Tuition Paid & Lessons Learned

Brian Cochran

Millennials are now the largest generation in the US and the most represented age group in the workforce. I’m one of them. We are starting to save and invest in stocks, real estate and other markets, which is great news. Everyone benefits from a new generation of buyers as the baby boomers retire and become sellers. But most millennials have yet to invest during a bear market, so they haven’t learned the lessons that come with losses.

Population distribution by age group which shows middle age is more than double child and senior age groupsCourtesy of Bill Sweet via Reddit

Unfortunately, younger investors lack experience. They know about the global financial crisis of 2008, but may not have heard of Lehman Brothers, Countrywide, Bear Stearns or Wachovia. Only older millennials (like myself) have owned real estate and saw their equity disappear during the financial crisis. They lived through the late 90s but were too young to participate in the frantic day trading and speculation that defined the tech bubble. This new generation of investors will make its own bubbles. We are seeing speculation in assets favored by younger investors, such as cryptocurrency and marijuana stocks. Millennial investors will need to learn all the same lessons as the generations before them, and they will likely learn by doing.

“I learn the hard way or no way at all”- Trampled by Turtles

Parents and grandparents of millennials are in a unique position to mentor this new batch of investors. Did you learn the importance of diversification when your portfolio of tech mutual funds crashed? Was your home value less than your mortgage balance in 2009 because you used your home equity like an ATM during the housing bubble? Did you build a large position in your employer’s stock only to watch it collapse as you approached retirement? Experienced investors have already paid the tuition, now they can share the lessons. Tell your financial story. Share the emotions you felt. Every market cycle is different, but the feelings of fear and greed are constant. You won’t be able to prevent every bad decision for younger investors, but at least you’ll be able to say “I told you so.”

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