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Does anyone have an intelligent strategy for investing in a world with low birth rates and an aging population? It's happening everywhere including the USA. I

Does anyone have an intelligent strategy for investing in a world with low birth rates and an aging population? It's happening everywhere including the USA. I don't think stocks etc. will work in a world without constantly growing GDP. https://www.afrugaldoctor.com/home/japans-lost-decades-30-years-of-negative-returns-from-the-nikkei-225 https://www.afrugaldoctor.com/home/japans-lost-decades-30-ye... If we look to Japan as the model and forerunner for what is happening to the rest of the world, what investments worked there the past few decades if any?

nikolayasdf123 4y ago
hunch: real estate in prime areas
- Mistletoe 4y ago
  I thought this too but this graph doesn't look promising for residential. https://fred.stlouisfed.org/series/QJPN628BIS https://fred.stlouisfed.org/series/QJPN628BIS
samus 4y ago
Aren't stocks supposed to yield dividends or are people only buying it to speculate on the resale value? If it is the latter, then stocks seem to merely be a volatile gold equivalent: valuable, but not because of having much inherent value.
- Mistletoe 4y ago
  Unfortunately almost always the latter these days.
  - osigurdson 4y ago
    The P/E ratio of the S&P 500 is somewhat reasonable at the moment. https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...
- adrianN 4y ago
  Stocks paying dividends or stocks increasing in value is functionally the same thing, but taxed differently. Companies for example sometimes have stock buybacks to increase the value. They could also use the money for dividends, but for tax reasons they don't.
  - ChadNauseam 4y ago
    Stocks paying dividends is not the same thing as stocks increasing in value. Stocks increasing in value means that the expected income from holding the shock went up. Stock buybacks accomplish that by decreasing the number of shares (with the assumption that the amount paid in dividends stays the same, so the divididends/share goes up.) The comments above are right that investing makes much less sense in a world without economic growth. Even if companies continue to pay dividends, the US stock market has had 7% real annual growth over the past hundred years and that drives a huge amount of investment.
osigurdson 4y ago
We will have lots of robots soon. AI is getting exponentially better. I expect GDP to go to levels we have never seen before. I'm not sure how long "AI summer" will last before "AI winter"[1] hits but I think there will be many decades of incredible increases in wealth for the average person globally. [1] skynet or extreme centralization of power
- Mistletoe 4y ago
  Hmmm I have my doubts about that, sounds like Cathie Wood talk. How will AI increase GDP? Seems like it could reduce GDP just as easily by putting all the writers, artists, coders, out of a job. This estimate is much more modest for AI increases by 2030. https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html https://www.pwc.com/gx/en/issues/data-and-analytics/publicat... >The greatest economic gains from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost) I think of this article when I hear about decades of incredible growth on top of the already many decades of incredible growth. https://www.cold-takes.com/this-cant-go-on/ https://www.cold-takes.com/this-cant-go-on/
  - osigurdson 4y ago
    It is pretty simple, really. The size of the economy, GDP and other metrics don't really matter. The real measure is how many hours does a person need to trade to get a particular product or service. If that goes to zero, we will be in good shape even if GDP is high or low. Nice to see that the "this-cant-go-on" author knows how to calculate 1.02^N and shocked themselves when typing a somewhat large N into the calculator. The thing they forgot is the size of the economy doesn't mean anything on its own. It isn't a physical thing that will take up all of the space in the universe eventually as the author seems to fear.
    - osigurdson 4y ago
      PS - Cathy Woods ETFs perform great. One merely has to turn the chart upside down for a proper analysis.
    - 4y ago
kikokikokiko 4y ago
Health care, pharmacies, old people's homes, pet food and health... You get the idea. Invest in things that will benefit from the fact that the population will get more and more older as time goes by, and everybody will have less babies and more pets. On the long run it is as sure fire a strategy as one can hope for in the world of the future.
croes 4y ago
Declining birth rate doesn't mean declining GDP.
deleted 4y ago
[deleted]
chewz 4y ago
> Does anyone have an intelligent strategy for investing in a world with low birth rates and an aging population? If you read the latest Charles Goodhart's book ageing population would bring period of permanent high inflation. And during high inflation periods trend following (macro) strategies work well [I don't have a link to the paper at the moment]... So this should be rather simple... Japan seems to be an exception to the rule, there are probably other factors that resulted in deflation during falling population era [I am fan of Richard C. Koo here - 2]. However it is not established yet - there is active discussion going on the topic - falling populations vs inflation/deflation. It is quite interesting actually. Try Dimitri Kofinas's discussion with Charles Goodhart in this podcast [3] if you can spare an hour... [1] https://www.amazon.com/Great-Demographic-Reversal-Societies-Inequality/dp/3030426564 https://www.amazon.com/Great-Demographic-Reversal-Societies-... [2] https://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Recession/dp/0470824948 https://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Rec... [3] https://hiddenforces.io/podcasts/charles-goodhart-demographics-inflation/ https://hiddenforces.io/podcasts/charles-goodhart-demographi...
- iklj 4y ago
  Investing in grocery store stocks would seem safe?
- imtringued 4y ago
  >If you read the latest Charles Goodhart's book ageing population would bring period of permanent high inflation. That is illogical. Aging populations save more because the money needs to last throughout retirement and these old people's bodies are no longer in a state where they can enjoy spending their money. Old people also have already fulfilled most of their wishes and have gotten used to their specific standard of living. A young society of under 20 year olds is more likely to cause inflation because every child is a pure consumer that does not produce what they consume for the first 18 years of their life. So the demand for labor is relatively high.
  - chewz 4y ago
    > That is illogical. Perhaps it would be wiser to read Goodhart's argument first. https://en.wikipedia.org/wiki/Charles_Goodhart https://en.wikipedia.org/wiki/Charles_Goodhart

nikolayasdf123 4y ago

hunch: real estate in prime areas

Mistletoe 4y ago
I thought this too but this graph doesn't look promising for residential. https://fred.stlouisfed.org/series/QJPN628BIS https://fred.stlouisfed.org/series/QJPN628BIS

samus 4y ago

Aren't stocks supposed to yield dividends or are people only buying it to speculate on the resale value? If it is the latter, then stocks seem to merely be a volatile gold equivalent: valuable, but not because of having much inherent value.

