retail millennials are now in charge
2020 has flipped the investment scene upside down: retail investors are now in charge. It first struck me when i picked the tesla stock bottom date while professional financial advisors, professional investors, and economics professors missed the entire 800% move.
Millenials hold the reins
Don't want to take my word for it? Then in the words of billionaire investor Chamath Paliphpitiya:
"Retail investors now have access to so much information that it's almost on parity with people that work in traditional investment organisations" -- Chamath Palihapitiya
The importance of retail flows
Jim Bianco, a macro strategist who recently featured on RealVision also agrees:
"Well, that seems to be what's going on with a lot of this money, even though a traditional AAII account might have half a million dollars in it, and a Robinhood account might have 10,000 just to use a number, that 10,000 will turn over every day or two, that half a million might do three trades a year. That Robinhood account will have a bigger influence on the flow of money in and out of the markets than those other accounts. Citadel says that about 25% of all trading in the markets, they said this to Bloomberg a few weeks ago, is retail investors on peak days, 20% on normal days. Now the third group" -- Jim Bianco @ RealVision
- on peak days, people trading on their apps are actually driving the price action.
- the rest of the time (non peak days) they still dictate about a third of the price action.
The average Robinhood investor is 30 years old.
Listen to the Millennials (who have savings)
Thomas Lee also agrees, and has been warning us that Millennials are now entering into their peak income years. It turns out Millennials love "growth stocks" (companies which re-invest in themselves and focus on exponential growth).
If TSLA teaches us anything, it is that big disruptive growth stock companies have become too complex for traditional finance to analyze under their existing lense. They'll often blend AI, SAAS, economies of scale, etc. and require a more technologically versed group of analysts to properly price.
Maybe this is something Millenials can do, natively, especially when not pressured by their boomer CEOs while working in the traditional fin jobs? After all, Millenials grew up programming their parents' VCRs.
Another thesis is that it doesn't matter whether millennials are right or wrong. They are now calling the shots. If they say it's right, then it's right.
Ditch your hedge fund
We now know that hedge funds are basically a money-making myth:
"Hedge funds lost 3.8% of assets globally in 2019, the most since 2009" --market watch
You can also ditch your financial advisor if they missed all the important trends of 2020. They'll tell you that you cannot live without them; they'll enter self-preservation mode, but remember they make money from you; and the data is showing they should start paying you for advice, not vice versa.
To sum up
- Do your own research, you have access to as much information as investment firms.
- Listen to 30 year olds. What companies do they like? 30 year olds dictate the trends.
- Research good investment apps: apps that let you directly buy:
- Start small, while you learn.
You are now in charge.