Younger generation has always shown higher risk appetite and this has resulted in valuations of almost all the asset classes rising to their all-time highs. But, one could also argue that younger generation has higher access to information and they can also seek help from online forums and experts offering investment advice.
After COVID-19 pandemic led to lockdowns in March 2020, stock markets have witnessed a strong rally. As per market experts and economists, one big reason for highs valuations of different asset classes in the entry of young investors in the market.
Young investors on social network Reddit in direct fight with Wall Street
A group of investors, WallStreetBets on popular social networking website Reddit has over 10 million followers. WallStreetBets is mainly concentrated on select stocks that seem to have lower valuations. They have become a big force in the recent months, especially as they trapped some hedge fund investors in stocks like Gamestop, AMC, Nvidia and Blackberry. The stocks picked up by members of this group are usually with lower trading activity and it is easier to manipulate the prices.
They also follow couple of ideologies like YOLO (You Only Live Once) which suggests the higher risk-taking attitude of youngsters and HODL (Hold On for Dear Life) which is conception followed by youngsters holding assets for long term.
Financial Times has that WallStreetBets has become so strong that many hedge funds have started keeping track of the discussion on this forum. Hedge funds can better understand the market mood and any stock specific action from members of this forum.
Real Estate Prices Rising Across North America and Europe
After COVID-19 lockdowns, construction activity came to a sudden halt and it hasn’t picked up pace yet. While the demand for housing has been high due to lower interest rates in Europe and North America, the supply has remained limited. This has led to a rise in prices of real estate across major cities in Europe and North America.
Online Gaming and Sports Betting
Younger generation is also passionate about gaming. And when gaming lets you bet on the chances of winning some money, that appeals to youngsters. Online sports betting and iGaming has picked up pace in the recent years. The main reason for this is entry of transparent networks in this segment. The data for sports events is streamed fast. Cricket fans can check out the options to try their luck on for all the major events. The platforms and apps offer detailed reviews and immersive experience for bettors. This is much better than going to local casinos and bets can be placed anytime, on handheld devices.
Crypto-currencies and alt-coins
Another popular (and controversial) investment segment for youngsters is crypto-currencies & alt-coins. While Bitcoin, Ethereum and DogeCoin are popular among investors, there are more than 25 crypto-currencies that have more than $1 billion in valuations (as per CoinMarketCap). Governments and central banks across the world are trying their best to come up with legislation to control the flow of money in these new assets classes but technology experts believe that it will be difficult.
As per a recent Goldman Sachs , young investors could invest nearly $400 billion in the stock markets this year and this could push stock valuations even higher. While some people would suggest that overheated prices would see a correction, the mood of high-risk taking youngster suggests the opposite.