The stock market is taking on a deeper red color as steep sell-offs continue, but a new report says some young retail investors are looking at ‘red meat for buying’.
Less than two in ten, 18%, say they are optimistic enough to keep more money on the market this year, according to a bankrate survey released Thursday.
But who in the market is willing to pay more – and look at red meat instead of red meat – to express it even younger and to a greater extent.
“A closer look at who is willing to put more money into the market reveals that they are much younger.“
About 43% of investors say they are ready to increase their investment (43%) between the ages of 18 and 25. More than a quarter, 27%, millennials aged 26 to 41 years.
But so-called General X Demographic, only 14% of investors aged 41 to 57 said they would invest more and 16% of that population said they would invest less.
Meanwhile, only 8% of baby boomers between the ages of 58 and 76 said they would invest more in the market this year and 22% said they would invest less.
Younger poll participants were also more likely to say that they were taking active action in response to market volatility.
But there is a big caveat.
The new survey was launched a month ago – before the stock-market rot on Wednesday where the Dow Jones Industrial Average DJIA,
It ended the day at 1,164.52-points, or 3.6%, in the face of inflationary pressures.
S&P 500 SPX,
Wednesday ended 165.17 points lower. That’s a 4% drop – and a potential fraction of what’s going to happen, according to one analyst who predicted a 45% crushing summer skid from the January peak for the S&P 500.
“‘We are beginning to notice a wide range of feelings between the younger (more aggressive) and older (richer) generations.’“
The bankruptcy survey is an echo of what others are seeing.
“We are beginning to notice a wide gap in feelings between the younger (more aggressive) and older (richer) generations,” according to a Wednesday note from Vanda Research, an independent research firm that offers institutional investor investment analysis.
The firm’s data signal “the former continues to leverage leverage to buy, while the latter sells equity primarily through mutual funds,” the note said.
“We are now seeing growing signs that rich and elderly individual investors are reducing their overall risk exposure to both equities and bonds,” the researchers added.
It is understandable why young investors are taking risks despite all the volatility and recession. After all, their portfolio has more time to recover from the deep and more time to profit from the bounce back.
“Gen Z and Millennium investors have more time to recover from the deeper bottom of the portfolio and more time to profit from the bounce back.“
“General Z and millennial investors willing to invest more in stocks this year, despite market volatility and inflation, may see long-term rewards for more buying discipline at lower price points,” said Greg McBride, chief financial analyst at Bankrate.com.
But they need to be disciplined in what could be their first real down-market test, especially if they start to get a taste of investing during the epidemic. (Some say they are ready for the challenge.)
On the other hand, McBride says Baby Boomer investors are “almost three times more likely to invest in stocks this year than last, but it is fully consistent with, or continues to be, portfolio risk dialing as retirement begins, regardless of the overall market environment.
“ Just when investors think they’ve bought a dip and are ready for a rebound, another one might be right in the bottom corner.“
Regardless of the age group, financial advisers say the best steps to invest right now are slow and thoughtful, not quick and responsive.
Another tip? If a person sees a certain falling stock, they have to ask themselves if the share price is falling because of a particular problem that the company may be controlling, Jeremy Bohne of Mass Paceline Wealth Management in Boston told MarketWatch.
But if it is the general investor’s mood that pulls the price, then the bidding investor will have to fight the market sentiment on a larger scale, he said.
Beware: When investors think they have successfully bought a dip and are ready for a rebound, another may be right in the bottom corner.
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