is a Health Care Facilities company that trades on the TSX.
Owns and operates 175 funeral homes and seven cemeteries in 27 states in the U.S. Funeral services include planning and coordinating personalized funerals and cremations, embalming, use of funeral home facilities, merchandise sales, conducting memorial services and performing cremation and cemetery interment services. Current dividend yield of 12.40%

I DO NOT RECOMMEND this stock at the present time because their balance sheet and payout ratio is awful. However, if the bird virus hits North America severely this may be a stock I would consider....... with a maximum portfolio weighting of 5%.

[Maverick]

On Report on Business, an analyst said that there as been significant job loses in the auto industry while he mentioned that the healthcare sector has shown a significant rise in new employment. He said that the companies are expanding as a result of the growing demand from the aging population demographic.

This has only increased my ambition to expand my weighting in the healthcare sector.

Please post any recommendation on healthcare or health related stocks that you believe have strong potential.

I'm going to do research for the next couple months and decide which health stocks to invest in.

Thanks

The stock I choice to invest in is Shoppers Drug Mart ( SC - on the TSX).

SHOPPERS DRUG MART is the leading player in Canada’s retail drugstore marketplace and is the number one provider of pharmacy products and services. The Company’s licensed stores are located in prime locations in each province and two territories, making Shoppers stores among the most convenient retail outlets in Canada. In addition, the Company owns and operates 53 Shoppers Home Health Care® stores, making it the largest Canadian retailer of home health care products and services.
.

I choice this stock because, unlike big pharma companies like Merck and Pfizer, Shoppers Drug Mart stock will not have any lawsuit issues because they are a retail supplier and not a manufacturer of the drugs.

The following are links to the stock performance and company snap shot.

http://tsedb.globeinvestor.com/invest/investSQL/tsx.show_chart?iaction=Generate&pl_period=60W&pl_primary_listing=SC-T

http://www.shoppersdrugmart.ca/english/corporate_information/investor_relations/index.html

http://tsedb.globeinvestor.com/invest/investSQL/tsx.company_news?pi_company_id=204640

http://tsedb.globeinvestor.com/invest/investSQL/tsx.company_prof?company_id=204640

Last week Merrill Lynch stated that SC is the best run retail drugstore in North America with projected runaway future earnings growth.

The reason why I didn't invest in a US stock is because the value of the US dollar is projected to drop when interest rates lower. Hence, the price of gold will rise as a hedge against the depreciating dollar.

A pharmaceutical ETF in the United States is appealing but I'm not transferring my money into American dollars until interest rates in the US are at a relative bottom.

SC has a 5% weighting in my portfolio and will be a long-term holding.