Stocks are poised to begin a “raging bull” market within 18 months as the children of baby boomers reach their peak savings years, according to Tobias Levkovich, Citigroup Inc.’s chief U.S. equity strategist.
“The demographics of the baby boom ‘echo’ should support a new cadre of investors,” spurring a multiyear surge in share prices, Levkovich wrote two days ago in a report. “They have not suffered a lost decade in stocks and thus do not harbor any ill will to the asset class.”
Americans between 35 and 39 years old are the group to watch, he wrote. The CHART OF THE DAY compares the number of people in that age category each year since 1900 with the Dow Jones Industrial Average. Projected figures through 2030, as compiled by the Census Bureau, are also displayed.
Demographics are among half a dozen reasons to look forward to a so-called secular bull market in U.S. stocks, according to Levkovich, who is based in New York and sees the Standard & Poor’s 500 Index ending next year 13 percent higher than yesterday’s close. He also cited:
-- The potential for a housing recovery to begin in the middle of next year,
-- “An American manufacturing renaissance” as companies bring back production from overseas,
-- Federal budget cutbacks that pave the way for greater interest in stocks and higher price-earnings ratios,
-- Rising shale oil and gas production that is moving the U.S. toward energy self-sufficiency, and
-- Increased technology investment to accommodate the growing use of smartphones and other mobile devices.