How Demographics Determine Supply and Demand of Shares

God intervened in the US political system again yesterday.

The Republican Party’s second in command in Congress lost his primary. His primary what? His primary to represent the Republican Party in his electorate at the next election.

This is sort of like having Julia Gillard lose her pre-selection to represent the Labor Party in 2009.

So where does God come in? Well, nobody expected the Tea Party’s Brat (that’s his surname) to win. But Brat had an ace up his sleeve. You see, the media is reporting he has an economics degree. But his actual undergraduate qualification is in divinity. No doubt he made a deal.

Our understanding of divinity comes from crystal ball gazing in the movie Harry Potter. But we can’t give Brat too much of a hard time. His study of the religious discussion of usury just might feature in our own postgraduate thesis. Brat also believes that religion and economic growth are somehow related. Nothing wrong with that until you combine it with Keynesian ideas of stimulus…yikes.

The political establishment isn’t interpreting Brat’s victory as a sign from above. They’re worried about the below. Could more grassroots Tea Party challengers steal Republican posts? Could they meddle with debt limit and budget negotiations? Could they make the Republican Party too extreme to appeal to swing voters?

The Tea Party used to be more grass smoking than grassroots. Presidential hopeful Ron Paul’s annual tax day protest was a libertarian event. Now the movement is very different things to different people. But they tend to be disruptive, which isn’t good for an economy on life support. Add a Tea Party comeback to European protest parties on the move and you begin to have a problem. A ruling elite without the façade of political backing is dangerous.

But politics and the stock market were yesterday’s topic. Today is about demographics and paperwork. Which would you like first?

Still reading? OK, it turns out we may have been wrong about our demographic theory. And just as the hate mail began turning supportive too.

If you remember, our theory is that the price of shares (and everything else) is determined by supply and demand. Others argue it’s determined by things like earnings, dividends and charts.

But they’re wrong. Demographics determine the supply and demand of shares. You buy shares in middle age and sell them in retirement. At least that’s the tendency of a generation as a whole.

Read the rest of this article at The Daily Reckoning