Why Some Millennials Are Sitting Out the Market Rally
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What's the market rally context and who is sitting out?
Here's your Money Briefing for Wednesday, December 2nd. I'm J.R. Whelan for The Wall Street Journal. The stock market continues to hit record highs. The Dow Jones Industrial Average is up more than 60% since its low point in March. But not everyone is taking part in the market rally. Among them are millennials.
All of the people I interviewed mentioned 2008, that they were very scared of a market crash, that they were scared of a recession. And in many cases, we're still trying to recover from the last recession.
Coming up, our personal finance reporter, Julia Carpenter, will join us to talk about why many millennials are shying away from the market. And we'll hear from one such investor about which financial obligations are taking top priority right now. That's after the break.
The stock market surge during the pandemic has given many investors confidence and strong returns. But millennials, people born from about 1981 until 1996, have been sitting out the market rally.
How many millennials are invested compared with other generations?
To find out why, let's bring in our personal finance reporter, Julia Carpenter. Julia, thanks for being here.
Thank you so much for having me.
So how does millennials' presence in the market compare to other age groups?
Why do millennials hold less value in the market despite similar participation?
So according to the St. Louis Fed, about half of millennials are invested in the stock market, and that's roughly the same as Gen X. Gen X, again, being people born between 1965 and 1979, that generation right before millennials. But the difference is that the value of millennials' holdings is almost a third lower than that of Gen X. So invested about the same amount, but just holding much less.
Now, what are you hearing from this generation of investors who were not in the market when stocks began to turn sharply higher back in the spring?
So the folks I talked to, they were kind of a mix. Some were saying that they were invested, but that they were being careful that their financial livelihood wasn't dependent on the market. Others were saying that the market continues to confuse them or that they are managing debt obligations, managing student loans, trying to make ends meet in another way that didn't leave them with much money left over to put into the market. But absolutely all of the people I interviewed mentioned 2008, that they were very scared of a market crash, that they were scared of a recession.
What reasons do millennials give for avoiding recent stock gains?
And in many cases, we're still trying to recover from the last recession.
You spoke with several millennials who have lived through more than one sharp economic downturn, one of whom is 39-year-old David Hill. He's married with two children, lives just outside of Chicago, and he's here with his thoughts on the market. David, thank you for joining us. Thank you for having me. So, you know, the market's been on a tear for the past six or seven months. What's kept you from getting in?
You know, the concern is I think things tend to be over undervalued based on the news. And so this is wild swings day to day. So if I was, you know, a day trader or someone who was looking to make short term gains, I'd be really concerned. You know, long term, I'm more of a long term buy and hold type investor. So I want to make sure that I'm also keeping an eye on like what's happening today. So it makes me a little bit nervous. But since I'm more long term viewing, I don't get really caught up in big shocks and big swings. But I try to at least, you know, not have too much of my money invested only in sole stocks.
So when you're managing your finances, what's important to you?
How does investor David Hill prioritize family finances over market risk?
Don't take anything for granted. Be smart about where you put your money. You know, they say cash is king, but also cash doesn't make money either. So you got to kind of balance your whole portfolio out between real estate, your investments, your retirement, how much cash you have. Look at everything. But just be smart about money. I try to be smart about what I'm spending on. We bought our house purposely. We spent way less on our house than we could have. Like we approved for a lot more than we actually paid for our house. Because we just want to say we want a place to live that meets our needs and not have to worry about something happens to one of our jobs.
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Chapters
6 chapters
1
What's the market rally context and who is sitting out?
0:05–1:04
2
How many millennials are invested compared with other generations?
1:04–1:15
3
Why do millennials hold less value in the market despite similar participation?
1:15–2:19
4
What reasons do millennials give for avoiding recent stock gains?
2:19–3:17
5
How does investor David Hill prioritize family finances over market risk?
3:17–5:13
6
What conditions would make millennials more comfortable investing more in stocks?
5:13–5:35
Speakers
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