Investment Demographics Revisited

My free subscription to John Mauldin's publication "Outside the Box" paid additional dividends today (see here for my earlier post on Mauldin Economics). The topic was "The Demographic Cliff and the Spending Wave" drawing on the latest book by Harry Dent, whose website describes him as follows:

Harry S. Dent, Jr. is the Founder of Dent Research, an economic research firm specializing in demographic trends. His mission is “Helping People Understand Change.”

I am naturally going to be drawn to someone who has dedicated his life to using demographic trends to  help make money--as long as no one gets hurt here! A few years ago, at the suggestion of one of my graduate students, I read an earlier book by Dent--"The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History." This book was published in 2009 during a time when everyone understood that we were going through the worst recession since the Great Depression of the 1930s. Setting aside the fact that instead of a Great Depression ahead, the Dow Jones average doubled from 8000 to 16000 in the period after the publication of his book, his book had some unfounded demographic predictors that seem to show up again in his latest book. His basic theory is that you should follow consumer expenditures if you are going to invest in the market, and these expenditures are highly predictable from age to age. What demographer tuned into cohort analysis wouldn't agree with this? My problem with the earlier book (and I have not read this most recent one yet) is that the devil is in the details. This blog is way too short to discuss these issues, but here's a good test. Read the following paragraph excerpted by Dent from his new book:

In the recent immigration surge from the 1970s into the 2000s, which peaked in 1991, the immigrants added more to the Baby Boom generation (born from 1934 to 1961) than to the Echo Boom (born from 1976 to 2007) to follow. The highest numbers of immigrants arrive around age twenty-three (what is called the mode in statistics), with the average age at thirty. The new arrival usually enters the workforce and starts producing and consuming. Hence, immigration has an immediate impact on the economy, unlike new births (the latter arrivals require eighteen to twenty-two years to enter the workforce and become productive).

Find the errors (subtle, but important) just in the above paragraph, and then decide whether or not you  want to keep reading...