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Ben Carlson writes a very informative financial column. Most of the time it is carefully researched and documented. There are a few exceptions. The current work that emphasizes a demographic theme is one such article. He took a US Census population projection and made much of it regarding our spending and saving habits.
That’s not new stuff. It’s an investment strategic strategy that has been proposed for many years. One famous advocate of such a strategy is Harry Dent. Dent has written books on the subject and continuously tries to sell his perspective to whoever listens. If I were writing that Carlson column, I would have definitely checked Harry Dent’s books, but more importantly, his performance record.
Unfortunately, Dent did not make the CXO Advisory Group guru scoring list, but he does have fund and forecasting track records that are decades long. His performance record is not comforting. A more harsh evaluation might call it dismal. Here is a Link to an assessment that ranked him the “broken clock moron of the month”:
If anything, he is persistent and consistent, not always to the benefit of his followers.
Dent basis most of his analyses on population age and individual spending habits as a function of age. Here is a Link to a fair review and assessment of Dent’s approach:
Dent is definitely not a madman in terms of his investment philosophy although he likely places too much emphasis on his aging statistics. His funds have an erratic history with mergers and closures a major part of their history. In his consumer life cycle curves, he typically shows that an individual’s peak spending happens at roughly the age of 47. But the curve is continuous with no discontinuities. Things happen smoothly, so spending is likely to change smoothly also. That’s not the stock market.
In a very simplified model (hopefully not oversimplified to compromise its validity), the economy growth is correlated with population and productivity. Data correlations suggest that one-third is due to population changes, but a full two-thirds are tied to productivity enhancement. So population is important, but not the dominant factor. Population changes tend to be more or less continuous, but productivity changes tend to be more sporadic and dynamic.
The Dent modeling misses that dynamic factor and so does the Carlson piece. By itself, demographics are not destiny. In his closing statement Carlson recognizes that there is a merging influence of various age groups that will dissipate any sudden economic impacts. Good for him since he acknowledges it. That offhand closing comment sort of marginally saves the article. I like Ben Carlson, but this article is not up to his high standards.
Comments
Ben Carlson writes a very informative financial column. Most of the time it is carefully researched and documented. There are a few exceptions. The current work that emphasizes a demographic theme is one such article. He took a US Census population projection and made much of it regarding our spending and saving habits.
That’s not new stuff. It’s an investment strategic strategy that has been proposed for many years. One famous advocate of such a strategy is Harry Dent. Dent has written books on the subject and continuously tries to sell his perspective to whoever listens. If I were writing that Carlson column, I would have definitely checked Harry Dent’s books, but more importantly, his performance record.
Unfortunately, Dent did not make the CXO Advisory Group guru scoring list, but he does have fund and forecasting track records that are decades long. His performance record is not comforting. A more harsh evaluation might call it dismal. Here is a Link to an assessment that ranked him the “broken clock moron of the month”:
http://www.avaresearch.com/articles/750/a-look-at-harry-dents-track-record.html
If anything, he is persistent and consistent, not always to the benefit of his followers.
Dent basis most of his analyses on population age and individual spending habits as a function of age. Here is a Link to a fair review and assessment of Dent’s approach:
http://seekingalpha.com/article/223886-harry-dents-outlook-on-demographics-debt-and-deflation
Dent is definitely not a madman in terms of his investment philosophy although he likely places too much emphasis on his aging statistics. His funds have an erratic history with mergers and closures a major part of their history. In his consumer life cycle curves, he typically shows that an individual’s peak spending happens at roughly the age of 47. But the curve is continuous with no discontinuities. Things happen smoothly, so spending is likely to change smoothly also. That’s not the stock market.
In a very simplified model (hopefully not oversimplified to compromise its validity), the economy growth is correlated with population and productivity. Data correlations suggest that one-third is due to population changes, but a full two-thirds are tied to productivity enhancement. So population is important, but not the dominant factor. Population changes tend to be more or less continuous, but productivity changes tend to be more sporadic and dynamic.
The Dent modeling misses that dynamic factor and so does the Carlson piece. By itself, demographics are not destiny. In his closing statement Carlson recognizes that there is a merging influence of various age groups that will dissipate any sudden economic impacts. Good for him since he acknowledges it. That offhand closing comment sort of marginally saves the article. I like Ben Carlson, but this article is not up to his high standards.
Best Regards.
Regards,
Ted
http://www.cbsnews.com/news/harry-dent-and-the-chamber-of-poor-returns/