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Are Millennials really the reason the stock market is stuffed?

  • June 24 2020
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Are Millennials really the reason the stock market is stuffed?

By Grace Ormsby
June 24 2020

Millennials are being blamed for the stock market’s continued volatility right now, but is it a well-founded judgement?

millennials

Are Millennials really the reason the stock market is stuffed?

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  • June 24 2020
  • Share

Millennials are being blamed for the stock market’s continued volatility right now, but is it a well-founded judgement?

millennials

According to Switzer Financial Group, “Millennial madness” is the reason for recent increases to both the ASX and US stock market, despite COVID-19 cases still rising the world over.

Peter Switzer said, “This oddity is explained by professional fund managers as the silly behaviour of Millennials as they get too engrossed in the stock market.”

Only 10 per cent of Australian Millennials actually invest in funds, according to a 2019 Calastone study – but more than three-quarters of those surveyed did indicate they plan to invest in the future.

Mr Switzer said there’s a newfound stock market appeal: “Term deposits are hopeless. People can’t buy homes. So, they’re looking to the stock market as an alternative to build wealth.”

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Pengana Capital’s Rhett Kessler agrees: “Before it was the Belgian dentists. Then it was the New York taxi driver that you got your stock tips from. Now it’s the Millennials.”

Amid current uncertainty, Mr Kessler conceded, “Everybody is having a punt.”

But he warned that “this is not a time for embracing risk”.

Roger Montgomery of Montgomery Investment Management is also of the opinion that Millennials are “pretty responsible” for current market swings.

He flagged a United States example to add to his point: Hertz.

After declaring bankruptcy back in May, the car rental’s share price went up fivefold.

“People were punting on the equity not realizing that the equity and the capital structure is the last to be repaid,” Mr Montgomery explained.

“The speculation in the stock after they announced Chapter 11 bankruptcy just shows you how uninformed traders are at the moment.”


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About the author

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Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

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About the author

Grace is a journalist on Momentum Media's nestegg. She enjoys being able to provide easy to digest information and practical tips for Australians with regard to their wealth, as well as having a platform on which to engage leading experts and commentators and leverage their insight.

Join The Nest Egg community

We Translate Complicated Financial Jargon Into Easy-To-Understand Information For Australians

Your email address will be shared with nestegg and subject to our Privacy Policy

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