Theoretical question about stock market shift

[jcy]

What would happen to the stock market if every person 55 years and older sold one percent of their equity holdings every day over the next 100 trading days? And put that money into fdic insured savings/ certificates if deposit, it US federal government bonds?

I came from a place that people over 55 should be migrating/ migrated out of equities and into federal government backed assets.

Is the market substantially overinflated/ over valued because interest rates, even today's rates, or below long term normals?

Supplemental- what would all the banks, especially community banks, be using the massive amount of deposits in? New construction loans? Business development loans? Originating single family portfolio mortgages?

sounds like a lot of exposure to inflation

 

[The_Jeff]

As of early 2026, Baby Boomers control over half of the U.S. stock market, with estimates placing their ownership at roughly 51% to 54% of all corporate equities and mutual funds, according to early 2026 analysis of Federal Reserve data. When including all Americans over age 55, that ownership share rises to roughly 80% of stocks.Total Stock Ownership: Baby Boomers (born 1946–1964) own roughly $25 trillion+ in stocks, making up over 50% of the total market.

When they cash out all at the same time to hire home care nurses

1: If you're a nurse, you can name your own price.

2: Expect a drag on your portfolios but

3: Expect some real estate to open up, finally.

 

[GON]

sounds like a lot of exposure to inflation

We bought an interim home to hedge against inflation. Many experts don’t recommend buying a home unless plan to hold for five plus years. We went with the hedge and willing to accept a loss when we likely sell in the very near future.

The home purchase was essentially an insurance policy against inflation. Right move, don’t yet know.

 

[raaizin]

I don't like to invest in real estate, when you factor taxes maintenance etc I do believe you will never beat the market. If you rent to tenants, that is another headache I don't want. Add to the fact that it is not easily converted to cash. It depends on your situation. We live on pensions and SS easily so I am 100% invested in the market, I consider our pensions and SS to be our bond component. If you cant outride the inevitable downturn this wouldn't be a good strategy though. Markets go up and down but over time they go up.

 

[jcy]

We bought an interim home to hedge against inflation. Many experts don’t recommend buying a home unless plan to hold for five plus years. We went with the hedge and willing to accept a loss when we likely sell in the very near future.

The home purchase was essentially an insurance policy against inflation. Right move, don’t yet know.

i see real estate as a get rich slowly type thing, so flipping a whole piece of property, which might be a cash flow positive asset someday, just to make up for any shortfalls in a fixed income portfolio, is just too rich for my blood

have you run a backdated model over the last 55 trading days to see how much interest is earned off the realized gains of your portfolio, vs the size of the portfolio if you had not sold on day 55?

if you wanted to learn how to use an AI chatbot, that might be a good exercise to learn how to fashion the prompts to have it create this model

 

[ATex7239]

I’m not an economist but I don’t think a run on the stock market will be any better for the economy than a run on banks would be. And considering how many portfolios likely hold large and mid cap funds it almost certainty would completely cripple the economy.

 

[PandaBear]

First off, I am never a believer of "if everyone do this then that would / would not happen". Go ask 100 people the same question and you will never get the same answer from them. As a group human would behave like a bell curve so there will always be people who agree and disagree, and that's how we end up with democracy being an ok system.

So let's say if really, everyone 55 and above do something voluntarily or forced to by law, like withdraw from SSN / 401K / IRA. Then someone else would look for money making opportunity to trade with them and profit from it. In the investment world it is called "market makers", they figure what is each trade worth and whenever someone want to do something there must be a price it is worth doing a trade for. This is why someone will always be able to buy and sell something at the right price and eventually price will change to a point things balance out in the long term. These market makers have to be real good at risk management or they will lose their shirts, just like a sport betting bookie has to set an odd and payout to be safe, and make money by skimming off a thin margin on top.

I am not sure why people 55 should be migrating out of equity and into gov backed assets. 55 is too young (I am probably going to reach it soon) and most of the people I know don't even hit peak income till then at work, and I have been dealing with a dead beat father in law who decided to retire at 55 and then loaf off his mom's pension then his wife's, then his daughter's help. I manage a contractor who is still working engineering work at 70 and a retired executive who decided to go back to simple engineering at 65. Neither felt like they should move into government backed assets and think they are just musical chairs between who lives the longest and who bankrupts first.

The market is going to go up and down in the long term. Some days it would be over priced, some days it would be undervalued, and some day the market would stay solvent before I run out of money trying to bet against it. What I as a responsible person can do is look at whether I have enough money in the short term to live on, without being forced to sell assets to pay bill at a bad time for a bad price. Nobody can control the prices, but I can survive if I have enough safety margin. I have friends who were margin called and then later the market behave as they have forecasted, but their assets have been sold and they did not get a return as a result. I personally have been too concerned about price collapse in the 06 and avoided 08, but didn't get back into the stock market in time to participate in the 10 boom. I have sold all my AMD shares right before the AI boom because I though the crypto boom was over. It is nearly impossible to know what is the right price at the time, we human can only do after the fact. Anyone who can tell you for sure what is the right price and when is either 1) a liar or 2) did not know what risk he is taking.

Bank typically has a policy to diversify. They cannot take on concentrated risk of anything like lending to certain sectors only, certain location only, and they have to be stress tested. The reason Silicon Valley Bank and First Republic Bank collapses are due to concentrated risk on long term US bonds, betting that they won't increase interest rate too fast. Who would have though buying US Treasure can cause bank run and bank collapse right? If there is anything I learned from them, I learned to stay away from a bank that is focusing their investment and lending. You don't need anything to cause a bank run and you better make sure you are diversified at all time.

 

[PandaBear]

When they cash out all at the same time to hire home care nurses

1: If you're a nurse, you can name your own price.

2: Expect a drag on your portfolios but

3: Expect some real estate to open up, finally.

1. Someone would see nurses' income go up and decided to enter the field, supply would increase over time.
2. Someone would see the price being too low and either decide not to sell, or some counter parties would see the good deals and decided to buy them.
3. Someone would think the home prices is too low and refuse to sell, and someone would decide he / she can finally get a home and enter the market, again balancing things out.

Everything is worth buying and selling, as long as the price is right someone will buy and someone will sell.