Why The New Generation Of Investors Is More Serious, Informed Than It May Appear

A flood of first-time investors poured into the market during the pandemic, and a surge in popularity of investments like AMC Entertainment Holdings Inc AMC, GameStop Corp. GME and Dogecoin DOGE/USD has some experienced investors questioning the approach of the new generation. Barry Metzger, managing director and head of Schwab Trading and Education, said this week that the group he calls Generation Investor isn’t nearly as uninformed and impulsive as the meme stock headlines suggest.

Serious & Engaged: In a new blog post, Metzger pointed out that Schwab surveys suggest Gen I investors have a strong appetite for investing education.

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“On top of that, many are proving to be serious, engaged traders with a commitment to research, learning, and building long-term wealth,” he wrote.

Metzger said Gen I investors are far more active than more experienced investors. For example, 45% of them say they adjust their trading plans on a weekly basis.

More Than Memes: Of course, 58% of Gen I investors say they have traded meme stocks in 2021, but they aren’t simply buying them indiscriminately. In fact, more than half of Gen I investors told Schwab they are currently bearish on meme stocks, roughly the same percentage as more experienced traders.

The new generation of investors may be at a disadvantage when it comes to investing education, but they are closing that gap on a weekly basis. Schwab found Gen I traders spend about an hour more each week researching trades and nearly two more hours each week consuming trading educational content than more experienced traders.

While 35% of these Gen I traders get trading ideas and information from social media, Metzger said their top resources are still online news articles and professional research reports.

The new generation of investors certainly has unique qualities, but Scwab found they are equally optimistic about additional upside for the SPDR S&P 500 ETF Trust SPY. Overall, 36% of Gen I traders are currently bullish on the U.S. equities market compared to 35% of more experienced traders.

Benzinga’s Take: Like the mainstream media, the financial market media is drawn to controversial and extreme headlines, which is one of the reasons meme stocks have received so much attention in the past year.

Yet there’s no reason to believe the youngest generation of investors is less capable of learning and understanding sound investing and trading principles than any other generation, and they may even prove to be more accomplished investors over time given their unprecedented access to online information and resources.