Millennials: This Is the Wealth-Building Opportunity of Your Life
Bashing Millenials and blaming their money problems on avocado toast has always been stupid.
You can only play the cards you’ve been dealt, and they’ve been dealt some pretty bad financial cards:
- Graduating college with crippling debt.
- Starting their career in the worst job market since the great depression.
- Weak job security.
- Runaway housing costs.
The list goes on; it’s been a rough 15ish years for my generation to begin their adult life.
Despite the doom and gloom headlines, 2022 is shaping up to be the wealth-building opportunity of a generation.
You need a job to take advantage of a crisis
Here are two conditions Millennials have never had the opportunity to enjoy at the same time:
- A crashing stock market.
- More jobs than you can shake a stick at.
One of Warren Buffett’s most famous bits of investing advice is to:
“Be fearful when others are greedy, and greedy when others are fearful,”
Which means that the best time to buy stocks is when the market crashes. Because every time the stock market crashes, it (eventually) snaps back and provides outsized returns.
- During the great financial crisis, the S&P 500 lost half its value from June 2007 to March 2009.
- From March 2009 to January 2022, it increased by 513%.
Anyone who could buy stocks at the bottom in 2009 was able to create a lot of wealth by 2022.
The only problem?
In March 2009, few people — and fewer Millennials had money to invest because we were in the middle of the worst recession since the great depression.
To be greedy when others are fearful, you need a job.
The stars have finally aligned
The stock market is finally falling — and falling fast. This is happening just as many older Millennials are entering their prime working years, and basically, anyone who wants a job right now can get one.
Ben Carlson (a great follow on Twitter) Tweeted this chart which shows the number of job openings vs. the number of unemployed people in the U.S.
There are 11.55 million job openings and 5.94 million unemployed people. There are two job openings for every unemployed person.
The dream scenario from a wealth-building perspective will be if the stock market continues to fall without a crippling recession. A scenario that is looking increasingly likely.
Unlike 2008 or March 2020, there is no underlying crisis driving the stock market down. In fact, many companies are reporting solid earnings.
What’s happening is that stocks are simply getting cheaper.
The valuation of companies — particularly unprofitable tech companies — is getting contracted by higher interest rates. It turns out that when money is no longer free, investors are less patient with tech companies with charismatic CEOs but no profits.
Yes, we may be reentering a world where the stock market rewards companies that, you know, earn money.
No Lehman Brothers collapsing, no sudden onset of a global pandemic, just a good old-fashioned stock market correction that doesn’t show any signs (yet) of materially impacting the economy.
If stocks keep getting cheaper and jobs remain available, then Millennials will be presented with a generational opportunity to play financial catch-up and build wealth.
How to take advantage of a cheaper stock market
Put as much money into the market as humanly possible — Duh.
There’s a time to prioritize your personal life and a time to put your foot down on the gas of your career and earning potential.
For a generation that has never had such an easy path to building wealth, it’s time to put the pedal through the f*cking floor.
Bear markets usually last somewhere between one to two years. This means the next two years may be the most important in many Millennials' financial lives.
This is the time to focus on making as much money as possible and investing aggressively. To paraphrase Mr. Buffett, “it’s time to be greedy.”
I’ve always defended Millennials who have struggled financially because they have never been dealt a good financial hand. Well, guess what, we’ve just been handed a pair of Aces; it’s time to put in the work and play the hell out of these cards.
Those who seize this opportunity in 2022 are the ones who will be sitting pretty in 2035.
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This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.