The Baby Boomer Effect

Some investors are worried about a possible destabilizing effect on the market when the Baby Boomer generation begins to sell shares of stock as they retire starting in 2008. This however should not be a concern because stock prices are based on companies' earnings growth and demand for the stock, and there should continue to be demand for the stocks of profitable firms.

Also, those Baby Boomers who do sell their stock are likely to do so more slowly than many people expect because equity investing is one way to try to outpace inflation.

In any event, it would be foolish for the average investor to avoid buying stocks in fear of any impact to the market that might result from Baby Boomer sales.

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