The Dividend Cafe - Good Enough for a 19-Year-Old?

Episode Date: July 10, 2026

Today's Post - https://bahnsen.co/4yeyV0d David Bahnsen uses the idea of asking 19-year-olds what’s popular to critique a growing tendency among investors to allocate capital based on youth trends and “shiny objects” rather than fundamentals. He distinguishes learning about generational preferences from turning those preferences into portfolio decisions, arguing this misreads Peter Lynch’s “invest in what you know,” which requires deeper research beyond familiarity. Bahnsen cites examples where popularity failed as an investment signal—Forever 21’s boom and bankruptcy, Gap’s long-term stock decline, Snapchat’s extreme volatility despite rising users, and Krispy Kreme’s post-IPO collapse—showing that what seems popular is often already priced in. He warns against adopting crypto, Bitcoin, AI-adjacent trades, IPO mania, or meme-stock themes merely to match what younger clients want, emphasizing fiduciary duty, cash flow, intrinsic value, and the idea that fads can be a counter-signal. 00:00 Welcome and Setup 02:01 Why Youth Trends Matter 02:39 Tech Habits vs Investing 06:41 Peter Lynch Misread 09:28 Retail Fads Fail Fast 12:15 Snapchat Popularity Trap 13:34 Krispy Kreme Lesson 16:02 Crypto and AI Pressure 19:33 Shiny Object Investing 21:37 Fiduciary Depth and Close Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Hello and welcome to the Friday Dividendon Cafe. I'm your host, David Bonson, and we are going to talk about a very important topic, and it may not seem like it's a very important topic this week because it is about 19-year-olds, and you say, how important could a serious macroeconomic investment commentary be? be if you're getting into some sort of sociology or demographic analysis around 19-year-olds. And in fact, that's not what I'm doing. And what I am doing is very serious. And it's symptomatic of a much more serious thing when it comes to the investing world. And I think it's become somewhat systemic.

I'm hearing it more and more from 50-year-olds and 60-year-olds and 70-year-olds when it comes to how they think about allocating client capital. and I want to use this subject to make a broader investment point. I do not know. I have a 19-year-old daughter. Some of you may have seen in the Divida Cafe from about a month ago now where on the video we showed her introducing me at her own high school graduation as I gave the commencement speech.

And I've talked about her plenty over the years. She's one of the significant joys of my life. As any dad would say about their daughter, She's my middle child, my only daughter. She is 19. And candidly, I do not know that her mother would agree with this, but I have enjoyed her teen years significantly. And I have an older son who is over 21 and a younger son who is 16.

And so we have plenty in our household of exposure to this demographic of teens, late teens, young adults and this kind of thing. And I think that some of you listening have kids that age or used to have kids that were that age and now they're older. You used to be that age yourself. And then some of you might be that age and it might be younger listeners, you know, taking it in. There is absolutely nothing I'm saying here today that even remotely connects to me saying anything derogatory about people who are 19 or 22 or whatever. It has to do, though, with whether or not selecting investments based on things the 19-year-old population is talking about, or 16 or 25, it's somewhat immaterial, is a good idea.

And I think that you're going to find something very relevant in where we're going with this and a little historical lesson as well. Now, look, I will be the first to say that I do try. my best to get information out of my 19-year-old about what 19-year-olds are thinking and doing and whatnot. I'm actually somewhat just fascinated almost in the social experiment of the ebbs and flows I've seen in the use of technology, the ebbs and flows of not only how they're using technology, but what they're using. And obviously, musical taste of pop culture stuff. It's like extremely hard for me to keep up with.

