Millennials: 'Market timing is everything'
Looks like Millennials learned investing lessons from the financial crisis. Just the wrong ones.
Roughly eight years after the 2008 bear market, 27% of Millennials said "market timing" is the most valuable lesson they learned from the protracted bear market that resulted in stocks dropping more than 50%, according to a survey in the UBS Investor Watch report released Thursday. Just 10% of Baby Boomers agree that market timing - or trying to buy and sell stocks at ideal periods to take advantage of short-term swings - was the lesson learned.
Investment professionals have been trying to guess how investor behavior would change following one of the worst bear markets in history. Seeing the rise in young investors who think market timing is a good idea flies in the face of decades of academic research proving just the opposite.
More than half of the wealthy World War II investors, 57%, learned during the crisis the "buy and hold" investment strategy is "important," while just 33% of Millennials learned that, the survey found.
But Millennials are full of investment paradoxes. While more than quarter of Millennials said they learned market timing is a good idea, 52% said they regret selling stock during market declines. That's much higher than the 23% of Generation X that regret selling at market declines and 14% of Baby Boomers.
Here's another head-scratcher. More than four in 10 Millennials said they are willing to take on more risk following the financial crisis. That's twice the 21% of Generation Xers that said they can stomach more risk and up from 12% of Baby Boomers set for more risk. But at the same time, Millennials hold more cash, 41%, than any other age group including Boomers at 19%. Holding cash is seen as being one of lowest risk options for investors — but also the one with the lowest returns.
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