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There are many types of risk and now even trading is an extreme sport. In this video, I will start with risking only $100 per trade. Bro, it's simple. If you can scroll TikTok, you can trade. You have the fear of missing out on a trade. And judging by social media, everyone is getting rich. We're at $232,000. Just today I made $16,000. More young people are investing than ever before, and they're learning about markets in a way no generation has.
Gen Z really is distinct from other age groups. If you go on social media now, you will see a lot of sophisticated trading techniques used in ways that I think no one would've imagined a 20-year-old in 1990, 2000, or even 2010 doing or even knowing about. I want to show you this trade I'm taking. A lot of that activity has also broadened to sports gambling, for instance, or trading on prediction markets. But there are worries that these investors are over-leveraged, taking one too many risks. I've always been a big risk taker. It's kind of just part of who I am. Three, two, one, To the **** moon. Holy **** Well, you know what?
Gen Z has a highly differentiated view of risk. They don't drive, they don't date, they don't drink. On the other hand, they're also this extremely risk-taking generation. And for many, it's the only path they see to getting ahead. YOLO stands for you only live once. So YOLO Bets would refer to risky investments where the trader has an attitude of, you know, you go big or you go home. Every individual is different. Every individual's different. We all have our own sort of risks that we feel comfortable with, but we do see each generation sort of experiences a lot of different risk events and that can have this generational impact.
We generally think of Gen Z as people born between the late 1990s and the early 2010s. One way to think about it is like it's Z for Zoomers. These are people who all kind of went online during the COVID pandemic and who were all defined by that experience. Some of them were children during the great financial crisis. They certainly felt the stress of their parents losing quite a lot of their stock market portfolios or maybe even losing their homes. And then they were graduating high school or going into college or entering the labor force during the pandemic,
which is a huge shock. If you're especially a male college graduate, the economy overall is in good shape. You're looking at unemployment rates similar to a recession level. You're looking at unemployment rates similar to a recession level. More generally, all young people have had a harder time finding a job. This is the average unemployment rate for all workers. Now look at young workers. It's hovering around 7%. we see this sort of odd dichotomy going on with Gen Z, is if you look We see this sort of odd dichotomy going on with Gen Z.
If you look at their financial portfolios, they have more money than any other generation, but they also are going to be a lot less likely to own a home. There's so many Gen Z folks, millennial folks really who are coming of age. They're ready to have children and get a place of their own and yet they can't afford it. Surveys about retirement suggests that Gen Z feels very good about being on track for retirement. But when they talk about their overall financial situation, they tend to feel pretty dark.
There's been an interesting academic paper from economists at Northwestern University and the University of Chicago showing that as people start to give up on home ownership, they tend to consume more, work less and put more money in risky investments. It's an outlook that's being called financial nihilism. Financial nihilism is a term that was coined by the podcaster, Dimitri Kofinas. And it refers to this idea that it seems like a lot of traditional long-term path to financial security no longer work. And so under those circumstances, you might as well go for broke and take big risks in order to meet your financial goals.
Studies suggest a higher percentage of Gen Z and millennials feel behind financially and need to take risks to catch up. Gen X and boomers tend to feel more secure and trust in traditional investments. that Gen Zers have spent the last two decades or so in a pretty straightforward bull market. For instance, if you put your money in the S&P 500 10 years ago, you would've seen that grow on average 15% a year, which is actually historically very high. So there's a really big correction a few years ago, There was a really big correction a few years ago,
but the market recovered from that. So that has really fostered the sense that they can win if they play the stock market. currently I'm part of Gen Z we seem to be constantly getting priced I'm part of Gen Z. We seem to be constantly getting priced out of everything. Owning a home, being able to afford to have kids, being able to afford a wedding ring, rent keeps going up, the wages keep stagnating or going down, unemployment is rising. So there's a desire to try and find your own way because the system doesn't seem to be working for us. So my initial investment was 13,000 in total.
I have made 109,000 from retail trading. I'm very focused on saving and making sure that I have a financial future. But seeing people who struggle every day just to get by and I'm doing this and it works. It's just such a weird disconnect because I'm pressing buttons on my phone. Playing the stock market is key here because day trading and the apps that support it are also a form of entertainment. way? Gamification has been one of the biggest themes in retail
investing in the past decade. It's rewarding a lot of parts of your brain that you might get if you're winning something and it reinforces certain behaviors and it makes a investing in a stock fun. Hold that thought until after this. The London Stock Exchange continues to shrink. Uncover more at bloomberg.com/videos. Technology has allowed this to become something almost similar to social media, right? Where we've got people who, you know, maybe they're double tapping on Instagram, they're going into TikTok, and then they're also between those moves going
into their investment apps. those moves going into their investment apps Take the US options market, which was once the domain of professionals at hedge funds and trading desks. Look how trading volumes have launched record after record in recent years, driven by itchy retail investors. Driven by itchy retail investors driven by is academic research has always Academic research has always been consistently negative about excessive trading for individual traders. One reason is that a lot of individuals tend to trade too much, which means they give away a lot of their gains in the form of transaction costs or they tend to chase trends and buy assets at their peak.
or they tend chase trends and buy assets of their peak. And younger people are more likely to own alternative assets. For example, other generations don't have as much crypto in their portfolios as millennials and Gen Z. We've seen the line between gambling and investing get increasingly blurred. And probably some people would say that there has never really been a clear difference. some people would say that there has never really been a clear difference. But with gambling, there tends to be more of a winner and a loser.
is investing to me has positive, say, externalities for the whole economy. Like you buy a share of a stock, you hold it for the long term. That company might invest in technology. They might hire someone and it sort of grows the economy. If you bet on a football game, it's not quite clear what economic benefit is to that. Appetite and incentives for risk varies not only across generations, but geographies as well. In the US, they're obviously risk hungry.
We've seen the same in South Korea where they're famous for trading these leveraged ETFs. But it's been a little bit more muted in Europe where historically people have put up more of their money in bank deposits or safer fixed income investments. And here we're actually seeing governments wanting to encourage people to put more of their money in the stock market. There's one study that looked at Gen Zers in China and find that they are more risk averse than other Chinese generations. When you look in their investment habits, they're more likely to invest in gold. When you look in their investment habits, they're more likely to invest in gold, wherever they are.
Wherever they are, it's important not to dismiss young investors. After all, money is being made here, just not necessarily all the time. Please, please. Order filled. Hold on. Oh my God, dude! Oh my gosh, dude. Gosh dang it. Bro, I lost 152K. There's a real danger of patronizing Gen Z. and I think something that we know about this generation is that they have grown up with smartphones. They have grown up with the ability to look up whatever it is they want to look up and quote unquote, do their own research.
That's So you have this group of people who are young, they're just starting out. they're just starting out, and they're investing at a time when they see massive amounts of wealth inequality, that cultural moment where risk has become more acceptable. With all the signs of wealth these days they're seeing on social media a lot of people feel driven to take big risks and to make a lot of money within a short amount of time. So you've got the affordability crisis combining with a greater cultural acceptance of risk taking, and that's created the moment that Gen Z is in right now.
