(Bloomberg News) Aging baby boomers may hold down U.S. stock values for the next two decades as they sell their investments to finance retirement, according to a paper from the Federal Reserve Bank of San Francisco.

"U.S. equity values have been closely related to demographic trends in the past half century," adviser Zheng Liu and researcher Mark Spiegel wrote in a paper released by the bank Monday. "In the context of the impending retirement of baby boomers over the next two decades, this correlation portends poorly for equity values."

The equity-price-to-earnings ratio of U.S. stocks tripled from 1981 to 2000 as Americans born between 1946 and 1964 reached their peak working ages, Liu and Spiegel said. Overseas investors' demand for U.S. stocks might help mitigate the effect of a baby-boomers' sell-off, yet the impact would probably be limited, they said.

"Foreign demand for U.S. equities is unlikely to offset price declines resulting from a sell-off by U.S. nationals," they said.