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Markets: Same Old Story?
New York: January 23, 2004
By John R. Stephenson

The new thirty is forty, or so you might think. All around us, people are living longer and better than at any time in our history. But does this spell opportunity for investors and business owners? You bet. Author Ken Dychtwald in his book "Age Power: How the 21 st Century Will Be Ruled by the New Old", points out the following about Americans who are 50 years or older:

•  They hold $7 trillion (70%) of all the wealth in this country

•  As a group they are responsible for 50% of all discretionary spending in the US

•  79% are home owners

•  They buy 41% of all cars sold in the US and 48% of all luxury cars

•  This group spends $610 billion annually on healthcare and accounts for 74% of the spending on prescription drugs

•  They are targeted by advertisers only 5% of the time

In our youth obsessed culture, we seem to have overlooked the biggest market that there is ? people who are over fifty years of age. This is a demographic that has gone unscathed through the post-war economic expansion, has put their kids through school, feels great and has tons of money to spend. Not only do they have lots of money ? but they want to spend it. They feel good and are looking to feel even better, and advertisers are asleep at the switch. Too busy trying to cater to a youth market that is facing uncertain prospects with limited resources. The real prize for savvy marketers is the over-fifty market.

The baby boom generation (people born between 1946 and 1964) not only owns everything, but because of their vast numbers (78 million strong), they drive markets ?everything from the stock market to the housing market. The reason? People tend to think about retirement planning, family planning and other major life decisions at roughly the same time in their lives. Stocks have been driven higher as boomers look to fund their retirements through equity returns. As boomers marry and start families, they buy homes and later vacation properties pushing valuations higher. But as they age, they will start to take money out of these various asset classes to fund retirement. When will this start to occur? The first wave of the baby boomers to hit retirement age will occur in a couple of years.

But what other services could these affluent boomers desire? The boomers as a group are not only financially secure but they are also an extremely individualistic generation, with a focus on self and a tendency to reject authority. As well, they tend to be very well educated as many of them stayed in school longer than their parents. In other words, a healthy, wealthy and well-educated generation looking for service offerings that are individually tailored. Retailers that offer a customized targeted service offering that respects rather than panders are likely to come out on top.

The opportunities to sell to this group are many. Everything from financial services, retirement planning, health care and gardening supplies should do well. Gardening is a perfect example of a pastime that you loathed in your thirties but welcome in your sixties. Not only are the demographics favorable for the gardening industry but gardeners have a continual need to replenish their supplies of plants, fertilizer, tools and books. Other industries that may be worth examining are the cruise industry and the gambling industry. Gambling is one of the fastest growing leisure industries in North America. Both serious and recreational gamblers tend to be in their fifties and sixties and are people who have enough discretionary income to afford this pastime. Retailers who understand that the aging boomers are people who need to remain active and relevant will do well if they can satisfy the needs of this most significant market niche.

 

StephensonFiles is a division of Stephenson & Company Inc. an investment research and asset management firm which publishes research reports and commentary from time to time on securities and trends in the marketplace. The opinions and information contained herein are based upon sources which we believe to be reliable, but Stephenson & Company makes no representation as to their timeliness, accuracy or completeness. Mr. Stephenson writes a regular commentary on the markets and individual securities and the opinions expressed in this commentary are his own. This report is not an offer to sell or a solicitation of an offer to buy any security. Nothing in this article constitutes individual investment, legal or tax advice. Investments involve risk and an investor may incur profits and losses. We, our affiliates, and any officer, director or stockholder or any member of their families may have a position in and may from time to time purchase or sell any securities discussed in our articles. At the time of writing this article, Mr. Stephenson may or may not have had an investment position in the securities mentioned in this article
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