Williams Inference

Art of Inference

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#6 Boomers : Present

Reports - Volume 23 (1996)

07 April 1996

Historic Symbol : Batman
Seven years ago, after viewing the movie Batman, we inferred that the nationwide clean-up binge was extending to the moral realm. We called the emerging social trend the "Batman Effect". Batman was more than a movie; it was a modern-day myth.

We were struck by the audience, which was made up not of children, but of adults in their 30s and 40s. From this phenomenon we inferred that baby boomers were moving from a state of conspicuous consumption to one of heightened personal responsibility and realism.

Reviewing this inference report is interesting. Crime is down. Guiliani in New York City, for instance, has gone from District Attorney to Mayor--and he is fighting crime. The boomers do not like crime. When Boomers became attracted to Batman seven years ago, subconsciously, they did not like crime. Today, they are coming into power. They are becoming mayor, senator, President. They still do not like crime, but now they can do something about it.

Recent Symbol #1: Harley Davidson

The baby boom generation likes Harley Davidson motorcycles. What does the symbol of a motorcycle mean? Power. (--the power of freedom? self reliance?). Boomers want power, and they are going for it. You can see it now in the freshman class of Congress. They not only have the vote, but they are using it. They play tough. We have not seen this sort of freshman exhibit of power for a long while.

Recent Symbol #2: The Color White

White is replacing the color black. White was the most popular choice of color for new vehicles in 1995. What does white mean? White is "good". Boomers want to be good--subconsciously. It does not mean that they are aware of it. A symbol is a projection...."I think I will become good. I will help humanity." The generation most desperate to create a new civil society are baby boomers.

Enter the Anomalies-Jane Austen

What is the current fascination with the novels of Jane Austen? Her 19th-century dramas of British gentility offer neither violence nor explicit sex. Many millions have flocked to screen versions of "Persuasion" and "Sense and Sensibility." An estimated 3.7 million American households tuned in to the A&E/BBC six-hour television adaptation of "Pride and Prejudice" earlier this year.

In contrast, just a few minutes before the first episode of "Pride and Prejudice" came on the air, millions of TV viewers watched two star players for the Dallas Cowboys look right into the television camera and utter the F-word and S-word to express their joy at having won the NFC championship.

What does this mean? Manners--deference and respect. The real world is not "Pride and Prejudice"--yet it seems the interest is over there. The cult of Jane Austen with its nostalgia for a more polite age is one small sign.

Anomaly #2--"Monks Dish Out Ethics To Bosses"

Monks at a 10th-century French Benedictine monastery in Ganagoble, near Aix-en-Provence, have found a novel way to raise funds by running business ethics courses for industry leaders

Do corporations have ethics? Perhaps to the recently dismissed employee, it doesn't seem so. Loyalty is not the name of the game this year. Now, corporate participants are going to France in order to sit down with a monk.

What is important is that the courses have attracted so many people from 25 countries and a wide spectrum of firms that the monks no longer have time to pray. Indeed, numbers have had to be limited. We find this intriguing. Corporations are trying to be good.

Anomaly #3-- Transforming Las Vegas

Las Vegas, notorious for booze, gambling and hookers, is advertising clean family fun. An article from World Business states "Las Vegas has come through rehab and emerged as clean family fun for the baby-boom generation." This is a big change. A corporate change. Perhaps only an image change. But Las Vegas is quite serious about this. It is transforming itself into a mecca for the family.

GENERATIONS

Leaving the subtle tools of inference, we turn to a more blunt instrument: the book Generations, by William Strauss & Neil Howe. This is a historical narrative compiled by two Yale professors who spent five years with the computer amassing information on a succession of generations beginning in 1584 and ending with the children of today. What they discovered was a pattern in these generations whereby each can be seen as belonging to one of four types that repeat sequentially.

Throughout American history, at roughly 20-year intervals, new generations sweep into power and reshape political life according to their collective personality. Howe and Strauss's theory is that each of our living generations shows a remarkable parallel in personality with ancestral generations of the same type. Boomers, for example, bring to mind Franklin Roosevelt and the moralizing peers of Susan B. Anthony and Henry David Thoreau.

The four current generations and approximate ages for each group are listed as follows:

Civic Generation: "G.I." elders, born 1901-1924, age 72-95 as 1996 begins;

Adaptive Generation: "Silent" midlifers, born 1925-1942, age 54-71

Idealist Generation: "Boomer" rising adults, born 1943-1960, age 36-53

Reactive Generation: "13ER" youths, born 1961-1981, age 15-35

If you are a G.I., you have a distinct character. Your "Civic" type is probably the most crisply defined. Yours is a rationalist generation. You are builders and doers.

If you are a Silent, you appreciate more easily the mind-sets and virtues of those born before or behind you. You are "Adaptive". No member of your generation has been elected President. When Ross Perot ran for president--typically, he quit. Colin Powell quit before he ran. You are nonjudgmental and fair--which basically means you have no values. You go with the flow. Of course, not having values is a great advantage, and the Silent generation is rich--like Mr. Perot.

