Millennials plays games.
The stock market IS a game.
Millennials should never play this game!
The rallying cry of most venture backed financial businesses these days is to ‘set and forget’. The media has globbed on of course. Trust an algorithm. Hire a robo advisor. Be passive! Don’t trust the players or the game.
I am confident ‘the millennials’ will come to their senses about the stock market and investing.
Why?
Ray Dalio who manages a paltry $170 billion calls it ‘the game’. He is addicted to and loves ‘the game’.
I love this post with links from Michael Batnick entitled ‘Addicted to The Game‘. Read it. Share it with your ‘Z’ generation child and ‘Millennial’ college educated, underemployed child that will never be able to afford moving out of your house. That kid of yours is going to inherit what’s left of your money and might as well learn the game.
Tiger Moms are teaching their kids 4 languages. None of those are the language of markets. That is incredibly lucky for the rest of us who are just getting exposed to the game today. Your competition wants to speak German, Spanish and play on the PGA.
Those that are thinking about investing are being drilled over the head with marketing to hand off all their investing to algorithms. Invest passively and don’t even try to play the game. Investing with algorithms and robo-advisors are forms of investing for sure, but they are anything but passive. You are just paying someone else to play the game.
There is NO such thing as passive investing. There are only varying degrees of active investing.
In a perfect example of how my industry works, Goldman Sachs is out telling the world that active investing is for losers. Not coincidentally they have also begun to market their own brand of Goldman ETF’s that…wait for it…pick stocks.
You can’t blame Goldman, but can you see how the game is being played? Pretty evil and pretty genius.
Do not be a pawn.
I am committed through Stocktwits and Social Leverage to ‘gamify’ the learning of this amazing language and this lifetime game.
People seek to abdicate responsibility in domains they have not mastered (or at least invested time and energy understanding). Hence most people do not desire to directly play ‘the game’ – they outright fear it. This majority would keep their money under the proverbial mattress if the payroll check didn’t get deposited into a bank account (where they get sold on funds managed by people or machines).
Bots (obviously programmed by humans) already regularly outperform humans (e.g. Renaissance Technologies) – however these bots are not generally available. Instead robo advisors are programmed to basically mirror +/- the performance of the most popular indexes so they can skim a small fee across an increasing pool of assets under management – the *primary* objective being to avoid churn of assets under management because: 1. it is much easier and less risky to track an index than outperform and 2. the stream of future allocations substantially exceeds their ability to compound assets through performance – the value at risk required and prospect of volatility is outside the robo advisor mandate. The pitch is that over decades a small advantage (assuming they consistently deliver – pretty speculative) over an index compounds.
If you are looking for above average returns… these are not the droids you are looking for.
If these underemployed millenials who can’t get out of their parents’ basement don’t have any money to invest, then teaching them how to invest money properly is putting the cart before the horse, is it not?
That aside, the conflation of words and trivialization of the implications of investing found in this article are rather worrisome. Investing is not a game, it is your livelihood and your future. Telling laymen to try and be heroes and manage their own money actively is not very good advice in my humble opinion. For the rare individual that does really want to embrace and learn investing, then absolutely, but for everyone else, their money needs to be entrusted to someone who knows what he or she is doing, because you can do a lot worse than pay robo-advisors to look after your money. A whole lot worse.