Wealth Creation Using the Demi-Ashton Ratio

September 4, 2009 at 4:00 am Leave a comment

Ashton-Demi

Ajay Kapur at Mirae Asset Securities is bullish on the global markets in the short-run (he sees the S&P 500 index reaching 1250 by March 2010), but even more optimistic in the long-run due to a demographic shift occurring in particular markets. According to this Chief Global Strategist, the more Demi Moores and less Ashton Kutchers we have populating the earth, the better our financial markets will perform.

Mr. Kapur’s Demi-Ashton argument is based on the belief that the higher the ratio of middle aged workers in their 40s (Demis) versus those in their 20s (Ashtons) will result in higher stock prices. Basically, those in their 40s generally have accumulated more wealth to invest and are very concerned about their impending retirement, while those in their 20s have little savings to invest and are more concerned about going to clubs and chasing the opposite sex. Seems to make logical sense.

Even though he is bullish in the domestic markets in the short-run, he sees the U.S., Canada, and Western Europe persisting through a secular bear market that began in 2000 and will last through 2015. Mr. Kapur is quick to point out these markets generally maxed-out when the Demi-Ashton ratios peaked in the 2000 timeframe. When these ratios were rising, for example as in Japan in the 1980s and the U.S. in the 1990s, the respective markets went on an upwards tear. Kapur sees emerging markets like Russia, Eastern Europe, and Latin America benefitting from the rising Demi-Ashton ratios in the coming years.

Whether his hypothesis proves correct or not, I admire the strategist’s bold call on the market direction. Typically economists and strategists herd together due to fear of being an outlier. As for Demi Moore and Ashton Kutcher, they should sleep fine with respect to their retirement plans, as long as they do not go on M.C. Hammer, Michael Jackson, or Mike Tyson spending binges.

Wade W. Slome, CFA, CFP®

Plan. Invest. Prosper.

Entry filed under: Financial Markets, Profiles, Themes - Trends. Tags: , , , , , , , .

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