Maybe You Shouldn’t Buy What You Know

The most popular stocks among young people: Amazon (AMZN), Apple (AAPL), Google (GOOG), Netflix (NFLX), GoPro (GPRO), Alibaba (BABA), Tesla (TSLA), Facebook (FB), LinkedIn (LNKD), Twitter (TWTR), Blackberry (BBRY). Trendy consumer tech stocks.

Stocks with Youngest Median Owners
Stocks with Youngest Median Owners

Old people are also buying what they know. That’s why they buy companies that sell life insurance and cancer drugs and sliced cheese.

Stocks with Oldest Median Owners
Stocks with Oldest Median Owners

This is what you have to look forward to as an old person. However, here are the stocks charted based on fair value (a combination of P/E, P/S, shareholder value, EBITDA/EV, FCF/EV).

value stocks

Each column represents the decile of a company’s valuation, and the numbers indicate the historical excess return by valuation for the last 50 years.

Old people are buying value stocks that historically beat the market. Young people are buying high-priced momentum stocks that are expected to underperform in the long run. Instead of following Mark Zuckerberg and Elon Musk, maybe kids should spend some time studying Warren Buffett.

See Also:
Why the Grandpa Portfolio will Crush the Millennial Portfolio –Millenial Invest


Disclosure: I am long AAPL, BABA, GPRO.