I’m not a believer in the idea that you can formulate a successful investment strategy based on the cover of a magazine. If I was, and again I’m not, but if I were, then I would have this one from Barron’s tattoed on my forehead.
We all know the story. The economic shutdown forced people to stay home, leaving them with more time than they knew what to do with. And then when the stimulus checks hit, and Davey Day Trader grabbed his megaphone, his army of followers listened up. Right at that time, a certain cohort of stocks started going vertical. This group was filled with names that young people are familiar with: Zoom, Wayfair, and Peloton, to name a few. Young people told their friends, and their friends told their friends. The best part of all this is that it didn’t cost anything. Trading was free, and you could do it with a swipe on your iPhone. It’s like the market gods conspired to create the perfect feeding frenzy.
Alright, so that’s the story rehashed for the millionth time. Thanks to JPM, now we have some data. The median 18-24 year old saw their weekly balance increase by 100% year-over-year.
The “everyone’s trading” story has evolved. First, it was Robinhood. Then it was WSB. Now it’s something else entirely. No way a bunch of kids are responsible for all the volume in the meme stocks.
I’m sure that Barron’s cover won’t age well. Few things do. Tom Cruise being an obvious exception. But with all that cash and nothing to do, it makes sense that kids were trading stocks to fill the time. The question now is how many stick around.