Millennials being blamed for global stock market volatility

‘Everybody is having a punt,’ says investment expert.

stock trader broker stretching hands at workplace

Millennials going “mad on stocks” could actually put the market at risk, leading money experts told Switzer Daily.

According to Switzer Financial Group, “millennial madness” is the reason for recent ASX and US stock market increases in the face of the COVID-19 crisis.

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

So, millennials are being blamed for current global stock market volatility, but is it a well-founded judgement?

A 2019 Calastone study showed that only 10 per cent of Australian millennials invest in funds, but more than three-quarters of those surveyed said they did plan to invest in the future.

“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, the traders,” said Pengana Capital’s Rhett Kessler.

“And it’s rampant. Everybody is having a punt. And I can tell you that share prices do not represent underlying fundamentals in a lot of cases. And so my concern is that we’re getting positive validation that everything is fine and it’s a new world, and this time it’s different, and it’s scaring the hell out of me.

“This is not a time for embracing risk, this is a time for caution. And it’s made a lot harder by the fact that if you’re sitting in cash, you’re getting nothing and you’re watching everybody making money around you and it’s a very difficult time to retain your discipline. But I would say that it’s probably more important now than ever.

“These are uncertain times and I hope that I am proven wrong.”

Mr Kessler cited the lack of sports betting as a reason so many are taking a punt on the market right now.

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

“So long as they don’t have to sell, they can hang in there until fundamentals improve and economies grow. But if they are desperate to get out and are afraid of capital loss then we could see a significant sell off.”

Roger Montgomery, of Montgomery Investment Management, agrees that millennials may be responsible for current market swings and could also be responsible for its downfall, saying there are too many uninformed traders speculating and punting on the market right now.

Have you been taking a punt on the stock market during the pandemic?

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    COMMENTS

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    justme
    3rd Jul 2020
    5:22pm
    Never been the slightest bit interested in knowing who is referred to as Gen x or y or whatever; same goes for milennials.
    Who cares.
    Sundays
    3rd Jul 2020
    6:27pm
    I have seen this phenomena amongst some GenY that I know. They think by buying low, they will make a quick killing. Completely missing the fact that investing is for the long haul and share trading by the inexperienced can cause you to lose money, many don’t even realise that selling at a gain within 12 months triggers a capital gains tax. Some are even borrowing to get into the market
    Rae
    4th Jul 2020
    7:23am
    The tail end of a boom is always like this and I doubt it's just one age group playing. Volatile markets are designed for trading and speculation.
    Eddy
    4th Jul 2020
    2:37pm
    I have never bought shares, mainly because until recent years I never had spare money to risk. However my eldest grandson had some spare cash and decided to buy into Flight Centre while it was low. I advised him there may be risks and he understands that but believes within a few years, when everything is back to 'normal', people, especially young people, will resume travelling. Makes sense and he thinks it is low risk. Who am I to argue with a top performing uni student.
    Simplelife
    4th Jul 2020
    2:43pm
    The younger generations should get into the stock market as they may be unable to buy a house!
    If they trade for profit and succeed that's great. Age should not matter.
    I cannot believe there are sufficient numbers to have any significant effect on the stockmarket though.
    Youngagain
    6th Jul 2020
    3:35pm
    Unable to buy a house? I don't recall a time when it was ever easier than now to buy a house. The government is handing out grants. Interest rates are rock bottom. Prices for construction are incredibly low. All this crap about houses being unaffordable is just that. In the inner cities, perhaps. But who could ever afford to buy in the inner cities? In country towns and outer suburbs, I'd love to be young again and buying my first home. It would be 1000 times easier than it was for us.


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