In 2008, I recommended my most profitable trade ever…
I recommended a buy on the iShares NASDAQ Biotechnology Index (IBB) at $80 a share. Today, almost seven years later, that trade sits atop $313. Not too shabby…
It was also the easiest trade I have ever issued.
All I had to do was pay attention. I knew that 10,000 boomers would retire by the day for the next 20 years. I also knew they would control $1 trillion of disposable income, demand greater health care, and spend on products that would keep them going another few years. And that’s exactly what happened.
Baby boomers created one of the most profitable 20-year trends that changed just about everything. “You’d have to be an idiot to turn your back on this humongous growth market,” said Jody Holtzman, head of the AARP’s Thought Leadership unit.
- GNC Holdings said that baby boomers are one of its biggest buyers of its products for high blood pressure, digestion, eye and brain health, and muscle and bone density.
- The market for skin care and anti-aging products is expected to balloon from around $80 billion today to more than $114 billion by 2015, according to Global Industry.
- Companies and clinics are promoting hormone replacement drugs as a way to slow the aging process, too. Some cost as much as $15,000 a year. In 2011, consumers spent $1.6 billion on prescription testosterone therapies, almost triple the amount spent in 2006.
Rest assured, the run in the IBB is far from over.
In fact, every time the IBB dips on the fear of a biotech bubble, I laugh at the absurdity and buy more. When it pulls back again near-term, I’ll buy even more, as baby boomers retire over the next 20 years.
And then I’ll buy even more as the Millennial Generation gets set to retire.
Cast aside as the lost generation with a -2% savings rate, low job prospects, fears of moving back in with mom and dad, student loans, low homeownership rates, the 86 million strong Millennial Generation – those born between 1980 and 2000 – have surpassed the Boomers as the biggest, most influential, economic drivers this country has ever seen.
To the smart investor, that means sit up and take notice to whatever that generation is spending money on, including schooling, retailers, cell phones, new technology, and gaming – a sector growing at a “rate four times faster than the U.S. economy,” reports the Entertainment Software Association. They’ll also be a big driver of healthcare after the baby boomers have all retired.
In plain English, sit up, pay attention, and invest wisely…
Just as the Boomers control $1 trillion of disposable income, this new generation of kids account for $1.3 trillion of consumer spending, or 21% of all spending. At some point, biotech will benefit from the Millennials, too.
