This is something I have no empirical measure of, it is just a suspicion, an idea that I am keeping an eye on...
Basically it revolves around the demographics of the baby boomers. They are as a group such a significant population bulge that they have been a force unto themselves in many ways. Through out their lives by and large it has been positive but as they hit their twilight years we are seeing more of the downside of having such a distorted population profile.
The boomers are a large part of our workforce and as a group hold the highest dollar value invested in most all investment areas, one of them being super. As they collectively get to the point that they are no longer putting into super and start drawing down on super we will experience significant selling pressure in the areas that most of their super in invested. The only way this can be held static is if the funds flowing into the market more than meet the redemptions. Given the demographics of the following generations I can't see that this is likely. So I am kinda seeing the boomers as a bear market in themselves or at best a significant market headwind. My approach with my fund is to be invested where I think the boomers are not concentrated.
Consider these things...
1. It's selling at the margin that turns a market so it does not take a huge imbalance to driven a market lower.
2. It is a vicious cycle, as this money is needed for income the lower the market moves the more needs to be sold to maintain income. Assuming that dividends don't meet current needs... most will not.
3. Markets look forward, once this dynamic becomes apparent it will be discounted in the present, it will not be a slow drift lower if it is an identifiable dynamic.... it will be a 'phase transition' with a relativity rapid move to the new discounted level.
4. Not only are the generations following the boomers less in number they are lesser in wealth and in many many cases they are simply poor money mangers that don't save at all and have debt that would have scared the average boomer when young. They have been born and raised in a benign environment and behave as if there is no risk.... ever.
When you look at the market this way our super system is simply a pay as you go system with the market as an intermediately that can revalue things in the bat of an eye. Ultimately its zero sum, money must go into it for it to come out of it and if this where a traditional gov pension plan officials would be looking forward and worrying about the money in vs the money out over the next couple of decades. (started 2008)
Some circumstances could mitigate this, things like working longer but I can't think of a reason the problem will go away. Assuming of course the supposition is correct!
So my question is... Is the number you look at in your super account merely a paper gain that will not be there when you really need it. Remember we can't all get out of the market with the number that is printed on our various statements!
The second part of this thought is that should the super system start to fail will we see some sort of government grab for the money with a pension promise as compensation. After all its a big pot of money, government will likely have a big need if we keep spending at this rate! Rudd has even talked about the super industry buying special gov bonds.... what if that is the thin end of the wedge? One mitigation here is that gov will have the same trouble liquidating to get the funds but as they are a single entity if the assets where taken over they could control selling possibly avoiding the worst.
I am bias, I run my own fund and I keep as little money in it as possible. I invest outside of it and take the tax hit, at least I know what I have.... I just can't bring myself to completely trust them. Years ago I had one relative that was completely screwed by a retroactive rule change when he went to cash his super in. At the time he did what he did it was the best thing to do, after the event he got a "by the way you now owe us $x extra" from the ATO, he was gob smacked, fought it but lost. For the life of me I don't understand how in a democracy rules and laws for that matter can be retrospective, frankly it scares me. Ever since then I have been wary about super.
I realize that it would be a huge thing to restructure super in such away but I see it as a response to a crisis which is always when the ugliest things get done.
Now even if there is no such crisis I think you can argue that the probability on some market impact is high so you may want to factor that into your thinking.
Now please tell me my this is just loony tunes thinking? Am I over looking something big? Have I just got it wrong? Please try not to attack me, it is just a theory, a talking point if you will! I am not married to the idea, more searching for evidence/ideas around the theme.
One last thing... if this is a real problem it applies to all assets that boomers hold to some degree, RE comes to mind!