The Breakdown - A Dozen+ Statistics Proving Millennials Are F%#$&D: The Breakdown Weekly Recap

Episode Date: June 20, 2020

The big narrative in financial media for the last few weeks has been the insurgent Robinhood rally, led by the AC/DC-blaring Pied Piper Dave Portnoy, owner of Davey Day Trader Global Global (DDTG Global).  As people try to make sense of the strange retail trading phenomenon, one perspective is the participants (average age of 31 on Robinhood) are reacting to a market that has left them behind. In this view, they are assaulting the market with otherwise outrageous and ludicrous strategies because, otherwise, how will they get their piece?  This week’s Breakdown Weekly Recap looks at this in the context of some surprising (and frankly depressing) stats about the millennial generation’s current wealth, as compared to where boomers were at the same time in their careers.   

Welcome back to The Breakdown, an everyday analysis breaking down the most important stories in Bitcoin, Crypto, and Beyond. This episode is sponsored by BitStamp and CipherTrays. The Breakdown is produced and distributed by CoinDesk. And now, here's your host, NLW. Welcome back to The Breakdown. It is Saturday, June 20th, and this is the weekly recap. Pandemic boredom in March, Matt, markets crashing have given rise to a brand new batch of active traders, perhaps as many as 10 million. And finding himself with a lot of money and a lot of time, Barstool Sports founder, Dave Portnoy took to the Robin Hood app and started a revolution.

And now he's making his mark and pissing off Wall Street in the process, beating them with an army of millennial traders backing him up. Dave, Portnoy joins us now. Dave, thanks for joining us. Thanks for having me. So let's talk initially. I know you got in this. It was a lot of fanfare. You admit it that there were some growing pangs. Explain, you know, just sort of the process. You know, you started doing some trades. What did you learn and the adjustments you quickly made? So, yeah, when I got involved, I learned what shorting the market was. So I bet against Boeing a little bit. I bet against Lulu Lemon. And I got my butt kicked. And then I realized that stock market, has no effect on the real world and vice versa. That it's its own universe, that the wise guys on Wall Street,

the pinstripe suits, has the thing all rig for their benefit. And once my brain adapted and was able to figure it out, quickly I realized stocks only go up. So we just keep betting on stocks to go up, and they keep going up. So since then, it's been a pretty easy game. Of course you just heard Dave Portnoy El Presente himself on Fox business from this week talking about how easy this game was once he figured out the rule that it was rigged and the stock market always goes up. And this is, I think, a useful setup for today's conversation.

And really, what I've been thinking about all week is trying to interpret this Robin Hood rally, right? We didn't see the craziness that we saw last week with Hertz bankrupt stocks jumping to the moon or anything like that. But I still think that this week now, people have been trying to piece out what this actually means. And it was really interesting. I was listening to Hidden Forces earlier this week. Dimitri was talking with his guest, Tony Greer, and they were talking about the idea of this as an assault on the markets from people who were supposed to be benefited

from the trickle-down effect of the wealth effect. If you increase asset prices, as per the Fed's mandate, then it makes its way down to everyone, even if some of the top benefit most. And that simply hasn't happened. And so if you look at it in that context, the Robin Hood Rally is, in fact, people who were never going to get theirs and, in fact, kept seeing it get farther away,

trying to use techniques to reclaim it, trying to disrupt the system, trying to turn over the apple cart and get away with some of the loot. Now, what I want to do today is kind of look at this from a generational perspective. The average age of Robin Hood traders is 31, so it is firmly millennial. So let's actually talk about the millennial generation. There is nothing that older generations like more than ripping, on the millennials for their participation trophies and, you know, pick your other stupid meme. But the reality is the data is in and there is no denying that the start that millennials have had to

their professional life is worse than basically any generation in American history. In fact, recent research came out that showed that since the 18th century, no generation has had a rougher start in terms of how much inflation-adjusted GDP grew in the first 15th years of their participation in the workforce. So let's look at this. The GI generation, who were born between 1901 and 1924, had the highest inflation-adjusted GDP growth in their first 15 years in the workforce at about 60%. Now, I think we can all agree that they fought in World War II and some of them even touched on World War I, so it's chill. They get to have the highest growth ever. We understand that. But then if you look, there's a set of other generations, the missionary generation between 1860 and

