"The idea is that the stock market does best when the percentage of the population in middle age is high and rising. The reason is that's the cohort in our population -- middle-age people -- who both spend the most and invest the most," says Dr. Walden, of N.C. State's College of Agriculture and Life Sciences. "So they are going to be spending money, and that's going to help companies. And
they are also going to invest in the stock market; that’s obviously going to help stocks.

"So followers of this theory say it can explain the rise in the stock market, for example, in the U.S. over the past 20 years as the middle-age cohort has gotten bigger. These followers also say the market will peak around 2010 when the percentage of people in the U.S. in middle age begins to drop," he adds.

"But there are lots of studies that say while age may be one of the factors explaining movements in the stock market, it's not the only factor, and indeed some studies find that its relative importance is actually fairly small. Some others say that really in today's ... worldwide economy, you should not only look at the age structure of your individual country, but you need to look at the age structure of the entire world. And when you do that this throws off those predictions that 2010 may be some tipping point with the stock market. "