One of the less predictable outcomes of the pandemic has been the surge in Gen-Z and Millennial stock trading. As Axios reported, the trend has grown over the past months from financial curiosity to a major force. This new segment of traders is even beating out professionals by margins that far surpass beginners’ luck. At Goods Unite Us we couldn’t help but wonder – what is this all about?
The surge in trading has been driven by two factors: social distancing and stock apps like Robinhood. Robinhood is a broker-dealer app that allows users to trade stocks, options, and ETFs – all with zero commission fees. Apps like Robinhood create a convenient, gamified version of the traditional financial workflow and the pandemic creates the time to take advantage of it.
In the past, stocks have been owned mostly by older, wealthier Americans who are, as a group, more right-leaning. From 2017-2018, only 37% of Americans from 18-35 were invested in the stock market. Among their 35 and up counterparts, that figure was 61%. Additionally, in 2016, the top 1% of income earners owned half of all stocks. For comparison, that figure was 39% in the late 1980s.
If apps like Robinhood continue to turn younger generations into active investors in the stock market, their left-leaning politics may begin affecting the ways stocks are traded as well as how companies themselves operate. It might also take the edge off of income inequality, which is mostly driven by the stark differences in capital and wage growth. In other words, this is definitely a trend to watch.