And as a 52 year old, I don't want to feel like I'm that old, but I now do and I haven't formerly felt that way. And my daughter, like, I'm buying her concert tickets all the time. And it kind of bothers me when I've never even heard of the person she's going to see perform. So there's certainly an interaction with young adults and late teens about, you know, various cultural artifacts and consumer appetites and technological preferences that I think makes a lot of sense. But what I have never done or thought or felt even a little bit is that if my daughter tells me all the kids like XYZ, that maybe I should be buying my client's stock in

XYZ. And I think that sometimes where there is a movement towards this, that there are people talking about important it is to know the preferences of young folks that they may have a good intention, that they may be thinking, you know, look, using a sort of young population survey to inform Gen X or inform baby boomers about what's happening out there where the investment manager population is often a lot older. So to keep your finger on the pulse of changes and preferences and choices that derive activity, I think, I understand that. That may be somewhat well-intention.

The technology thing in particular, it's not necessarily very investment-oriented if the kids still like Taylor Swift or don't like Taylor-Swift or what have you. But for an example, I think that my daughter gets reasonably annoyed when I send her an email. And I get extremely annoyed when someone sends me a DM. Like, I, as a 52-year-old Gen Xer,

and I don't really care how this ages me, but I live in my inbox. And most of my ecosystem of calendar tasks, notes, email, just a lot of workflow is very well organized inside Microsoft Outlook. I've used it since it existed. I've used it my whole adult life. And it's just that's not going to change. And I'm sure all of you can think of different analogies for yourself.

But then I gather that some younger people really prefer their electronic communications, either being through DMs in social or text or what have you. And so again, there's a generational thing that can become somewhat pronounced. And I'm not criticizing that even a little bit. I totally get it. The problem, though, I think, is not so much of different generations having different habits. It's in the context of investment themes that various products in the market and people's appetite around those, that they change, that their taste change.

And I think that when you look at what's happening with pop culture stuff, their taste may or may not change their. Our taste may or may not do. Well, I say our, I mean, you know, older people. But what I'm getting at is from an investment standpoint, I believe that trying to just generally understand what younger people or different demographic than you're in thinks about XYZ is perfectly understandable. And I think that some people view this as a little bit of an application of the great, phenomenal, legendary investment manager Peter Lynch, who I grew up reading, who used to talk about investing in what you know, and that they might view this as a way to using a younger generation survey to get a chance to know what your kids or grandkids or neighbors or whatnot are,

thinking and doing. But I think it really amounts to a very big misunderstanding of what Peter Lynch even said when he talked about investing in what you know. He was always abundantly clear for those who read deep enough that he did not mean when he talked about liking a product, that that was sufficient to make it a good investment, that there was a benefit to familiarity and that it connected us to a deeper truth, but a need for more clarity of knowing why you own something. And I think invest in what you know is a good starting point. And that was Lynch's mantra. It was investing in what you know is a starting point.

But that meticulous research, including the type of meticulous research Lynch famously did, is necessary to further scrutinize an investment merit. But I take it at face value that there is some prima facie benefit to doctors that have a certain optic to oncology pharmaceuticals. But I would not recommend Norwood Lynch, who was well aware as I am, of some of the investment track record when doctors try to buy stocks based on their own prescription pads. It doesn't always go very well. And I'm not picking on the medical profession.

You could apply it to any number of things. There is some benefit and familiarity that has to then need to another level. And I think a leasing agent at a local mall is going to have a good optic into certain things regarding retailers and consumer trends. But the popularity of the stores, it may be useful, but it is on a sufficient condition when it comes to portfolio. selection. So I think leveraging expertise in familiarity is good, including hearing things you may hear at the dinner table with your 19-year-old. But I think that not doing homework beyond that is a very bad idea. And I've never really forgotten that message even when I was studying Lynch as a much younger guy. But here's the thing. If all we are doing is looking at like the kind of

advice we might get and the perspective of let's continue picking on this sort of teen age audience, I would use as an example, Forever 21 at one point was the most popular store with that demographic in the world. And their record, record year for sales, for store quantity, for global penetration was 2015. They got to about $4.5 billion, top line sales. I think it was over 800 stores. And in 2019, they were bankrupt. And I don't mean that as a figure of speech. I mean legally, literally bankrupt and in fact had a second bankruptcy petition after their

