Buy boomers, sell millennials: Bank of America trade recommendation exploits ‘big diversion’ in generational spending amid high interest rates https://fortune.com/2023/10/27/buy-...of-america-trade-recommendation-stock-market/ Baby boomers are flush, with high interest rates fattening their savings accounts. Young Americans, they’re struggling with debts, sky-high rents and mortgage rates that are putting home ownership further out of reach. That’s driving a new trade recommendation from Bank of America Corp., one aimed at exploiting the widening generational wealth gap: Go long on old-people stocks. Avoid those whose fortunes ride on cash-strapped millennials. That means American Express Co. and cruise-ship lines are in. Out is Revolve Group Inc., a self-styled “next-generation fashion retailer” for the twenty-somethings. “Millennials are really feeling the impact of the hiking cycle. Boomers, not so much,” BofA quantitative strategist Ohsung Kwon, himself a millennial, said in an interview. “We’re starting to see a big diversion between the two.” That fault line is growing beneath an economy that’s on the surface remained surprisingly strong, largely due to a steady consumer-spending splurge since the pandemic lockdowns ended. True, the Federal Reserve’s aggressive interest-rate hikes have slowed pockets of the economy. But they’ve also delivered what’s effectively been a steady supply of stimulus checks to older Americans, who went from receiving virtually nothing on their savings to pocketing the highest interest payouts in two decades. Winners And Losers That’s likely to make winners out of sectors like health care and entertainment, where older people spend a lot of money, according to BofA. Home-improvement stocks could also be rewarded, as boomers are living longer than previous generations and grow reluctant to sell homes that are locked in low mortgage rates. On the flip side, clothing retailers, a category skewed heavily toward the young, are facing strong headwinds. The trend appears likely to continue with the Fed planning to hold interest rates high for a while and the surging federal deficit keeping upward pressure on bond yields. That, in turn, is driving up what the government pays in interest on Treasuries — which goes right back into the pockets of investors. As a result, baby boomers and those right before them are accounting for the lion’s share of US consumption today, BofA data showed. Meanwhile, members of the cohort born between the early 1980s and late 1990s have pulled back on spending and seen delinquencies rise on credit and debit cards. “Pre-pandemic, the empirical evidence was there supporting that boomers are doing better than millennials in regards to investments, retirement accounts and home ownership,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management. “And post pandemic, that divide, because of higher inflation and elevated interest rates, has gotten dramatically worse. The divide is just gigantic.” Boomers Are Cruising According to BofA, cruise lines have the heaviest exposure to boomers, who represent roughly 40% of their trip goers. Travel was highest on the list of priorities for discretionary spending among adults over the age of 50, BofA said, citing AARP data. And that industry has benefited well from the post-pandemic travel boom: The S&P 500 hotels, resorts and cruise lines index is up nearly 28% this year, even after the drop over the past few months. The BofA report offers few specific stock picks. But American Express is singled out as a beneficiary of its “boomer’s boom” thesis, since older adults are more prevalent users of its credit cards. On the millennial side, BofA cited a deceleration in spending on clothing that’s already underway, which they partly attribute to a discrepancy in wealth and consumption between the two age groups. The analysts see specific risk to e-commerce retailer Revolve, which charges higher prices than its peers and is favored by Gen Z and millennial shoppers. Yet some investors are dubious of the long-term staying power of the trade, given boomers’ rapidly advancing ages. Moreover, all that wealth will eventually be inherited — and much of it spent — by millennials. “To focus investments for boomer preferences and not millennial preferences, I think you’re skating to where the puck is and not where it’s going,” said Douglas Boneparth, president at Bone Fide Wealth. “If there is significant wealth being transferred to millennials or younger, wouldn’t you want to understand the investment preferences and consumer habits of that generation as far as investing in the long term?” For now, BofA argued that boomer spending and asset ownership is enough to keep consumption going. The bank has held a positive outlook on US consumer spending and stocks more broadly, with its economists scrapping a previous call that the US was heading toward a recession. “Everyone talks about the access savings that are dwindling, but they are double pre-Covid levels, and that’s only part of the story,” BofA’s Kwon said. “You gotta look at the whole picture, the whole balance sheet — and the balance sheet for the consumer still looks phenomenal.
