Millennials in the red, Gen-X and boomers in the black on meme stocks: OMG
Trading and wealth management infrastructure fintech OMG (Openmarkets Group) has analysed proprietary data created by its retail trading platform, Opentrader, that reveals that, on average, boomers and Gen X are making money on meme stocks, while millennials are losing money.
The analysis covered 11 “meme stocks” (stocks whose share prices skyrocketed due to social media hype, not fundamentals). It defined boomers & Gen X as those over 40 years of age, and millennials as those under 40 years of age. Based on an evenly weighted basket of the 11 stocks, investors over 40 would have experienced an average gain of 1.29%, with these stocks comprising a total of 3.8% of the share of their total trades.
This is compared to investors under 40, who would have experienced an average loss of 1.93%, with these stocks comprising 5.14% of their total trades.
This means that the younger and less experienced traders were acting with 2x as much risk, their return was 2.5x worse and lost them money, and they were generally more likely to be duped and trade on the hyped status of these stocks, compared to their older counterparts.
OMG stresses that any individual stock in the analysis was not necessarily a good or a bad investment, rather it appeared that it was the act of trading according to social media “advice” and not according to a responsible and strategic approach to investing that made the difference.
These findings reinforce the risks of investing based on uninformed social media hype while reinforcing the benefits of professional advice and experience, according to OMG.
Ivan Tchourilov, CEO of OMG, said, “With all the hype around meme stocks, it is no surprise that the younger traders and investors are getting caught up and caught out.
“And considering we are seeing the largest intergenerational transfer of wealth in history, this is a very worrying trend. We would advise caution, and for investors to research, seek professional advice, and gain experience before trying to time the market or make quick gains, especially in meme stocks.
“This opens up a significant need for scalable online advice solutions that can be provided to online investors in the comfort of their own homes by well-informed and experienced advisers, brokers, and fintechs.”