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A fascinating analysis

Chief economist at National Bank of Canada looks at the various inflows into investment assets (Cash, Equity and Bonds).  First, the interesting elements; in 1995 (15 years ago, fixed income accounted for 30% of investors portfolio, in 2000 it accounted for only a little more than 10%, today the proportion is growing again (around 25%), but is still today (2010) below the long term average of 30%. 

 


The flow away from equity continues unabated:



What is truly interesting is the median age of investors is around 50, so that an increasing number of investors are looking at their retirement requirements, having lost some confidence in the equity market (essentially flat since 2000), investors are taking their most recent experience as a barometer of future occurrence.

Are the correct?  Only time will tell.  Corporate profitability has risen dramatically over the past two years, to reach stratospheric levels, in fact, American companies have seen virtually no growth in top line revenues, but massive increase in profitability, via cost cutting (hence today’s U6 unemployment of nearly 17%).

The reality is that the baby boomers are approaching retirement age, and as such, and following the advice of their investment advisor, are moving towards more income heavy portfolio, with less risk.  The time for capital gains is gone, income and stability are key as retirement becomes closer.

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