It's funny how in all the talks about generational differences, the comparisons always involve Boomers and then Millenials/Gen Z. The Gen-X folks truly are treated like their moniker "The Lost Generation", forgotten about and left in the dust.
Would be great to get a Gen X president this election cycle. Look here...Biden is too old to be a Boomer....Post War. WTF!
Health Care & Entertainment doing well? I don't know who wrote this article but they obviously don't have access to stock charts. Besides the Wegovy & Mounjaro makers everything else in the XLV is crashing. Cruise Lines & Airlines doing well? They are also crashing.
Boomers have more to spend. And they are going to die. And they feel they have "earned" the right. Pretty much simple as that. Evidenced by the number of wealthy people getting Social Security checks, despite the system near collapse for Millennials. They are going to spend hard for the next 20 years. The Economist has a good study can't find it right now. Paywall anyways too.
The latest lazy generation which does not want to work... It’s not just a stereotype: Gen Z really does ‘have a work ethic problem’ https://www.msn.com/en-us/money/mar...ly-does-have-a-work-ethic-problem/ar-AA1k5g1u Kids these days. For as long as there have been generations, there have been older generations griping about younger ones — often about their seemingly weaker work ethic. But a new analysis shows there may actually be some truth to that old adage, at least when it comes to young adults in Generation Z. Jean Twenge, a psychologist who studies generational differences, has spent years tracking the data provided by the Monitoring the Future survey, which annually records how high school seniors feel about a variety of topics, from their own daily habits to the state of the world. Her look at the most recent survey shows that work ethic among 18-year-olds took a nosedive in 2021 and 2022, with the proportion of respondents saying they wanted to do their best in their job “even if this sometimes means working overtime” dropping to just 36% last year, from 53.74% in 2020. “Gen Z really does have a work ethic problem,” Twenge wrote in her analysis of the data for her “Generation Tech” newsletter. Gen Z is generally defined as those born between 1997 and 2012; they’re now about 11 to 26 years old. “It’s really unusual to see changes that sharp in this kind of research,” said Twenge, who is also the author of “Generations: The Real Differences Between Gen Z, Millennials, Gen X, Boomers, and Silents ― and What They Mean for America’s Future.” The percentage of high school seniors who said they expect their chosen work to be extremely satisfying also dropped sharply over the last two years, to about 20.4%, down from 26.4% in 2020. The survey also asked: “If you were to get enough money to live as comfortably as you’d like for the rest of your life, would you want to work?” 70% of respondents said yes, down from 78% in 2020. The data show that some social media trends — from quiet quitting to lazy girl jobs and other viral moments of young people questioning the traditional approach to work — are speaking to a broader shift occurring among Gen Z, Twenge said. Those social media conversations capture “something about those very pronounced declines,” she said, though she added that cultural conversations about work-life balance have been going on for decades. The reconfiguration could also be happening across age groups, not just among teenagers. “There’s the possibility that the pandemic really was a big reset of attitudes around work in many ways,” she said. “Generations happen because cultures change. It’s not that young people wake up one day and decide to be a certain way.” But drawing harsh conclusions about the differences between age groups can be counterproductive, she cautioned. “Is this a decline in work ethic, or an increase in the desire for work-life balance? It depends on your perspective,” she said. Gen Z’s other shifting sentiments It’s not just work-life balance that’s shifting in the eyes of Gen Z. They’re questioning other traditions, too, including going to college. A data analysis from the Federal Reserve Bank of St. Louis found that, among certain groups, Gen Zers were more likely than not to believe that going to college wasn’t a worthwhile investment. Less than half of some Gen Z groups — those who went to college but didn’t graduate, women, and Black and Hispanic adults — believed the lifetime financial benefits of college would outweigh the costs, according to the Fed’s 2022 Survey of Household Economics and Decisionmaking. That doesn’t mean they’re not investing elsewhere: a new study from Fidelity found that Gen Zers lead the way when it comes to women investing in the stock market — more women in Gen Z are investing than in any other generation group, the study showed.
Gen Z says they should be hired for personality, not productivity. How about NO. Gen Z workers say they should be hired for their ‘personality,’ not productivity: We ‘set the vibes’ https://nypost.com/2023/11/18/lifes...y-they-should-be-hired-for-their-personality/