Hipster or investor? Smashed avo generation turns stocks into a subculture
Tech
Tech
Billions. The Wolf of Wall Street. Black Monday. The Big Short.
If you don’t know what these are, you are probably too old to care and you certainly don’t have a Netflix or Stan account.
But these movies and bingeable TV series are driving a ‘subculture’ of stock market investing among millennials, reckons Stake CEO Matt Leibowitz.
Add in cryptocurrency trading, which introduced a generation to the idea of making money from ephemeral resources, and you have the makings of a subculture of under-35s for whom ‘investing’ is a cool and interesting new plaything.
Just not something you put your life savings into.
Made $10k on crypto… now an investing expert
23-year-old Joe Harris got into investing when his dad thrust a Medibank Private (ASX:MPL) IPO application form under his nose when he was 18.
The IPO was a raging success, up 11 per cent when it debuted and 20 per cent in the first month, and Mr Harris began trading and then educating himself and taking longer term positions in both stocks and cryptocurrencies.
But he says that while his mates and acquaintances are super keen to hear about his experiences, they aren’t quite as on the ball when it comes to educating themselves.
“The crypto bubble wave got them to understand some of the principles but the fact was it was some kind of bull market… a lot of people think they’re an investing savant now [but aren’t doing the extra legwork],” he told Stockhead.
“It’s very easy to think that you have this magic touch.”
He himself made enough to cover his rent for a year and a half from a very early crypto arbitrage fund.
Commsec? NABTrade? Really?
Millennials have until the last few years been largely absent from the stock market.
While it’s partly down to the fact that this generation is more cash-strapped than the one before and single-mindedly focused on property, Mr Leibowitz reckons the apathy is also due to the fact that the tools for investing and the investments available in Australia are all, well, a bit dull.
“Nothing has changed for investors in the last 30 years, except for cheap online trading,” he said.
“Younger people want to be in the market but need a hook. They need more engaging [interfaces] or products. That’s why people got into Bitcoin, because people were talking about it and [they could see it move].”
Hooks like Australia’s Next Top Trader could bring more young investors into the stock market fold.
Equity Mates, a podcast that offers up a bit of stock analysis and a lot of investing basics, is running the competition.
Come March, when it starts, investors will put a bit of money down and get advice on the way — Jennifer Hawkins and Megan Gale won’t be judges in this particular ‘Australia’s Next Top…’ though.
They say the skin in the game makes it sexier than “watching paint dry” in the ASX trading game, as does the grand prize of a trip to Wall Street.
Apps like Stake and Raiz (ASX:RZI) offer the millennial-focused interface that Mr Leibowitz reckons is necessary to market to people who have grown up with iPhones and apps.
What the kids these days are investing in
Millennials hold less of their assets in shares than older generations and more in cash, according to the annual Legg Mason investment survey released in December 2018.
“It likely suggests that younger people have a ‘non-traditional’ view on investment allocation,” the report said.
“We also see data suggesting that younger investors (Millennials) are less likely to have a steady job, high expenses in raising their children or live on their own versus prior generations, which suggests they may not have much savings to build traditional investment accounts.”
They’re more likely to invest in alternative assets, such as ETFs, commodities and derivatives, and entities with green and social credentials.
Data from Stake, an app that facilitates investing in US markets, shows Canadian weed stocks are on a tear with its majority 18-34 year old investors. This industry went from making up 4.5 per cent of stocks traded on Stake in August to 10 per cent in February.
The kids are liking Cronos Group, Canopy Growth, Tilray, Aurora Cannabis and Aphria, in that order.
And despite being the generation that came of age after the global financial crisis, Legg Mason says they’re OK with risk.
Stake data shows the top five exchange-trading funds include two ETFs that ‘short’ or invest against sectors, one leveraged to market volatility, and one that tracks a very high-tech industry:
Mr Harris says he couldn’t name any of the top 10 resources companies in Australia but can tell you all about Atlassian — his workplace and part of his stock portfolio — Tesla, Amazon and his best investment to date, A2 Milk (ASX:A2M).
He can also tell you all about his flutter on a leverage US volatility index — fun, but a “painful learning curve”, although not one that put him in financial danger.