Mistletoe 4y ago
Unfortunately almost always the latter these days.
- osigurdson 4y ago
  The P/E ratio of the S&P 500 is somewhat reasonable at the moment. https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-earnings-chart https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...
adrianN 4y ago
Stocks paying dividends or stocks increasing in value is functionally the same thing, but taxed differently. Companies for example sometimes have stock buybacks to increase the value. They could also use the money for dividends, but for tax reasons they don't.
- ChadNauseam 4y ago
  Stocks paying dividends is not the same thing as stocks increasing in value. Stocks increasing in value means that the expected income from holding the shock went up. Stock buybacks accomplish that by decreasing the number of shares (with the assumption that the amount paid in dividends stays the same, so the divididends/share goes up.) The comments above are right that investing makes much less sense in a world without economic growth. Even if companies continue to pay dividends, the US stock market has had 7% real annual growth over the past hundred years and that drives a huge amount of investment.

osigurdson 4y ago

We will have lots of robots soon. AI is getting exponentially better. I expect GDP to go to levels we have never seen before. I'm not sure how long "AI summer" will last before "AI winter"[1] hits but I think there will be many decades of incredible increases in wealth for the average person globally. [1] skynet or extreme centralization of power

Mistletoe 4y ago
Hmmm I have my doubts about that, sounds like Cathie Wood talk. How will AI increase GDP? Seems like it could reduce GDP just as easily by putting all the writers, artists, coders, out of a job. This estimate is much more modest for AI increases by 2030. https://www.pwc.com/gx/en/issues/data-and-analytics/publications/artificial-intelligence-study.html https://www.pwc.com/gx/en/issues/data-and-analytics/publicat... >The greatest economic gains from AI will be in China (26% boost to GDP in 2030) and North America (14.5% boost) I think of this article when I hear about decades of incredible growth on top of the already many decades of incredible growth. https://www.cold-takes.com/this-cant-go-on/ https://www.cold-takes.com/this-cant-go-on/
- osigurdson 4y ago
  It is pretty simple, really. The size of the economy, GDP and other metrics don't really matter. The real measure is how many hours does a person need to trade to get a particular product or service. If that goes to zero, we will be in good shape even if GDP is high or low. Nice to see that the "this-cant-go-on" author knows how to calculate 1.02^N and shocked themselves when typing a somewhat large N into the calculator. The thing they forgot is the size of the economy doesn't mean anything on its own. It isn't a physical thing that will take up all of the space in the universe eventually as the author seems to fear.
  - osigurdson 4y ago
    PS - Cathy Woods ETFs perform great. One merely has to turn the chart upside down for a proper analysis.
  - 4y ago

kikokikokiko 4y ago

Health care, pharmacies, old people's homes, pet food and health... You get the idea. Invest in things that will benefit from the fact that the population will get more and more older as time goes by, and everybody will have less babies and more pets. On the long run it is as sure fire a strategy as one can hope for in the world of the future.

croes 4y ago

Declining birth rate doesn't mean declining GDP.

deleted 4y ago

[deleted]

chewz 4y ago

> Does anyone have an intelligent strategy for investing in a world with low birth rates and an aging population? If you read the latest Charles Goodhart's book ageing population would bring period of permanent high inflation. And during high inflation periods trend following (macro) strategies work well [I don't have a link to the paper at the moment]... So this should be rather simple... Japan seems to be an exception to the rule, there are probably other factors that resulted in deflation during falling population era [I am fan of Richard C. Koo here - 2]. However it is not established yet - there is active discussion going on the topic - falling populations vs inflation/deflation. It is quite interesting actually. Try Dimitri Kofinas's discussion with Charles Goodhart in this podcast [3] if you can spare an hour... [1] https://www.amazon.com/Great-Demographic-Reversal-Societies-Inequality/dp/3030426564 https://www.amazon.com/Great-Demographic-Reversal-Societies-... [2] https://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Recession/dp/0470824948 https://www.amazon.com/Holy-Grail-Macroeconomics-Lessons-Rec... [3] https://hiddenforces.io/podcasts/charles-goodhart-demographics-inflation/ https://hiddenforces.io/podcasts/charles-goodhart-demographi...

iklj 4y ago
Investing in grocery store stocks would seem safe?
imtringued 4y ago
>If you read the latest Charles Goodhart's book ageing population would bring period of permanent high inflation. That is illogical. Aging populations save more because the money needs to last throughout retirement and these old people's bodies are no longer in a state where they can enjoy spending their money. Old people also have already fulfilled most of their wishes and have gotten used to their specific standard of living. A young society of under 20 year olds is more likely to cause inflation because every child is a pure consumer that does not produce what they consume for the first 18 years of their life. So the demand for labor is relatively high.
- chewz 4y ago
  > That is illogical. Perhaps it would be wiser to read Goodhart's argument first. https://en.wikipedia.org/wiki/Charles_Goodhart https://en.wikipedia.org/wiki/Charles_Goodhart