Fund managers blame millennials for volatility
Fund managers are blaming millennials for the volatility in the stock market, as easier methods of investing have allowed them to make their own decisions and invest directly.
A 2019 study ‘Millennials and Investing’ from Calastone found only 10% invested in funds, but 76% planned to invest in the future.
As of May, US-based investing app RobinHood had added 3 million funded accounts so far this year, which was a concern for fund mangers as the app allowed easy and cost-effective investing alternatives and had been taken up by millennials.
Peter Switzer, director of Switzer Financial Group, said the US and Australian stock markets went up yesterday, despite rising COVID-19 infections worldwide.
“This oddity is explained by professional fund managers as the silly behaviour of millennials as they get too engrossed in the stock market,” Switzer said.
“Term deposits are hopeless. People can’t buy homes. So, they’re looking to the stock market as an alternative to build wealth.”
Roger Montgomery, Montgomery Investment Management founder, said millennials were the demographic responsible for volatility and used the example of Hertz, who declared Chapter 11 bankruptcy in May and had its share price increased fivefold.
“People were punting on the equity not realising that the equity and the capital structure is the last to be repaid,” Montgomery said.
“The speculation in the stock after they announced Chapter 11 bankruptcy just shows you how uninformed traders are at the moment.”
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