“That’s A Big Bull”

Most millennials have a pretty unique view of the financial markets and investing. Many of us witnessed our parents go through the financial crisis which lead to layoffs and net worth’s shrinking back in 2008. This started us off with a negative view of how financial markets and investing works.  So when millennials started entering the workforce in masses those who could save money did because we had just witnessed how our jobs could disappear. The positive this created was that we learned to save for tomorrow but many were to scared to begin investing. Meanwhile the market came roaring back and those who stayed invested or decided to begin investing were rewarded handsomely.

Take a look at the S&P 500 returns since the great recession.

This bull market continues to carry on with the S&P 500 being up 10.32% as of July 12, 2017. This leaves us all contemplating the bull market wondering what to do next with our money. If we aren’t careful we will end up like Mathew McConaughey and just stare at it rolling a booger in our fingers and ultimately turning around and running away.

So, what does this mean for millennials? I have observed three types of new groups being formed within the millennial generation because of how markets have performed over the last decade…lets take a look at each observation.

First Group: The what is a bull market crowd?  

Not everyone is going to tune into what is happening around them. This is the reality of every generation and nothing is different about millennials. This is the group that is portrayed by media for buying too much avocado toast and quite frankly not giving a shit about their financial future. They either think things will work themselves out,it is out of their control, or their parents will bail them out. Either way they are not to concerned overall about what is going on.

Second Group: The markets are bound to crash I am holding out.

This group is educated and employed with a good salary which leads them to be able to save some money. The problem is that they are late to the bull market party. They got out of school started working and had to get on their feet. This means saving an emergency buffer, paying down student loans, and learning that supporting themselves without the bank of mom and dad can be a challenge. They powered through this phase and started to stash cash and now that they are ready to invest some surplus money everything they look to invest in seems expensive.

Instead of biting the bullet and starting to invest they have been holding off waiting for a pull back. This has led to them missing out on exceptional gains. This leads to analysis paralysis, if you are young and have excess cash invest today! No one can see the future but if you choose to not invest you will fall behind each year further and further and there will never be a clear entry point. Every year you can go on an investing forum and see threads of people talking about how this year is the year of the crash…for each year going back to 08’…seriously. No one knows the future, one thing that is certain is everyday people wake up and spend money and you could receive a portion of that money if you invest in a portfolio of businesses today.

Third Group: Found success early in investing and are taking on greater and greater risk.

This group has been investing in the bull market and has found great success for almost a decade. They have seen their money consistently grow if using a low-cost indexing strategy and have never experienced a down year since the great recession. Many have also found success in leveraging money in rental properties magnifying these gains creating an even greater appetite for risk.

This in my opinion is the most dangerous group to be in. Don’t mistake your success as being an investing guru, keep your foot on the gas and continue investing but realize your investing will not always be smooth sailing. There will be testing times in the future so take this time to reflect on your plan and make changes to set yourself up for the future. Don’t listen to those who start to sound greedy and end up investing in something you are not comfortable with or the numbers don’t make sense. Be critical of investments and stick to your plan so you are in a good position today and are ready for tomorrow. Most importantly do not over leverage yourself and wipe out all the hard work you have done when times get tough.

Why does any of this matter?

No matter what group you find yourself in it is important to be self-aware. Recognize that every year there is someone who calls an end to the bull market and this year is no exception. Don’t let this influence your investment decisions just be aware that we are in one of the longest bull markets in history and make sure you are positioned in case there is a down turn in the future. We all must take risks and put our hard-earned dollars somewhere if we want to avoid eating cat food in our old age.

Just make sure you are not feeling bullet proof and getting in over your head by taking excessive risks. Weigh out the pros and cons of any investment strategy, make your decision, and stick to it so you are ready when the market inevitably takes a dip. Make sure that if you are taking excessive risk you have cash reserves to weather the storms that may come. Then go confidently forward and continue to build the life you are aiming for. Those who flip flop on their plans or get greedy get burned the worst when things get ugly. Keep saving and investing and you will reach all your goals.

What Are Your Thoughts?

  1. What is your view on millennials and the ways they invest/save money?
  2. Do you know of anyone falling into one of these categories?
  3. What is your next move in navigating this bull market?
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