I understand your point. However, I think more likely retirees will take periodic payments or MRD payments from their qualified plans rather than lump sum distributions. It is the latter that would cause a mass sell off.

ps- I’m on the South shore, Babylon area.

Just checked out your website, where on the Island are you from? I am in North Shore Nassau County (TOBAY area)?

MasterPro,
I actually do not think we are disagreeing, per se, but rather not discussing the same point. As I interpreted it, the issue is whether or not there will be a large dip (due primarily to sell off) when baby boomers retire and need funds.

“Shareholders in non-retirement accounts can (and do) sell all the time. The fund has to keep a bit of cash on hand to handle this. But there’s no way for them to forecast how much free cash they will need.”
This is exactly my point. If XYZ mutual fund finds out that within 1 week they need to liquidate 20,000 shareholders, they WILL NOT have the cash to do so…as such, they will likely start selling off large blocks of assets.

While you may be correct as to people’s liquidation preference, I truly believe there are tons of baby boomers (maybe not readers/followers of TML! lol) out there with zero non-qualified savings and tons of Qualified (i.e. 401(k), IRA, SEPs, 403(b), etc.) Dollars as such, they are unlikely to have a choice as to what to liquidate.

Just some thoughts,

That’s still an inaccurate picture.

First, mutual funds have non-retirement accounts as well as retirement accounts. Shareholders in non-retirement accounts can (and do) sell all the time. The fund has to keep a bit of cash on hand to handle this. But there’s no way for them to forecast how much free cash they will need.

Second, presuming traditional IRAs, people can’t just sell everything on the first day of retirement. They will draw down slowly over their retirement life time. At least the required MRD amount. Even with a Roth IRA people still won’t liquidate on day-1.

Third, I know from personal experience an IRA does NOT work like a regular non-retirment account. You can’t just call up and pull out X-dollars anytime you want. Yea, that was BIG surprise to me too!!

Finally, even though boomers will be selling those that follow like me and you will be buying in via 401ks and IRAs. At a minimum that will cushion the liquidation.