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Now that the hype around GameStop seems to have died down a bit, we can look back on the impact that it had. Over the span of two weeks, it made headlines globally, online brokers like Robinhood gained a lot of new users and the subreddit that started this hype – r/WallStreetBets – grew from about 2 million members to a whopping 8 million members.

According to the Financial Times, a significant share of the people who bought Gamestop and other “meme stocks” were millennials – some outlets even went as far as describing the situation as “millennials vs. the big boys”. Reading this made me interested in learning more about how people my age (23) approach investing.

In July 2020, Het Financieele Dagblad published an insightful piece on new investors in the Netherlands, titled “New investor is young and a daredevil”. In their research, they concluded that 2 out of 3 new investors pick an online broker over an asset manager when they start investing. Furthermore, they also conclude that 1 in 3 new investors is either in their 20’s or 30’s.

After I read this article, I compared their findings with what I saw on r/WallStreetBets. On the subreddit I saw a lot of risky gambles (it is in the name after all), ranging from using entire student loan checks to buy stocks like AMC, to buying GameStop options with stimulus checks. Whilst there are no clear demographics on r/WallStreetBets, 65% of all Reddit users are between 18 and 29 years old. Based on their use of slang and memes, I will assume that the majority of the subreddit’s users are also a part of that age group.

What has caused these young people to start investing? The articles that I read argue that this is caused by a multitude of factors, among them the accessibility of investment platforms, low interest rates and word-of-mouth communication. In my opinion, media coverage of Bitcoin, Tesla and recently GameStop have played a role in this as well, triggering an “if they can do it, I can do it too”- mentality.

It will be interesting to see how young investors interact with the markets in the coming months. A small part of r/WallStreetBets believes that GameStop’s stock will bounce back and calls on users to hold their shares, whilst the rest of the subreddit seems to have moved on to Tilray, a Canadian pharmaceutical and cannabis company. Regardless of how GameStop or Tilray play out, I think different platforms, movements or currencies will emerge where young people would want to invest in.

That being said, young investors will have plenty of options to continue to explore the world of investing. Perhaps this could be an opportunity for asset managers to engage with a young audience and give them an opportunity to invest in something with less risk and more “purpose”. When you consider that the majority of millennials hold sustainability in high regard, an investment in a sustainable fund appears to be a solid match. 

All in all, the GameStop saga has been quite a ride and has without a doubt been a catalyst for many young people to consider investing for the first time. Whether their investments are risky or safe, the younger generations still have a lot of time to explore the world of investing and find out what works for them. Especially in a country like the Netherlands, where younger generations tend to be reluctant to invest, I think the increased awareness for the possibilities in investing is very welcome.

Image: iStock

Written by Martijn van Dorp