A younger generation of stock investors is growing up in a different world to some of us slightly older ones. I wouldn’t classify myself as old, but the mindset of the Millennial is wired differently even to myself. So when a report came out from a large retail investment firm detailing the most popular stocks that Millennials and Gen Z are investing in, I was very interested. Here are my takeaways from it.
Looking at the most popular stocks
First, who are the investors we’re talking about here? Millennials and Gen Z refer to a broad age range from around 18 to early 30s.
The first point that stands out to me is that younger UK investors are very happy to buy stocks based outside of the UK. In fact, all of the top five most popular stocks are listed in the US. In order these are NIO, Airbnb, Palantir, Zoom and Plug Power.
From that list of names, it’s clear that this generation is focusing on the future. For example, NIO is an electric car company. This ties in with the movement away from traditional petrol and diesels powered cars. What about Airbnb? Again this is company that offers hosts the ability to list their home for people to come and book and stay. The need for a traditional hotel isn’t required.
With all of the top five stocks, it’s the same story. The companies are heavily invested in technology as a means of pushing boundaries in their respective markets. For the generation that has grown up around such technology advancements, it doesn’t surprise me. My takeaway here is that I need to embrace more stocks focused on this sort of technology. They clearly are the future and could prove even more popular as Millennials and Gen Z grow up, become wealthier and invest more.
More takeaways
Another point that caught my eye is that UK Millennials are happy to take on risk. For example, within the top 20 most popular stocks are the likes of Carnival, Rolls-Royce and easyJet. Over the past 18 months, these three stocks have felt the brunt of the pandemic.
The impact of travel (especially international) has been severely restricted since the outbreak. Therefore, the volume of people travelling on cruises or on planes has been very limited. For more risk-averse investors, buying shares in these type of stocks wouldn’t be likely at all. Yet younger investors are clearly happy to buy these higher-risk stocks.
I think this is because these younger investors have a long-term mindset regarding investing. In a decade, is it likely that a company like Rolls-Royce will have a share price higher than currently? I’d say there’s a very good chance it is. So over this time frame, the risk could be lower than the risk of the volatility over the next month or so.
My takeaway here is not just to have a long-term mindset, but to think about which stocks represent the future. The younger generations clearly still see value in certain companies, despite short-term trouble. So perhaps I should tap into that mindset as well to think ahead. And even though I’m older, I’m still happy to hold a stock for a decade or more if it offers me attractive risk/reward characteristics.
