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Proprietary Data Insights Financial Pros Top Stock Searches This Week
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Nobody Wins Unless Elon Musk Wins Bruce Springsteen used to say, Nobody wins unless everybody wins. I doubt Elon Musk abides by the same motto. Love him or hate him, you probably agree Musk acts recklessly, without concern for how his words and actions might impact everyday investors. The Lesson To Take From The Week That Was Elon Musk You’re not Elon Musk. So don’t try to be like him, or any other ultrarich person. Don’t follow their trades, at least not impulsively with money you can’t afford to lose. That’s the lesson. Source: Google Finance Who won – on purpose – as Twitter (TWTR) soared over these five days? Elon Musk. Anybody else who won unknowingly timed it right, was already long, or chased the rally, day trading it for quick profits. You’ll never know who bought the top and are left holding the bag, waiting on a rebound. A billionaire’s bag. Maybe The Worst Part Yes, Elon Musk won. He’ll continue to win. But he reportedly broke the rules in the process. The Washington Post claims Musk publicly disclosed his Twitter stake 11 days late, violating SEC rules. The SEC requires investors to report when they pass a 5% investment in a company. Musk eclipsed 5% on March 14, but apparently didn’t report this right away. In the interim, he bought more shares, accumulating TWTR at under $40. If punished, he’ll face a relative slap on the wrist. A tiny fraction of his potential fine would render most of us insolvent. |
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Retirement |
Before You Trash Talk Gen Z, Millennial Investors Read This |
Key Takeaways:
Source: Investopedia Call this data from Investopedia’s recent survey of investors a sign of the times. Millennials plan to rely on cryptocurrency almost as much as old school sources – Social Security and 401(k)s – for retirement income. When asked which vehicle will generate the biggest returns, every generation except baby boomers cited crypto. Even though boomers put stocks and mutual funds ahead of crypto, they still say crypto will beat index funds and ETFs. Noting that just under half of survey respondents report only having beginner’s knowledge of digital currency, the study’s authors make a big deal about what they call a “knowledge gap.” This idea that lots of people own cryptocurrency, yet quite a few don’t understand it. But here’s what the study didn’t make clear.
The authors didn’t focus on the study’s most encouraging part of the study, found in the following data: Here’s what I take from that chart. Impressive asset allocation. In fact, younger generations appear slightly to considerably more diversified across asset categories than baby boomers, who apparently know what they’re doing. Granted many of these boomers are close to or in retirement, however I still didn’t expect to see such encouraging levels of asset allocation among younger investors. You can be at or around retirement age and still have a presence in a variety of investments, simply by selecting more conservative, income-generating holdings in each area. We also don’t know how diversified these investors are within asset classes. I hope to find and dig into data on this and explore it in a future edition of The Juice. Would you have guessed that a larger percentage of Generation Z, millennials, and Generation X own real estate investment trusts (REITs) than the 58-and-older boomer crowd? I wouldn’t have. The cynic might say boomers are avoiding REITs due to a poor interest rate environment. I say we’re – as per usual – giving boomers too much and younger folks too little credit. Plus, the same story applies pretty much across the board for index funds and ETFs. Young Investors Get A Bad Rap No doubt the pandemic – with the rise of high-flying meme stocks and altcoins – created an air of overconfidence, particularly among young investors. There’s considerable academic research that shows being too confident in one’s own ability can hurt the returns of traders and investors. That said, the trash talking Generation Z, millennials, and some of us in Generation X take might be overdone. While the pandemic certainly gave folks who made bank on GameStop or Dogecoin beer muscles, it also opened the stock market and other investment venues up – for the first time – to large swaths of the population. Young Investors Want To Close The Knowledge Gap Not only are younger generations diversified across asset categories, they’re also hungry for knowledge. And not just on crypto. The survey revealed that Generation Z and millennials want to up their game in areas where they lack knowledge. For example, Gen Z said they knew least about taxes. And 34% in this group want to learn more, saying they consider taxes “the most important financial skill they could learn today.” Doesn’t sound like something from an uninformed snot nose running their mouth on Reddit. The Bottom Line: It’s easy to get caught up in the headlines, which tend to be one of two things lately – bad economic news now and the flavor of the day (like the latest Elon Musk news!!). However, it never, ever hurts to go back to basics. When I read this study on how different generations invest their money and plan for retirement, I expected to throw shade on Gen Z and millennials. Turns out they have a solid grasp on one of the lessons we’re first taught as investors. Keep a diversified portfolio. So, if you have time this weekend, look at your holdings. Reallocate and rebalance as necessary, across and within asset categories. |
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