Digital Assets: JPMorgan on the Generational Divide in Alternative Assets Investing
Older investors are inclined towards gold, while millennials are piling into cryptocurrencies such as bitcoin.
According to a note from JPMorgan (NYSE: JPM) analysts this week, an interesting trend is playing out in alternative investments such as precious metals and cryptocurrencies. Older, more conservative investors are buying up safe-haven assets such as gold and silver. However, millennials will have none of such stuffy, traditional investments. They are more attracted to the technology, the volatility, and the modern allure of digital assets such as bitcoin. (MARKETS INSIDER)
Retail investors in “alternative currencies” split down the middle
“The two cohorts show divergence in their preference for ‘alternative’ currencies,” a team of JPM analysts led by Nikolaos Panigirtzoglou wrote. “The older cohorts prefer gold while the younger cohorts prefer bitcoin.”
Though the assets at different, both cohorts share a common investing thesis. And that is the scope for appreciation in these assets due to massive global stimulus measures, geopolitical turmoil, and the damage to the global economy from the coronavirus pandemic. There is also the expectation that the US dollar will significantly weaken. That is a bullish factor for both bullion and digital currencies. Besides, millennial investors fancy bitcoin as a dollar alternative.
Gold scaled a record high this week as it raced past the psychological level of $2,000 per ounce. Meanwhile, bitcoin sliced through $11,000 and is trading at its highest levels for the year.
Funds tracking gold and bitcoin are seeing robust inflows during this year.
However, there is also a contradiction in equity investing between the two groups.
Variation in stock investing strategy
According to the JPM analysts, while millennials have taken a strong fancy to technology stocks, the older generation is mostly selling their equity holdings.
“Younger cohorts of US retail investors show little interest in bond funds,” the analysts said, adding that “they also avoid equity funds, preferring to invest in equities directly by buying individual stocks, especially tech stocks.”
“The older cohorts continued to deploy their excess liquidity into bond funds, the buying of which remained strong during both June and July,” they added.
Meanwhile, Jim Cramer, in his inimitable style, said in late July that the moves in the three major tech stocks [Microsoft (NASDAQ: MSFT), Tesla (NASDAQ: TSLA) and Amazon (NASDAQ: AMZN)] were “truly insane and unlike any I have ever seen in my life.”
Related Story: Millennials Trust Bitcoin Over Berkshire Hathaway
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