initial bankruptcy petition. And you go, okay, well, you're cherry picking a bad example. Let me tell you something. When it comes to retailers, apparel oriented teen market, I am not cherry picking. That's actually extraordinarily common. Sometimes what you hear from. from a certain demographic, it may be like the end of the cycle. They're describing what has been popular,

and there is very little chance in the cyclicality of that demographic's consumer preferences, it's going to stay popular. I think about a story like Gap, which was becoming very, very popular back in the late 80s, early 90s when I was in high school. and for all of its ups and downs and their unbelievable capacity to add other brands and to acquire the Old Navy and Banana Republic and all the diversification and capital stewardship, a company like that had, and yet the stocks down 70% from where it was 25, 30 years ago.

And I say this as basically a success story because they're still there, versus so many of their peer group that are totally gone. We'll put a chart up of gap right now that kind of makes this point. You see this peak moment and then ebbs and flows, but when all said and done, 30 years later, down dramatically from where I might have as a 19-year-old have observed, you know, their kind of peak season. This is rather obvious in the consumer discretionary space.

I'm cherry-picking a sector here because by, definition, consumer discretionary companies are going to change when consumer discretion changes. And I guess, yeah, it's probably true that teenage girls are even more fickle than other demographics, but all are when it comes to discretionary items. But in technology and those preferences, it's kind of the same thing. And again, looking at the limitations of a 19 year old's perspective on this stuff. You know, here we'll put up a chart of Snapchat and their stock. And they were, if you asked a teen in 2017, you know, it was the most popular thing out

there. It goes public. And let's see, I think it went public at like 15. It bounced up to $27. And two years later, it was at $5. And then everybody gets locked down for COVID. And the teens are just sitting there not being able to go out, not going back to school. And the snap user stats go through the roof.

And the stock got up to, I think, what was it, $80, $85? So we'll put the, I think the snap chart should be up on your screen right now. And then just utterly collapsed. And now it's sitting here below $5 again. Now, let me ask you a question. Do you think that the stock is down 90% or 80% because the users are down and the 17-year-olds and 19-year-olds don't like it anymore? The users are way higher now.

than they were a few years ago. So investment merit matters, fundamentals matter, cash flow, all those things. The popularity does not. Now, we're way off the subject here, my next analogy of when I remember really feeling that I had no connectivity and would not make connectivity in my investment career between popularity and investment decisions. because I remember the moment after Krispy Kreme donuts went public. And it was very, very popular at the time.

And there was a huge buzz about it growing like crazy. And I remember like it was yesterday, 2003, a client calling and was just so mad that we didn't own it. And they go, it's so huge. And why don't we buy it? I think at the time the stock had gone from like 20 to 40 or 45. And they were calling from a parking lot. And they had drive-thrus and the line was going around the block and they go, this is just unbelievable, you know.

And so you see here in the chart of Krispy Cream that just two years later, it had gone from that kind of 40 or 50 peak all the way back to all the way down to five. And it basically stayed at five or below five for 10 more years eventually got kind of taken out private and whatnot. But my, and I recognize that that's a little different than, you know, our example. of teenage demographics. But my point in that story was that it reinforced for me this idea that people have to understand it's very, very true about 19-year-olds,

but it's pretty much true about everybody. When someone is telling you how popular something is, it is not news to the stock price. Now, if someone is telling you no one's really heard of this, I think it's a big up-and-time. comer, they can be right or wrong and you have all the risk around that. But that might be different. But do you think when your 19-year-old is telling you what all the kids like, all the kids are

doing, what their peer group is doing, do you think that they're making a predictive statement or a descriptive one? I mean, it's kind of obvious. So in that sense alone, there isn't real stock merit. Look, I think that at the end of the day, it's a very big non-sequit, or even if it's forgivable, to say that once someone has told you something, it sounds kind of cool and popular, that that might make it an investment. The sequence of these things is I just talked about matters. But where I want to pivot a little bit now is to what I actually think is being said more and more, which is not, if your kid likes a store at the mall, that's a new stock to go

