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Why the Millennials Aren’t Investing Now (And Why You Shouldn’t Worry)
By Don Freeman
Its hard to be a regular reader of Western newspapers or magazines
and not read stories about the so-called “Millennials” or “Generation Y,”
those born between the late 1970s or early 1980s up until the end of the
millenium or so, struggling to find good-paying jobs or just make ends meet
- let along have any spare money to invest in the stock market or pay into
government retirement systems. But what do the problems of the Millennial
generation mean for investors and should you be overly concerned about them?
To begin with, today’s stories about struggling Millennials would be
familiar to older generations because if you were a younger “Baby Boomer” in
a Western country graduating from high school or university in the 1970s,
investing was the last thing on your mind because you probably entered
adulthood facing high unemployment, stagnant or declining manufacturing
economies, urban decay, soaring crime rates, violent strikes, oil shocks,
terrorist hijackings, crippling inflation, corruption scandals at the
highest levels of government, housing and commodity bubbles and don’t forget
about the Cold War and the threat of nuclear Armageddon.
Things were so bad in the 1970s that at one point, New York City, the home
of Wall Street, was essentially bankrupt (thanks to uncontrolled deficit
spending) and required a bailout from the local teachers’ union pension fund
after President Ford initially threatened to veto any bailout coming from
Congress. Sound familiar?
In fact, some pundits even went so far as to predict the demise of the West
and the eventual triumph of Soviet style communism while things weren’t much
better outside the “West” as many of today’s hottest emerging markets were
either trapped behind Iron Curtains, ruled by despotic regimes or plagued by
coups or violent insurgencies.
However, everything changed in the 1980s and 1990s when the Soviet Union
turned out to be a bankrupted paper tiger and entire new industries or
technologies emerged - fueling a return of retail investors and especially
Baby Boomers (who managed to “survive” the terrible 1970s) to the stock
It’s also worth remembering that both the so-called “Greatest Generation”
and much of the “Silent Generation” who were either born before or during
the Great Depression largely shunned stocks that weren’t utilities to invest
in savings bonds or CDs. They did this not necessarily because of the 1929
stock market crash or an irrational fear of stocks but because many had
defined pension plans while investing in savings bonds or CDs often meant
double digit and largely risk free returns - something that’s a thing of the
past in most countries.
However, many Baby Boomers who could no longer rely on defined pension plans
made the twin mistakes of taking on too much risk and too much debt because
they assumed asset prices (whether stocks or real estate) would keep on
rising forever at a double digit clip. So if there is any generation we need
to worry about, it would be the Baby Boomers.
And what about the Millennials? Sure, the job market and economic growth in
the West appears tepid (just like in the 1970s) and many American
Millennials are saddled with school loan debt, but certainly its too early
to write off the entire generation that has also hopefully learned from the
investing mistakes of their parents.
Moreover and just like the rise of the PC and the Internet helped to fuel
the bull market of the 1990s, today we are seeing the rise of the smartphone
or tablet replacing the PC along with the emergence of new and potentially
revolutionary industries like 3D printing, cloud computing and clean tech.
And even if Millennials in the West choose to largely remain on the
sidelines, there are hundreds of millions of people living in emerging
markets who are or are just entering the middle class and have yet to move
beyond just depositing money into savings accounts or buying real estate or
gold when it comes to investing.
In other words, maybe we should not worry too much as a new wave of
investors will inevitably break into the stock market.
Don Freeman is president of Freeman Capital Management, a Registered
Investment Advisor with the US Securities Exchange Commission (SEC), based
in Phuket, Thailand. He has over 15 years experience and provides personal
financial planning and wealth management to expatriates. Specializing in UK
and US pension transfers. Call 089-970-5795 or email:
Suzuki launches new
Celerio at Central Plaza
Suzuki Motor Thailand
launched its new compact car the Celerio at Central Plaza Chiang Mai Airport
on June 1, 2014. The launch was presided over by General Manager of Suzuki
Motor (Thailand) Co., Ltd. Wallop Treererkngam (4th left). Executive Vice
President of Ariyakij G.P. Co., Ltd. Suphasiri Ariyawutyakorn (3rd left)
welcomed and joined the ceremony that was hled on the ground floor. Suzuki’s
new eco-car was launched in India in February 2014 and offers the company’s
new automatic gear technology EZ Drive and fuel efficient driving.