If you are a Boomer, you perceive that within your circle lies a moral acuity more wondrous than anything ever sensed in the history of mankind. You are narcissistic and self-indulgent. You are an "Idealist" with a visionary's desire to redeem. You possess unyielding opinions about all issues.

Key: Idealist generations--quite the reverse of Civic generations--typically exert their most influence on history late in life. According to Strauss and Howe, history suggests the Boomers (Idealist) will leave a decisive mark on civilization quite unlike anything they have done up to now. Perhaps a World War in the year 2020?

This is only the beginning of the Boomers taking power. (the symbol--motorcycle). They already have a President of their own generation. The Boomer share of the House of Representatives is now 52 percent (and of governorships, 58 percent). They run 30 percent of all corporations. In studying this generation, we are talking decades of Boomer leadership. This generation of leaders has only begun to make its mark on the course of America's future.

If you are a 13er--You have an ill-timed life cycle. Reactive, critical, rebellious. Boomers and 13ers are coming to recognize how unlike each other they are. The conflicts get bigger. As Boomers gain power, 13ers rebel against them.

Financially, 13ers may do much better than boomers. The Boomers will inherit some money. But will they lose it? One way to lose money is to be opinionated. Boomers have values. They do not know the luxury of not having values. In the 1920s, for example, who made money? Joe Kennedy. As idealistic Wilson was building world order, love and prohibition, Kennedy was selling booze. The World War came and Kennedy joined Hitler--a tactical error. The point is, he was rebellious. The Joe Kennedy generation parallels the 13er generation. As rebels, they have a tremendous advantage.

Boomer Values

Excerpts from Generations. . .

"Whatever age bracket Boomers have occupied has been the cultural and spiritual focal point for American society."

"By almost any standard of social pathology, the Boom is a generation of worsening trends. Death rates for every form of accidental death, ratesof drunk driving, suicide, illegitimate births and teen unemployment."

"Rising-adult Boomers migrated out of mainline "established" churches,but surged into New Age and evangelical sects. America's fastest growing church is the Assembly of God. The largest branch of protestantism is the fundamentalist Southern Baptist church. America now has more Muslims than Episcopalians."

"Now gaining real power, Boomers do not inherently dislike government: The idea of using the state to tell people what to do suits them just fine. Their task is to redirect public institutions toward what they consider a socially redemptive purpose."

Unabomber

Last June, The New York Times and The Washington Post were sent a text by a person who calls himself "FC", identified by the FBI as the Unabomber whom authorities have implicated in three murders and 16 bombings. The author threatened to send a bomb to an unspecified destination "with intent to kill" unless one of the newspapers published this manuscript.

Of particular interest is the following quote from the Unabomber document:

"A person is said to be well socialized if he believes in and obeys the moral code of hissociety and fits in well as a functioning part of that society. . . .Some people are so highlysocialized that the attempt to think, feel and act morally imposes a severe burden onthem. In order to avoid feelings of guilt, they continually have to deceive themselves about their own motives and find moral explanations for feelings and actions that inreality have a nonmoral origin."

The writer of this diatribe against society is probably a Boomer. He is probably a professor. He writes well, lengthily and he is concerned with morality. This particular individual, however, kills in defense of his morality.

Generational Political Affiliations

Generations' authors Howe and Strauss wrote a recent update in USA Today on Boomer leaders. "History suggests the Boomer leadership share will peak--at about 70 percent--no earlier than 2005 or 2007." At that time they begin to lose a little of their push. They will be elder statesmen, however, and will hold their power long after that.

A generational breakdown by party affiliation shows that in today's House of Representatives, party membership is almost perfectly correlated with age: GIs are mostly Democrats; the Silent are split; and Boomers are heavily Republicans. A "moral" Republican? This is an oxymoron, but that is what we have. "Big outer-world goals like space rockets and world peace have been repudiated--in favor of inner-world virtues like good character or good families," says Howe. This puts our Boomer president in an uncomfortable position. And, indeed, Clinton is fast becoming a Republican.

Politics is becoming young vs. old--not party against party. This conflict can be felt in our society. The old are in trouble. Boomers want to slash entitlements. They have their own paradigms. They march to their own drummer.

What Are The Boomer Consequences ?

Brief Guide as Boomers Move Further Into Mid-life.

Midlife Crises: Businesses are already serving the wants of Boomers as they pass through difficult transitions. Invariably, the crises of midlife revolve around the things that are most important--families, jobs and personal health.

As millions of Boomers join the battle against aging, sales of skin creams,hair coloring and nutritional supplements surge. . . Spirituality, if not traditional religion, sees a rebirth in the search for life's meaning. . .The death of a parent is one of the traumatic events most people experience during their early 50s.

In the next few years new categories of products and services which concern the middle-aged will prosper or not upon the influence of the Boomer demographics. Dr. Ken Dychtwald makes this his business. In The Boomer Report ($195/yr) he will tell you each month what companies to buy. Some of his growth areas? Mutual funds, life-long education, recreational products, alternative therapies and home health care. Campbell Soup is one interesting recommendation.