1882, Gen X between 1965 and 1980, the progressive generation born between 1843 and 1859, the boomers, of course, born between 1946 and 1980, and the silent generation born between 1925 and 1945, all of whom saw between 30 and 38% inflation-adjusted GDP growth in their first 15 years in the workforce. There were three more generations that were right around or just a little below the 20s. And then right smack at the bottom was millennials, who've seen just 15% inflation-adjusted GDP growth in the first 15 years in the workforce. So by that one measure, in terms of how good the economy was doing overall for their first decade and a half in the workforce, basically every generation in America since the 18th century has done better than millennials. And if you were

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from crypto laundering risks while protecting user privacy. Years of research have created the world's best cryptocurrency intelligence with the best attribution and deepest token coverage. So if your virtual asset business isn't using CypherTrace to manage compliance risks, you should start now. Learn more at cypress.com. A lot of these numbers are coming from a awesome viral thread from Trin Nuyen, who just posted this this week. So let's look at this. At the same point in their lives that millennials are now, boomers owned 21.5% of the wealth overall in America. Millennials owned just 2.7%.

2.7% compared to 21.5% of boomers. In terms of assets, at this time in their life, at this point in their life, rather, boomers had 26% as compared to millennials 4%. Real estate, boomers had 32% of the overall real estate. Millennials, again, just 4%. Corporate equities and mutual funds, boomers had 19% at this point in their lives. Millennials, cool 1%. When it comes to pensions, boomers had 22% at this point in their lives.

Millennials at harboring at 5%. When it comes to ownership of private businesses, boomers had 20%. 27% whereas millennials have just 2%. And when it comes to the way that this has been changing over time, because you hope that this should get better over time, right? The change in the share of wealth per generation between 2009 and 2019, Boomer's share of the wealth grew 8.6%. Gen X's share of the wealth grew 7.4% and millennial share of the wealth grew just 2.2%. Meanwhile, and this is where it really gets screwy, our share of debt is very, very different. Total consumer credit, the total amount of the consumer credit out there that is owned by millennials,

is 33.1% up from 1.2% in 2008. Mortgages are actually down. They were 12.1% in 2015. That is, millennials had 12.1% of all mortgages in 2015. It is down to 9.9%. Compare this to boomers who have 59% of all mortgages and 56% of all consumer credit. Now, there is theoretically some good news. There is supposedly a generational wealth transfer. As boomers slowly kind of phase out of the economy and they need to kind of move their assets elsewhere, theoretically those will come to millennials. But there are a lot of concerns and risks to that. You have rising healthcare costs. Healthcare could be up to $6 trillion by 2030 largely because of boomers. You have entitlement programs in failing pensions. There is currently a $4 trillion shortfall in pensions,

translating to roughly 13 million Americans with pension obligations with no money to fund them. The average pension assumes a 7.2% return, but over the last decade, returns have been just 5%. All of these things could cause fundamental shifts in how wealth is transferred between generations, how boomers use their wealth or have to destroy their wealth to survive. There are real serious questions around this generational transfer of wealth that I don't think it's as easy as just assuming that at some point people are going to sell their houses to millennials, right? Especially because the more that asset prices get driven up, the harder it is for millennials to actually be even able to buy in at the first place. When you create a system

that only drives up asset prices at the cost of basically everything else, you have a real disconnect and a real gap when people who are owning those assets need to sell them because there is simply no natural buyer. There's no natural buyer at any price that makes sense. And so all that happens is wealth just stays stuck. It just doesn't move. People just don't sell their houses. And it's hard to imagine any scenario that actually allows those things to meet in the middle again, the demand for millennials for assets, be they real estate assets or financial assets, and the supply of those assets from boomers and retirees who need to sell them, other than major market crashes, right? There's not a healthy middle right now, and that is going

to have, I think, deleterious impact on the shape of the next 20 years in American life. So anyways, guys, my point today is just in kind of reflecting on what I've seen as key discussion points throughout this week, and really so much of it has been around trying to make sense of this Robin Hood rally and what it means in the insurgency. And I think that you can't tell that story without looking at the state of where millennials are right now. So take those numbers for what they are, interpret them as you will, but it's a complicated and some ways clear story that is leading us to something that I don't think is very good. So with that, guys, I will leave you for the weekend. I hope wherever you are, you're having a great one, and I appreciate you listening.

Until next time, be safe and take care of each other. Peace.