Market Movements and Generational Mindsets

An article in CFA Institute shares the opinion of Fundstrat Global Advisors co-founder Thomas Lee, CFA, that “major economic shifts occur in tandem with generational milestones.”

“Generations drive markets way more than we appreciate,” Lee told an audience at the CFA Institute Equity Research and Valuation Conference last year, noting the following correlations:

  • The demographic peak year of the Greatest Generation was 1930, just after the beginning of the Great Depression.
  • The generation that followed — the Silent Generation—”invested heavily in gold and achieved its apex in 1974, which coincided with the 1973-1974 market crash.”
  • Baby boomers, according to Lee, no longer viewed gold as a safe asset and were instead drawn to equities that “enabled their consumer culture” such as Walmart and Home Depot. That generation, he argued, reached its peak in 1999–along with the equity market.
  • Generation X “embraced the Internet’s potential to connect people and facilitate transactions. Anyone who invested in Amazon in 1999 has enjoyed returns far exceeding those generated by the S&P 500.”
  • The millennial generation will be the next to move the market, says Lee, with increased investments in digital assets and cryptocurrencies. He believes that the generation’s willingness to embrace technological solutions could end up “redefining the traditional boundaries of investing.”