The Saga of the Baby Boomers

I’m in Ireland this week travelling round on steam trains, seeing the sights, indulging in the famous culinary delights (that’s not potatoes any longer, for anyone under that outdated impression), and of course supping the occasional Guinness.

The company that runs these excellent excursions is called Steam Dreams. It organises many trips around the UK and occasionally overseas – this is the first time they’ve done the Emerald Isle. For a variety of reasons most of the people who do these longer trips (this one’s around a week) are Baby Boomers. They have the time, inclination and the money. If you didn’t know, Baby Boomers are loaded! 80% of Britain’s net personal wealth is owned by the over 50s.

To some extent it’s axiomatic, all other things being equal, older people should have more wealth, after all they had longer to accumulate it. But the Baby Boomers here have been particularly lucky with a number of things. Decades of a burgeoning residential house market, several economic booms, jobs for life, investments that paid off their mortgages, and final salary pensions that those of us a way off retirement can only dream of. The new paradigm of low interest rates may mean servicing a loan is not too much of a hardship, but making a passive investment to pay that loan off is now next to impossible.

Businesses like Steam Dreams have seemingly grown up without really consciously targeting the Baby Boomers. I was talking to Marcus Robertson (Chairman of Steam Dreams) yesterday. A Baby Boomer himself, he hadn’t really thought about how much his business related to this economic phenomenon that undoubtedly underpins their success (these trips are very well subscribed if not sold out in my experience). On many of their steam day trips they do get a younger demographic travelling too – and why not – we don’t remember steam! But the predominant age group on the week-long trips is certainly those for whom steam is nostalgia, and perhaps a reminder of what now seem like they were better times.

The other factor with Baby Boomers is that they are still healthy enough to get out on these sorts of trips. And likely to be so for some time yet.

Of course Steam Dreams is a private company, so we can’t invest in it short of bunging Marcus a few bob for some shares in his Baby Boomer Baby on a private basis. Incidentally, if you want to sweet talk him then you’ll need to know a lot about stream trains, and that his mum wrote the Wombles. He comes from a line of people who made good following their heart.

Of course I’m here to follow the money so the obvious company to look at that takes advantage of the Baby Boomers must be Saga plc. They are in five main areas: insurance, travel, personal finance, healthcare and have a publishing business too. Saga floated on the LSE last year, and that must be a sort of de facto company health check, since many analysts will have been over them with a fine tooth comb. Having been around for c. 60 years the company itself is a Baby Boomer! If they play their cards right it’s easy to see how they can do very well indeed for the foreseeable future, well poised to take advantage of the BB demographic and actually a pretty good looking price chart. We’ve seen a move up above the resistance level at around 190 and are now at a thus far small congestion area.

Given markets generally are in bull mode, that alone should sweep Saga along to higher prices. As we stand it’s not really any more complicated than that!