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> a smaller working-age population supporting a larger dependent population (absent massive technological advancement in care) = lower standard of living for everyone

On average, assuming nothing else changes. In reality, we have the levers of immigration and workforce utilization (e.g. making it easier for ex-felons or non-violent drug convicts to re-enter the workforce) to juice labour inputs. And we have education and R&D to juice productivity. On top of that are random factors like natural resource utilization, falling energy and material intensities of GDP, et cetera.

> That would imply an S&P 500 of about 370 (down ~95%) and interest rates in the 10% range

One cannot so neatly connect demographics to interest rates, let alone the S&P 500. Demographics map to certain consumption sectors (e.g. durables) very well. They map to others (e.g. luxury or entertainment products) quite badly.

To illustrate one of the many confounding variables between demographics and stock prices, consider what a small shift in asset allocations in a single generation from real estate to equities would do to prices.

In such a horrific scenario, I imagine the stocks of companies with low-duration free cash flows (i.e., generating profits in the near future and trading at reasonable multiples of those profits) would hold up the best, because they can pay greater dividends, buy back more shares, be more likely to go private at a premium, etc. As for the stocks of companies with high-duration cash flows (i.e., companies for which the majority of profits lies far in the future, trading at optimistic multiples of those distant profits)... I imagine they would suffer the worst declines.

However, I agree with JumpCrisscross (https://news.ycombinator.com/item?id=18763124) that such a horrific scenario is unlikely.

There is an underlying presumption here that US stock market and investors live in the US, or are otherwise correlated with US demographics. Historically this is not true. International investors make up a sizeable part of the investors, and within the US investors the very wealthy are a disproportionate part of the market.

The same phenomena is playing out throughout the developed world and even in much of the developing world, though. Europe has even lower birthrates than the U.S, China had a huge baby boom in the 50s and 60s followed by a huge baby bust in the 80s under the One Child Only policy, and Japan has been in this situation since the 90s.

What would reverse this, internationally, is if the high-youth countries of Latin America, the Middle East, sub-Saharan Africa, and rural India could be rapidly integrated into the global economy. There are large political, cultural, and educational barriers to this, though.

> the peak of the Boomer years will soon start entering retirement soon (~2020)

Boomers were born 1945-1960, meaning in 2020 they'll be 60-75. They started retiring long ago.

Some did. Peak births per year happened in 1957, and during the boom, total births were skewed toward the latter end of the 1947 to 1965 period. In 2017 the median retirement age in the USA seems to have been 62, I can only imagine that number will have increased over 2018 and will continue to increase as the markets stagnated. That would put us just now approaching peak retirement rates. Add to that the fact that investment advisors still seem to want to wait most people toward equities for their first few years of retirement (at 60, your investment horizon is still 20 years out these days...) switching fully to more fixed income and few years in, I think that all is a recipe for the rotation just beginning.

"...a smaller working-age population supporting a larger dependent population..."

This describes Japan for the past decade or so, right?

Also, are you saying the standard of living would regress back to the 90's/80's/etc., or that growth in the standard of living would be curtailed significantly?

It'd depend on industry. We wouldn't suddenly lose the technological advancements of the last 40 years - we'd still have cheap TVs, cheap computers, mobile phones, the Internet, etc.

However, sectors where productivity hasn't risen that fast - like health care, elder care, mental health services, natural resources, etc. - will encounter sharply rising prices as there are too few workers to provide services to everyone who needs them. The market is a way of allocating resources to those who are willing to pay the most - so those with resources will still be able to afford them, but will end up liquidating a lot of their investments for it, while those without assets will just have to go without. In the process, the exodus of cash from financial markets to health & elder care will drag down asset prices in general. It'll be a good time to put money into the market, but a bad time to have money already in it.

I'm just trying to get a bit more precise.

You're saying that the rate of growth in the standard of living would be curtailed, and that the degree of curtailment would be sector dependent? If so, then I definitely agree.