Part II: Top Ten Stocks Owned by Millennials

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Millennials have had a rough introduction to the working world. They graduated after paying the highest college tuitions on record only to face reduced job opportunities compared to past generations. They may be the first generation that doesn’t assume things are going to be better for them than they were for previous generations.

It is no surprise that Millennials are risk averse, so they have the most conservative portfolio mix of any age bracket under 65!

 

A recent survey by the Boston mutual fund company MFS Investment Management, found that nearly half of millennials said they “never feel comfortable investing in the stock market.” The survey also showed millennials keep more of their assets in cash, less in stocks, and have a shorter time horizon — less than five years — for their investments than boomers or Gen Xers.

Part of the problem is most schools still don’t have financial literacy programs in place. Plus many parents are reluctant to have conversations with kids about money. No surprise since many parents also have very little financial knowledge!

 

Affluent millennials hold 52 percent of their money in cash and 28 percent in stocks, compared with 23 percent and 46 percent for older people, a UBS survey released in the first quarter found. The study focused on 21- to 29-year-olds with $75,000 in income or $50,000 in investable cash, and 30- to 36-year-olds with $100,000 in income or assets.

TD Ameritrade has shared a new batch of statistics with Benzinga that are focused on investment strategies among 4 different generations of stock market investors. I found it interesting  to compare the holdings of Millennials with their baby boom parents.

Millennials (born 1980-1997)        

  1. Apple (12.3 %)
  2. Facebook (2.1 %)
  3. General Electric (1.7 %)
  4. Berkshire Hathaway (1.7 %)
  5. Bank of America (1.6 %)
  6. Walt Disney (1.5 %)
  7. Tesla Motors (1.3 %)
  8. Microsoft (1.3 %)
  9. Alibaba (1.2 %)
  10.  Exxon Mobil (1.2 %)

Baby Boomers (born 1946-1964)

  1. Apple (9.9 %)
  2. General Electric (1.7 %)
  3. Microsoft (1.5 %)
  4. Facebook (1.4 %)
  5. Bank of America (1.4 %)
  6. Intel (1.3 %)
  7. AT&T (1.3 %)
  8. Exxon Mobil (1.2 %)
  9. Berkshire Hathaway (1.1 %)
  10. Johnson & Johnson (0.9 %)
Seven out of ten stocks were the same. It raises the question; are Millennials getting their stock picks from their baby boom parents or are they selling their winners too soon?

I find the lack of high growth names in semi-conductors and bio-tech an indication that both generations are ultra conservative. I am totally shocked that both Netflix and Chipotle didn’t make the list of popular stocks owned by Millennials. A large part of revenue growth of both these companies comes from the spending habits of millennials.

 

In another study, released earlier this year by Northwestern Mutual Life Insurance, only 11 percent of those age 18 to 29 said they are comfortable with the risks associated with growth strategies in their portfolios. Just 14 percent said they are pursuing as much growth as possible.

However, most young adults are not benefiting from sitting down with a professional who can ease their mind about the stock market. According to a report from The Northwestern Mutual Life Insurance Co., only 13 percent of adults age 18 to 29 work with a financial advisor.

Here is another example of how Millennials can affect the financial service industry. The automated money manager company WealthFront crossed the 1 billion market in assets under management in June of this year. It only took two and half years since its founding. In contrast, it took Charles Schwab six years to reach the 1 billion mark. The difference is 60% of WealthFront’s client base is under the age of 35!

As their financial resources grow, the millennials will come to wield enormous influence in the financial market. What products and services will they spend their money on? As a stock picker, I am always looking for new opportunities to make money. The problem lies in determining if it is a substantial trend or a fleeting fad.

One thing for certain, baby boomers are spending less and saving more for retirement. The Millennials, as a group are a force that investors can’t afford to ignore.

Disclaimer: The above lists of stock ownership comes from only one source and it is for discussion purposes only!

Part III: Cashing in on Millennials

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2 thoughts on “Part II: Top Ten Stocks Owned by Millennials

  1. Interesting Post !

    I wonder how many of those surveyed get recommendations from an investment firm or invest in funds or ETF’s. This could account for the similarities.

    Also, I have noticed that not everyone invests as they spend. Peter Lynch (as well as many others) once said to invest in what you know. It is surprising that Netflix is not on this list as Millennial spend most of their time and money with brands such as these – as well as Apple which is on the list.

    Like

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