Thread by @APompliano

0/ One of the things that very few people are talking about is how unprepared the baby boomer generation is for an economic downturn.

Time for a thread 👇🏽👇🏽

1/ Most people are aware of the carnage that was created by the Great Financial Crisis. It took peoples' homes, savings, and set them back years in their financial journey.

It also changed the way that many baby boomers interacted with money.

2/ An entire generation had grown up believing two things — the American financial system was bulletproof and their greatest asset was the home they owned.

The Global Financial Crisis shook those two assumptions at the core.

3/ The baby boomer generation was not only set back financially, but they also had their confidence shaken.

They quite literally left financial markets in many cases and became more concerned about saving, rather than investing.

4/ This switch from investing to saving mentality came at the worst time — we started the longest bull market in history coming out of the Global Financial Crisis.

The baby boomers were saving when they should have been investing.

5/ Over the last few years, baby boomers started to gain back their confidence and began to invest in the stock market and other financial markets again.

They were able to capture some of the upside from the decade-long bull market, but not nearly enough of it.

6/ Over the last 12-24 months, it seems like every stock and asset someone could buy kept going up in value.

Every investor was a genius. They couldn't lose.

So right when the baby boomer generation should be worried about saving, they started to invest very heavily again.

7/ If we are headed into another global recession, many baby boomers are going to realize they were saving when they should have been investing and started investing when they should have been worried about saving.

The psychology of investing will screw anyone up.

8/ Now imagine what will happen if baby boomers are net long to public equities with a majority of their wealth and the economy runs into a brick wall.

The same generation that got hammered in the GFC will get hammered again.

Two crisis in under 15 years. Not good.

9/ But what makes the prospects of another financial crisis especially bad for baby boomers over other generations is that the baby boomers don't have time on their side.

They are all reaching retirement age. They should be preparing to stop working and enjoying their wealth.

10/ The baby boomer generation is likely to learn a really, really hard truth — many of them can't retire.

The timing of two financial crisis within the last 15 years of your working life is a cocktail for disaster.

Some were prepared, but most weren't / aren't.

11/ To make all of this worse, baby boomers who got crushed the hardest during the GFC are also many of same ones who became most aggressive in their risk appetite over the last few years.

They were trying to make up for lost time.

Another GFC could be game over financially.

12/12

Ultimately, investing is a game of psychology and discipline.

The next market downturn will teach everyone the same lessons as every market downturn before it:

Time and compound growth are your greatest allies.