A great thing about modern-day investing compared to when our parents did it, is that we have so many more options available to us than just the old 'buy and hold' strategy. Ideally, we would just be able to ride a wave of growth by purchasing shares in companies that are poised to take advantage it, then cash them out when we're ready to retire. Simple.

The only problem with this strategy is that the economy (and by proxy the stock markets) need to keep going up for us to make any money. With the influx of ETF products available to us now, we have ways to make money even if the economy is on the ropes and the market tanks.

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In my last post I touched upon the baby boomer generation's positive impact to the overall economy.  Given that they were a good catalyst to 50 years of stock market explosions, I'd say it's worth examining this group a little closer.

Ask a boomer how much they paid for their first home 30 years ago and you will probably hear a price that seems ridiculously cheap by today's standards.  Then ask them what their household income was a the time, and you'll probably hear an answer that makes today's home prices look ridiculously expensive.

My own parents paid a price for their home that was about 2 times their annual salary.  The banks just didn't throw around their money back then, and interest rates were a 'modest' 6%.   They worked hard to pay off the entire mortgage, and at the end of it they had a mortgage-burning party to celebrate the fact that they were out of debt.

Contrast this to today's situation, where a home's price can average up to 3-4 times the income of the entire household, and homeowners think nothing of taking out a line of credit on their home equity.    How exactly did we get here?   The simple answer is that the more people take out loans to buy homes, the higher home prices rise.  This in turn raises the tolerance of the banks to hand out more loans for less home equity.  The more loans the banks hand out, the higher the home prices rise, and so on and so on... until about 3 years ago when the housing crisis hit. Read more »

This is a 50-year chart showing the S&P 500 index from the year 1960 to present day (click on the chart for a larger image).

After chopping around in the 60s, the market bottomed round 1975. After that it didn't look back as the market soared to the first of three peaks you see at the top starting in the year 2000.

In 1975, the first wave of baby boomers (born in 1946) were reaching their 30s, and were starting to do things like saving for retirement and buying homes and cars. This demographic had a good hand in the market's dramatic rise during this period, and even if you didn't know anything about investing you might have done quite well just by throwing darts at a newspaper. At the very least, taking part in your company's employee share ownership plan could have meant an early retirement. Read more »