Market Overview

How To Invest Like A Millennial 2.0

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Motif Investing looks for "trends, ideas and world events that could create an investment opportunity" and then picks 10 to 30 related stocks to build portfolios around, weighing them based on their exposure to the coinciding idea, event or trend.

On Thursday, founder and CEO Hardeep Walia appeared on CNBC to talk about his firm’s latest motif, which has to do with Millennials, and their interest in social media, e-commerce and wearable tech.

How To Invest Like A Millennial

What’s really interesting to look at is which sectors did not make the cut for Millennials, Walia explicated. “Think about the Millennials,” he continued. “They have lower-end employments, lower real income, they’ve seen their real net worth drop by about a third from the prior generation [and] student debt go up 300 percent versus the prior generation. So, we looked at segments that looked like pure plays.”

One example of this could be rental REITs (versus housing stocks, for example), which give investors exposure to urban areas, like Equity Residential (NYSE: EQR) or AvalonBay Communities Inc (NYSE: AVB).

Related Link: Get Ready For Tighter Gun Controls With This 19-Stock Portfolio

A few other interesting data points that Walia highlighted were: Millennials spend about 27 percent of their time online; they consume 40 percent of the total video seen online, 46 percent of online radio… So, as one might figure, Millennials are certainly investing in Facebook Inc (NASDAQ: FB), Netflix, Inc. (NASDAQ: NFLX), Pandora Media Inc (NYSE: P) and Alphabet Inc (NASDAQ: GOOGL), among other tech stocks.

“People don’t realize… even though they [Millennials] don’t have more money, they spend more money online than any other generation,” Walia added. So, Amazon.com, Inc. (NASDAQ: AMZN) is another important stock in a Millennial portfolio.

GoPro Inc (NASDAQ: GPRO) is a special case. While the stock is included in the Millennials #IRL motif, wearables only account for 2 percent of the total asset allocation, Walia expounded. And, he went on, the reason for this stock to be in there is, “48 percent of wearables are consumed by Millennials… And all the weightings in this motif are weighted by their exposure to Millennials.”

A Look Into The Motif

In terms of asset allocation, 51.8 percent of the portfolio's assets are placed in multi family REITs, because Millennials are renting houses, rather than buying; 27 percent in internet and social media stocks; and 18.9 percent in e-commerce companies; and 2.3 percent in wearable technology firms.

Below is a more detailed look at the top stocks in the portfolio. Check out the full motif (and the returns of each stock and segment) in the link above.

  • 15.3 percent: Equity Residential
  • 14.3 percent:AvalonBay Communities
  • 13.7 percent: Amazon.com
  • 8.7 percent: Facebook
  • 6.3 percent: Alphabet
  • 6.3 percent: Essex Property Trust Inc (NYSE: ESS)
  • 6.2 percent: Mid-America Apartment Communities Inc (NYSE: MAA)
  • 6.0 percent: Netflix
  • 4.1 percent:UDR, Inc. (NYSE: UDR)
  • 2.6 percent: Post Properties Inc (NYSE: PPS)

 

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Posted-In: CNBC CNBC Hardeep Walia Motif InvestingLong Ideas Media Trading Ideas

 

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