How do Millennials choose stocks?
Millennials like stocks. Why shouldn’t they? Stocks only go up, right Dave Portnoy?
I recently reviewed the latest survey from Apex clearing, S&P Global Market Intelligence and Investors Business Daily. Each quarter, they review account holdings of a large group of Millennial generation investors, and analyze which individual stocks are the most popular in their portfolios. Below, you can see a chart of the Top 10 as of the end of last month, out of their full list of the top 100 stock holdings of this group.
Young investors and stocks: awesome!
Before I specifically deliver some observations from that latest list, let me say this about millennials and stocks: I am thrilled that younger folks are learning about investing while they are still in the earlier stages of their retirement saving. There is an entire generation of Baby Boomers that wishes they had the opportunity to invest in such transparent, liquid markets at such a low cost. But in the 1980s and 1990s, the internet and investment markets were in a nascent stage versus today.
The issue for all investors, including millennials, is that they have not known any serious hardship as investors since they started investing. Market declines have been so quickly-remedied since 2008, you could excuse this generation for thinking that stocks only go up…but when they go down, they come right back.
Index-mania is out there: but there’s a cure
There is also the issue of “index-mania” I have described before. While it is possible that investing in the S&P 500 Index is the only strategy a young investor will ever need until they approach retirement, that is not the lesson from history. In fact, I would say that strategy is on seriously borrowed time.