How Do Millennials Approach Investing?

Who are millennials anyways, and what makes us so different? 

Millennials are the roughly 80 million Americans born between the years 1980 and 2000 (ages 15-35). Our world views, attitudes and tendencies have been shaped by two decades of dramatic changes in technology and communication as well as the worst financial crisis our country has seen since the great depression of 1929. We are the trailblazers of social media and mobile communication. There is no doubt we communicate and gather information differently than our parents’ generation. Therefore, it comes as no surprise that millennials approach investing differently than generations in the past.

Scarred by the Great Recession 

We’ve all heard stories of grandparents who lived through the great depression and keep cash or gold tucked away under their beds out of distrust for banks and the financial system. While 2008 wasn’t as severe as the great depression it still caused similar fears among the generation that grew up seeing family or friends foreclose on their homes, or  loose their jobs and retirement savings. A Money Pulse survey shows that only 26% of adults under the age of 30 own stocks,  compared to 58% of investors 50 years and older. In addition a U.S. Trust report found that 51% of high net worth Millennials fear they will lose money in the stock market while 64% said they were more comfortable investing in physical assets rather than stocks. In addition the financial crisis crippled the labor market for young people, making it harder for young people to find well-paying jobs and invest.

Leveraging Online Tools

For millennials who are willing and able to invest in stocks, their approach is unique due to their familiarity with technology and the internet. We have grown up in an Information Age where the answer to any query is right at our finger tips. “Just Google it” and the answer is just a click, swipe or tap away. The internet has made information more accessible then ever thus making it easier for individuals to make more informed investment decisions. Millennials leverage the power of social media to find stock picks, and gain investment insights. Platforms like StockTwits and Twitter have made ideas and information flow more efficiently in the markets and young people understand how to take advantage of these platforms. Apps like RobinHood, allow clients to trade stocks completely commission free. The average user of RobinHood is about 27 years old as opposed to a more traditional online broker like Charles Schwab whose average client is in their 50’s. The chart below shows that millennials surveyed are significantly more likely than their elders to use online tools for investing.

Screen Shot 2015-10-29 at 12.18.07 PM

(Source: Etrade)

Impact Investing

Millennials want to be invested in companies that have a positive impact on society. Impact investing refers to investments made in companies that put capital to work in a socially responsible and sustainable manner. Stocks like SolarCity (SCTY), Tesla (TSLA) and Whole Foods (WFM) are appealing to younger generations because investing in those companies is a way to make a difference while gaining financial returns. The chart below shows that Millennials are more willing than other generations to take on more risk and less return in companies that reflect positive values. Screen Shot 2015-10-29 at 11.25.13 AM

(Source: Motif Investing)

Rather than simply donating to a charitable foundation, millennials see impact investing as a way to profit from companies that have a positive impact on society or the environment. While impact investing is not exclusively for young people, many experts believe millennials will be the ones to bring this trend mainstream.

While it’s clear that not all Millennials are fully willing and able to participate in the stock market, those that are are able to invest, go about it in a unique way. Our familiarity with technology allows us to utilize online resources and mobile apps when making financial decisions and investing. When making specific investments we tend to gravitate toward companies that have a positive impact on society and the environment. Fintech startups and financial advisors look to better understand these trends to be able to adapt and serve the needs of this new bread of investors.

Intrexon: A Stock Poised for Growth

Intrexon inc. (NYSE:XON) has been one of my favorite stocks for 2015. The company is a leader in an exciting emerging area of biotech known as synthetic biology. It offers a diverse portfolio of synthetic biotechnologies that have a wide range of  applications in industries including health, environmental, food and energy. The game changing potential for these technologies have given investors a very bullish long-term outlook on the stock with investing titans like Bill Miller of Legg Mason dubbing Intrexon as “the AAPL of the next decade”. Further optimism for the company hinges on its stellar management team led by billionaire biotech investor Randal J. Kirk.

Synthetic biology is essentially the manipulation of DNA which allows you to design and control cells for a specific function. Intrexon calls this technology a “paradigm shift” in the analysis of biology which will allow for numerous innovations across many different industries, from creating targeted cancer therapies to apples that do not brown.

Intrexon is different from most biotech companies that typically have one or two speculative drugs or therapies in the works. Companies like this depend on the FDA’s approval, thus presenting a significant risk if their product is not approved. Rather than developing a couple of drugs and treatments Intrexon designs, builds, and regulates gene programs, which are DNA sequences consisting of key genetic components. The company applies these technologies and monetizes them through strategic partnerships that they call “exclusive channel collaborations”. Many publicly traded biotech companies have entered into these collaborations with Intrexon. Here are just a few:

  • Sanofi (NYSE:SNY)
  • Johnson & Johnson (NYSE:JNJ)
  • Fibrocell Science, Inc. (NASDAQ:FCSC)
  • Synthetic Biologics Inc. (NYSEMKT:SYN
  • ZIOPHARM Oncology Inc. (NASDAQ:ZIOP)

All of these companies use Intrexon technologies for the research and development of their own drugs and therapies. Due to its diverse portfolio of technologies and partnerships Intrexon is inherently less risky than many other companies in the biotech sector. Any significant successes or breakthroughs coming from the company’s partners could boost its own stock significantly.

Intrexon is currently trading around $51 which is about 26% off its recent all time high made just last week at $69. It sold off sharply after missing its Q2 earnings estimates. This recent correction is, in my opinion, a great long term buying opportunity. Earnings are important, however, earnings were hurt by capital expenditures which are necessary to fuel future growth. The company still exhibits undeniable growth with revenues increasing 300% year-over-year. As you can see in the chart below, earnings have fallen despite healthy revenue growth. Most likely this can be attributed to expensive investments in research and development which should pay off in the future.

XON_chart-4

Technical Analysis

The chart below shows the stock’s performance this year with the 50 day moving average overlaid, one of the most widely watched indicators. As you can see,the stock sold off sharply after becoming very overextended from the 50-DMA. Recently it has dipped under the moving average, and  historically when this occurs it has been a great time to buy. The stock has some real potential and is worth keeping an eye on.

Screen Shot 2015-08-13 at 12.46.25 PM

5 Things we Learned from Kyle Bass

By Patrick Dunuwila via StockTwits Blog

Legendary hedge fund manager Kyle Bass gained notoriety for accurately predicting and profiting from the 2008 financial crisis. Bass was early to notice a bubble forming in subprime mortgages and in 2007 began purchasing credit default swaps on subprime residential mortgage backed securities. When the housing market finally collapsed Bass made hundreds of millions of dollars from his position. Our partners at Real Vision TV recently sat down with Bass for an interview. Here are some powerful insights from his talk.

1.) “There’s no true science to it, it’s an Art”

This was Bass’ response when being asked about his procedure on finding trade ideas. What he meant by this was that as an experienced investor he’s able to successfully rely on his intuition when scoping out opportunities. Through years of practice and dedication he’
found his own style and method. There isn’t an exact formula behind it, either. Instead, he’s an artist carefully and creatively scanning the world for investment ideas.

2.)  He has an incredibly high level of conviction with his trades

Once Bass has established a thesis on a particular trade, he has complete confidence in it. It no longer matters what other people think. For example, before the housing market collapsed there were plenty of market professionals that told him he was crazy. Continue reading