Where to Invest as America Goes Solo

There are any number of data sources to focus on as an investor, economic, psychographic, policy both monetary and fiscal and more. Given the longer-term nature of how I like to invest, I tend to watch emerging trends in demographics and one in particular is the aging of the population given the number of baby boomers Athat have started to retire and will do so over a number of years to come. Emerging trends in that demographic can result in incremental demand for a variety of goods and services and two that have caught my eye are primed to do just that. In 1950, roughly four million Americans lived alone and they made up only 9% of households. Back then, going solo was usually a short-lived stage on the road to a more conventional domestic life. Skip ahead to 2011's census data and we find there are nearly 33 million people living alone and that group makes up 28% of all U.S. households. To put that in perspective, people who live alone are now tied with childless couples as the most prominent residential type, more common than the nuclear family, the multigenerational family and the roommate or group home. The second emerging trend is rising divorce rate among couples in their 50s and 60s. Faced with the prospect of a decade or more in unhappy marriages, the data shows those couples are reluctant to stay the course. Over the past 20 years, the divorce rate among baby boomers has surged by more than 50%, even as divorce rates over all have stabilized nationally. Also, more adults are remaining single. About a third of adults ages 46 through 64 were divorced, separated or had never been married in 2010, compared with 13% in 1970, according finding from Bowling Green State University. Sociologists expect those numbers to rise sharply in coming decades as younger people, who have far lower rates of marriage than their elders, move into middle age. The combination of more people living along and rising divorce rates among baby boomers is changing the traditional portrait of older Americans. The result is more people on their own needing to care for themselves, save for their retirement, pay their own rent or mortgage, utilities and so on. Quite simply, this shift will drive incremental demand in an a number of areas -- banking and financial services, consumer durables, housing, insurance and more -- that offer prepared investors opportunity. In particular that need to save over the long term should be good for financial services companies such as Ameriprise Financial (AMP), Charles Schwab (SCHW), ETrade (ETFC), Principal Financial (PFG), Allstate (ALL) and so on. Despite that long-term potential, near term something that Ed Ponsi pointed out has me very cool toward financial services firms that derive meaningful profits from stock trading volumes. hile we have all heard about how low industry trading volumes are this year, Ed tallied the data and found that year to date the combined volume of the New York Stock Exchange, the American Stock Exchange, and the Nasdaq is down by about 1 billion shares per day from levels recorded a year ago. Talking to friends on the floor of the NYSE, they are indeed feeling the pinch of that volume decline and compressed commissions. That combination, as I am told, is drawing some to make some businesses decisions. That makes it hard for me to get behind any of those companies, like TD Ameritrade (AMTD), ETrade, Interactive Brokers (IBKR) and so on that derive meaningful revenue and profits from trading volume. Knowing that, the year-to-date moves in a number of these companies -- ETrade up 39%t and TD Ameritrade up 28%t -- makes it even harder to swallow and put fresh money to work. Ameriprise, which is up 16% year to date, is a better play in my view given the relationship nature of the company's business but also the fee nature of its revenue stream. While it may lack some of the action associated with sexier trading volume, slow and steady is a good place to be, particularly given upside in AMP shares to $70. That's ample upside to being building a position here, but on a 10% plus pullback I would get even more aggressive in the shares.

Where to Invest as America Goes Solo

More people are on their own, needing to care for themselves, save for their retirement.

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