The Future

Key to the Boomers is the future. We use the Boomers as a generation-pattern. This is why a discussion of the 1920s is interesting. If we believe generational history, we believe in future predictability. Where are we now? We are in historic alignment with the year 1918. The 1920s are ahead of us. Data from the book, Generations, projects a volatile financial period parallel to the years around 1924. We could have another 1929 stock market crash. If we believe in generation demographics, we are not due to have the big crash for a few years.

Transferring Generational portraits to the present gives a warning of instability sometime around the year 2003 and economic depression in the year 2008 through 2020. At this point, according to authors Howe and Strauss, America moves into the ensuing "Crises era" and the possibility of a world-wide war. The depression will probably hit in 8-10 years and the war in about 18 years. These are broad-stroked possibilities.

A review of the year 1918 shows there was still a strong bull market. The Dow Jones Industrial Average doubled in two years. Less than two years later, the Dow average dropped to nearly half its previous high. Then, averages tumbled in a two-year bear market--which is a normal bear market period.

This scenario is intriguing: For example, late this year or next year the stock market tops. The market declines 50 percent in the following two years. Then, the 1920s. Then, we get rich. At the bottom of the next bear market, we want plenty of cash--because a parallel era of the 1920s may be ahead.

The Roaring 20s: The prosperous 20s continued to be reflected in a rising DJIA.

"The political climate of the 20s provided fertile soil for big business. It was an era of laissez-faire--an era personified by President Coolidge's remark that "The business of America is business."
Robert Sobel, The Great Bull Market

This delightful laissez-faire period may be coming, because the Republicans are coming. They are the Boomers. These Boomer leaders want to "ease" and let business do its thing. And, of course, that creates "boom" times.

Our Six U.S. Economic Depressions: The following is an observation by Frederick C. Thayer, visiting professor at George Washington University.

He sees only six major depressions in the economic history of this country. All of them followed determined, long-run efforts to balance the budgetand reduce the national debt.

We are just beginning to make an effort to balance the budget. However, in seven years, we will balance the budget. Where do you arrive if you add seven years to 1996? At the danger point, generationally speaking--the year 2003 or its parallel era, the mid-1920s.

We balance the budget, we cut taxes, we give businesses their heads. we cut capital gains, we go to a flat tax-- and all of a sudden we have "boom" times and a dangerous situation. The time table shows a remarkable similarity to Generations.

A Final Question:

Will baby boomers stay with stocks?

Wall Street thinking is quantitative, not qualitative and therefore assumes that as millions of baby boomers reach the height of their earning years, the potential impact on the stock market could be enormous. All of the Boomers will begin to pour more money into their pension funds and IRAs.

This is not necessarily true, according to a new study of 401(k) pension plan investments.

Consultant Watson Wyatt International finds that younger participants invest far more of their assets in stocks than their elders. Whereas workers age 21 to 40 hold about half of their 401(k) assets in equity funds, the equity share drops to 30% among those age 51 to 60, and to just 13 percent among those over 60.

According to this, we are at the peak of the baby boom contributions.

A Final Inference

A Redeemed Boomer

The Boomer started out-- a flower child, a drug-taker, a draft dodger, in a sexual revolution. Then, he grew up and spent money as a "yuppie". Today, he has none of these characteristics. The Boomer is a REFORMER. This adds impetus to his value system.

FOLLOW-UP COROLLARY

Volume 23 #7 - April 12, 1996

BOOMERS: PRESENT

Currently, The Williams Inference Service is putting together a basket of stocks that represents Boomer values. Some selections include:

Charles Schwab Corp.: According to Forbes, Charles Schwab has ridden the bull market to a splendid present, but its future is in Boomer retirements. "The older generations have a lot of relationships (with brokers and other financial professionals) already settled, but the newer ones are in flux," says Charles Schwab, founder and chief executive officer. Schwab also agrees that electronic trading "is going to be a big, powerful movement."

Johnson & Johnson: J&J is betting it can lure the wrinkled baby boomers from the cosmetics counter to the pharmacy. In February, the company launched Renova, the first wrinkle cream approved by the Food and Drug Administration. Renova is based on the active ingredient in Retin-A, J&J's prescription drug for severe acne.

Campbell Soup: Campbell is working toward creating functional foods that have specific medical or health properties appealing to the baby boomers. The potential for such foods is evidenced by the rapid success of Snack Well cookies.

BOOMERS: FUTURE

In our Boomers: Future report we stated that one consequence is a boom period ahead of us. A corollary to this thought is that we need a 50 percent correction in the stock market in the next few years to set up a roaring bull market. It is hard to start a bull market with stocks yielding less than 3 percent.

ANOMALY	INFERENCE	CONSEQUENCE
Las Vegas has come through rehab and emerged as clean family fun for the babyboom generation.	Businesses are already serving the wants of Boomers.	The crises of mid-life revolve around the things that are most important - families and personal health.

COMPANIES:

Johnson & Johnson (JNJ)
Campbell Soup (CPB)