Boomers, Gen Xers, Gen Zers and millennials don’t agree on much. But there are seven stocks, mostly in the S&P 500, they all think you should own now amid the coronavirus stock market rally.
Just seven stocks, including S&P 500 members Apple (AAPL), Amazon (AMZN) and Microsoft (MSFT) are top 10 holdings of all four generations of investors, according to data from Apex Clearing provided to Investor’s Business Daily. Apex analyzed nearly 8 million investor accounts held by baby boomers, Generation X, Generation Z and millennial investors as of March 31.
And more than half these stocks command 90 or higher IBD Composite Ratings, meaning they are outperforming 90% of all others based on both stock gains and earnings growth. All also hail from three of the 11 S&P 500 sectors, including information technology, communications services and consumer discretionary.
Even during the depths of the crash, individual investors didn’t panic. They looked for opportunities to hold these top stocks, Apex Clearing CEO Bill Capuzzi told IBD.
“Popular belief was that when we had this major correction (individual investors) would … freak out,” Capuzzi said. “What we see in the data is, is just sort of the opposite. We saw an avalanche of new customers (opening investing accounts).”
S&P 500: Generations Look For Profit, Not Panic
All generations bet heavily on Apple, Microsoft and Amazon — the only three S&P 500 companies to regain their trillion-dollar valuations. Betting that big S&P 500 companies would get even bigger was a smart move.
It wasn’t just lucky stock picking, either. The number of new brokerage accounts jumped 300% in March, Apex says, bringing the total to nearly 8 million.
The rush to participate in the volatility spanned generations. Millennial investors were the most aggressive. These investors born from 1981 to 1996 opened 314% more brokerage accounts in March than in a typical month in 2019, Apex says. Millennials sought ways to scoop up cheap stocks suffering big losses: Delta Air Lines (DAL) jumped to the No. 21 position in millennial investors’ portfolios.
But older investors piled in, too. Accounts opened by boomers jumped 263% in March. And Gen Xers opened 306% more accounts during the volatile month, Apex says.
S&P 500: Wisdom Of The Crowd
Watching individual investors rush into the market amid a bear market is surprising. Pro traders like to think the masses are “dumb money,” who scurry out of stocks at the slightest whiff of trouble. But the opposite was true in March.
“Retail investors have been a highly visible part of the U.S. equity market during the Covid-19 crisis,” said Nicholas Colas, co-founder of DataTrek Research.
Searches on the “buy stock” phrase and names of brokerage firms spiked on March 13. And interest also jumped following highly volatile days for the S&P 500 like March 19 and March 25. Investors are closely monitoring money-making opportunities with airlines especially, he said. What should you look at before you buy United Airlines (UAL)? Keep in mind, the airlines are not leading stocks and holding them is costing Warren Buffett dearly.
“Retail investors are a microcosm of the American public as a whole, voting with their dollars that the country can come back from the Covid-19 crisis,” Colas said.
S&P 500 Stocks Everyone Can Agree On
Apple is the top holding for every generation. Sinking just 5% this year, the maker of iPhones is a top pick as faster wireless 5G networks launch this year. Earnings are strong, too, helping the 94 Composite Rating. And analysts think the company’s profit will rise 4% this fiscal year. That’s why you might wonder if you should buy Apple stock, too.
Don’t forget Leaderboard stocks Microsoft and Amazon, which are up 9% and 30%, respectively, this year. Both stocks are widely held across generations.
Tesla (T) is more controversial. While not in the S&P 500 (yet), shares of the electric-car maker are up 74% this year. It’s a top three holding by Gen X, millennials and Gen Z, but only No. 6 by boomers. The company is expected to earn $2.55 a share this year, up from a loss in 2019. Here’s what to look at if you’re thinking about buying Tesla.
Boomers vary, too, in their holdings of AT&T (T). It’s a top four holding for them. No doubt, the 7.1% dividend yield is a draw. But the full year’s dividend is certainly wiped away by the stock’s 23% drop this year. Earnings are seen dropping 8% this year.
But boomers also side-stepped the 29% crash in Disney (DIS) stock this year. Earnings at Disney are seen dropping by nearly half in 2020. Its theme parks are closed, cruise ships idle and ESPN network absent live sports. Disney is a top 10 holding of all the generations, except boomers. They relegate Disney to No. 14 in portfolios.
But while the S&P 500 stocks they own might vary a bit, the generations agree, moves you make now will determine your financial future.
S&P 500 Top Holdings For All Generations
Each rank in top 10 holdings in portfolios spanning generations
|Company||Symbol||Boomers Rank||Gen X
|YTD Stock % Ch.||Sector||Composite Rating|
Sources: Apex Clearing, IBD, S&P Global Market Intelligence, * = not in S&P 500
Follow Matt Krantz on Twitter @mattkrantz
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