buy. I don't really think that's the fallacy we're running into as much. I'm hearing more and more from professional investors and seasoned people in my business. Look, my own kids, their generation, they want to talk about crypto. They want to talk about Bitcoin. I have to do it. We've got to go put 5 to 10% in the portfolio. That's what the younger audience may want. The AI world is especially prone to this. We have to implement certain AI stuff that's adjacent to what they're doing. It's kind of in their ecosystem. They want

that new IPO. They love talking about that. There's a sort of social signaling around it that is quite relevant. It almost sounds to me like investment managers doing a Mia Copa, but I don't think they mean it that way. They're almost saying if I mention free

cash flow or intrinsic value, they're going to look at me with a glazed look in their faces. and that glaze is not a reference to Krispy Cream, that they want to hear me talk about the investment themes that are relevant to their lives in a kind of cultural context. And I guess I would just say that that is utterly incoherent to me. What makes them interested at that age and stage of life,

and for very many people into much later stages too, But by definition, the notion of something having novelty, and I mentioned a social signaling or networking component to it, a fear of missing out, right, whether it's social or economic, that FOMO factor, those things are very inerrant to the characteristics of your life and your DNA in young adult in 18 years. but they are just completely inappropriate for investment methodology. And I think that you could, by the way, I have anecdotally, in divinacethae.com, I write about Facebook as an interesting example that you can't expect young people to understand the economic metrics. They all know that their age group doesn't use Facebook and that their mom and dad use it. and that their aunts and uncles or grandparents post pictures and that type of stuff. So it would be the opposite of what's going to track young people conversationally.

But where do you think the advertising dollars are with Gen Z or with Gen X and baby boomers, right? So the engagement metrics and stuff, that's not going to be part of the conversation. And yet from the investment standpoint, there's these sort of fundamental factors that kind of do matter last I check. What you're really hearing professional allocators say when they talk about, I have to go do this Bitcoin thing because that's what the young people care about, is that first of all, they're not being intellectually consistent because why stop there? I mean, the social habits and interest and stage of life things from teens and young adults, you can go to a lot of different places besides what may be a shiny object in investing. but fundamentally that really is the element that we're talking about. It's creating investment categories around the pathology of young adults, and that is essentially a subset of what I've referred to for many years as shiny object investing.

I think that while there are always in forever going to be things that appeal to any demographic that do prove to be bona fide investments, the appeal itself is not something that makes it so. that something is popular with a particular age group. And so while I may bore you by talking about the lesson and history of tulips and terrestrial radio and Japanese real estate in the 1980s and obviously the dot-com boomed later and I use my Beanie baby analogy all the time. And so I am a student of the big booms and bust of history. But that mentality behind it going into like that COVID moment of a few years ago.

and where we are now with some of these mean stock things. And I wrote a Diven Cafe a month ago on the IPO mania. These are not the exact same things that drive interest in what young people are talking about, but they're symptomatic of the same deal where investment criteria is replaced. The legitimate things that go into selecting future profitability of investments is replaced with something that is essentially either directly shiny itself or a derivative of the shiny fallacy. And I will tell you that conversation with young people, conversation with your own young people, you know, I would do anything of the world.

I love talking with my 19 year old daughter. She cracks me up. We have fun together. We, I learned something. It's just, it's a very, very special part of my life. And I'm sure most parents feel that way. I mean, I'll talk to their kids, especially when the kids, get to an age where, you know, they got to fit you in because they're busy with their own friends and priorities and all that. But what I would suggest to you is that investing is more than just the things you can talk to younger people about, the fads that exist, the stores at the mall, the current trends, the brands, the fiduciary obligation of investing requires you to go deeper. Wealth creation is not about popularity or fads. History, in fact, might suggest that it's a

counter signal. Thank you, as always, for listening, watching, reading the Dividend Cafe. Please reach out with any questions, anytime. Have a wonderful weekend. I will be back with you. Still here in New York City, where it is a warm weekend coming for the Monday Dividend Cafe. Take care. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, with Hightower Advisors LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors, LLC. This is not an offer to buy or sell securities.

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