Investing in Tech Stocks
When observing the stock trading and investing trends of millennials, it is interesting to note their gravitation towards investing in tech stocks.
Sometimes in stock trading, it helps to study the investment patterns of various sections of the public since you never know how their investing could influence the whole stock market.
Some of the top tech stocks are in the preferred target range of millennials. These young investors seem to favor tech company shares for their personal portfolios, particularly shares of companies that are familiar to them and whose products are indispensable to their day-to-day life. This was revealed in a CNBC report. What millennials choose may be their own choice, but it can sure influence the markets significantly. At over 75 million individuals in the United States, they are the country’s largest living generation, surpassing the baby boomers in 2016. So their choices could really influence the markets.
According to research, Apple ($AAPL) is the most preferred stock holding for these millennials, followed by Facebook ($FB), Amazon ($AMZN), Tesla ($TSLA) and Netflix ($NFLX).
It is interesting to know that with the exception of Apple, these stocks don’t pay dividends. But millennials have a long time horizon for their investment. It isn’t surprising therefore that they aren’t giving much importance to dividend income, so much so that avoiding dividend-paying stocks has become a characteristic of the millennials. They are also willing to take risks above what the average individual can. TheStreet.com reported that millennials seek to invest in companies following responsible business practices.
Another trait of millennials is that they typically don’t look much into history to learn vital lessons. The point here is that focusing your investment portfolio on one industry is risky, since market crashes have historically begun with localized crashes in sectors that are overvalued. Back in 2000, for example, it was the technology stocks that the crash focused on while in 2008 it was the financial stocks that were affected. But millennials don’t care, as they focus their energy on these highly valued tech stocks.
There are some lessons to learn here, to apply to your stock trading strategy. Primarily, what you can gauge is the fact that tech stocks are where the focus is for the majority of young investors. But it is also important to remember that you should not invest all your money in just one industry, but spread it out. The millennials may not be doing it, but you need to. With the right trading software, you can make informed trading decisions.