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Millennials Ruin Everything — Except for Bull Markets

Even though I’m a grumpy old man, I’m OK with millennials ruining whatever they want. That’s because they’ll make lot of money for me in the next decade.

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My daughters are stereotypical millennials.

They prefer standing in line for brunch to grabbing a donut or bagel. They take pictures of experiences instead of living in the moment.

I could go on. But you probably know how millennials act. We blame them for ruining everything from consumerism to hotels to napkins.

Even though I’m a grumpy old man, I’m OK with all that. They can ruin whatever they want. Millennials will make lots of money for me in the next decade.

Millennials are defined as the group born between 1981 and 1996. That makes them 23 to 38 years old right now.

As parents of babies like to say: “That’s a fun age.”

It’s a fun age because that’s how old baby boomers were when the great bull market began.

Looking Back

Baby boomers were a demographic tidal wave.

There were about 77 million births from 1946 to 1964, the years usually called the “baby boom.”

There were about 92 million births in the millennial years.

That’s right — millennials are a bigger group than the boomers.

This is bullish news.

In 1982, the oldest boomers were 36 years old. The youngest were 18. This group created bull markets in stocks and real estate as they aged.

While growing up, boomers bought homes. Prices rose 144% in the 18 years when boomers were starting families.

(Source: The Federal Reserve)

Stock prices also soared. The Dow Jones Industrial Average gained more than 1,200% over those 18 years.

Several factors drove gains in both markets. Technology advanced throughout that time, creating new products for consumers. Standards of living rose around the world, increasing global trade and creating new consumers.

But demographics — the sheer number of boomers — was a large factor.

Looking Ahead

Millennial demographics point to similar trends in the next decade.

This cohort is even larger than the group that drove stocks and homes to record highs in the 1980s and 1990s.

(Source: Goldman Sachs)

For now, the stereotypical millennial lives with their parents. But the real estate site Trulia found 93% of millennial renters want to buy their own home.

The stereotypical millennial is brunching on avocado toast. But they will soon need to fund retirement accounts. As their families grow, they’ll need to fund college savings accounts.

Stock prices will rise as 401(k) contributions replace $25 brunches.

And it’s likely this generation will save a lot for retirement. One survey found that 80% of millennials are concerned Social Security won’t be available to them when they retire.

This will push millennials to the stock market. The savings of tens of millions of employees in retirement accounts will make the 2020s the greatest bull market ever.

As Goldman Sachs notes about millennials and housing: “The cohort’s sheer size, plus its desire to settle down in the future, could lead to a surge in home sales.”

The same is true for stocks as millennials save for retirement.

Millennials Are Different

That sums up millennials for investors. There are incredible opportunities.

Of course, there are also risks.

This generation won’t be like the boomers. Millennials buy online while boomers shopped in malls.

Millennials want ride-sharing services. Boomers owned cars.

This new generation will drive different stock market sectors to bubble extremes. They’ll also push others to bankruptcy.

It’s the type of environment where stock pickers will prosper.

I’ll be talking about how millennials will affect your investments at this year’s Total Wealth Symposium next month. I hope I’ll see you there as we prepare for the next Roaring ’20s.

Regards,

Michael Carr, CMT, CFTe

Editor, Peak Velocity Trader

P.S. I’ll be talking next month at this year’s Total Wealth Symposium , an annual investment event in beautiful Amelia Island, Florida.

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