Monday, 1 July 2013

b.MegaTrend - Baby Boomer Bubble has Burst

Baby Boomers

The phrase baby boom has been used since the late twentieth century to refer to a noticeable temporary increase in the birth rate during the post-world wars, i.e., 1946-1964.

In 2008-2009, the financial markets actually melt down and threatened another round of the class 1930’s depression. I don’t understand why? Now I know.  Baby boomers were the first generation to be raised with fast food, principally led by McDonalds, after the world wars. And together, these post-war kids and the quick-service industry have grown and evolved. Now, noticeably McDonalds is not doing as well. Why? Well, the first of the baby boomers are now retiring starting from 2011 (65 years of age). Over the next 20 years, bit by bit, these baby boomers would retire. From 1946 to now, all of its boom was due to the baby boomers. Their needs and their kids’ needs were the single largest concern and target of all commercial corporations. 

When the first baby boomers started to retire, suddenly the white land realized that they don’t have enough health insurance safe-guards to handle this sudden large number of retirees. They even change a white president for a black one, hoping that they can have a change of luck. This is how serious the problem has snow-balled. I also didn’t realize until quite recently that indeed we have a problem.

The mythical Baby Boomer Bubble has Burst

I personally engaged the following:
  • Several of my online gamers mentioned about moving from a major city to a rural sub-urb for retirement. I asked why? Each mentioned that he no longer has regular income and hence, would not be wise to stay in a large city and spend his miserable pension. He will get a better bang for his money in the sub-urb. In the sub-urb, he no longer needs to fight with others for the trains and roads. He simply wanted to sell his expensive city house for a cheapo alternative and keep the difference.
  • Many of my land deals were of very long historical records, i.e., 35-90 years. Ordinarily, I didn’t decipher any note-worthiness from this similarity. But now, I suspect the baby boomers were the main issue. It seems that many of these baby boomer retirees initially being gainfully employed would not see a need to sell any of their dormant or active assets. But, once they are retired, they wouldn’t have any more cash flow to maintain their lifestyles. The single most obvious thing to do is to liquidate as quickly as possible those assets which they find no obvious profitable deployment, such as land banking. They try to sell and I caught them. Why? Because I am a cheapo. I only go for obviously cheap distressed stuff.
  • Many longer-termed immigrants told me that they are currently very home-sick. They wanted to sell their white houses and go back to their former home countries for retirement. But, they can’t do it as the prices back in their ex-home countries have risen to a level that is beyond reason. They showed me great regrets and sadness. The alternative is for them to move to a white sub-urb and keep the difference. But, this option means that they will move away from their current kakis and no more blow-waters (chit-chats).

These incidents led to a single conclusion:   No matter how rich these baby boomers are. Many are not savers. Their single largest asset must therefore be land ownership. They are indeed fast in releasing them.

Supply outpacing Demand
Based on the chart, there would only be 60 newly-wed takers for every 100 baby boomer retiree liquidating their assets each year. Supply would far outpace demand. This is going to continue till the last of the baby boomers retires, i.e., 2029. We would have a good 16 years to catch their land banks.

With the frequent and serious world-wide quantitative easing, we are going to have real fun.

We live in an exciting time where we are now given a second chance to collect land. Hence, for the next 16 years, do nothing but collect land. You can improve the infrastructures of the land later, i.e., after 2029.

Although you should never structure a business based on trends, but this baby boomer trend is too mega to be ignored. So use it to the best of your interest.

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