Why Millennials Don’t Care About the Bear Market

by Conor Richardson, author, Millennial Money Makeover

Millennial investors often feel left out of stock market swings as they struggle to meet more near-term economic priorities

Understanding the intricacies of the stock market is not a priority for most Americans. But when the stock market turns from a bull to bear market, generates historic volatility, and begins negatively impacting financial portfolios across the country, it dominates everyday conversations.

For America’s largest generation in the workforce, the economic sways of the stock market are hard to feel regardless of media attention. Millennials, generally defined as those born between 1981 and 1996, presently feel a sort of immunity from bear markets as they seem to have more immediate competing economic priorities.

Here are five reasons Millennials are less concerned with the short-term implications of bear markets than other generations.

1) Jobs Are Priority Number One

With millions of Americans filing for unemployment over the last several weeks, jobs have become priority number one for most households.

Cash flow management is top of mind for businesses, both large and small, as they struggle to stem losses and maintain payrolls. Even with the $2 trillion CARES financial stimulus package, job security remains opaque.

As Millennials dominate some of the industries hit hardest by the recent economic downturn, the issue of employment has become even more acute. Millennials are forced to focus on maintaining, or regaining, employment in order to meet their current economic commitments.

2) Participation in the Stock Market is Low

During their relatively brief tenure in the labor market, Millennials have been hit economically by both the financial crisis of 2008 and the current COVID-19 economic shutdown. As Millennials witness the second-largest stock market crash of their lifetime, it is no wonder that almost half of Millennials don’t participate in the stock market.

Investing is viewed as risky among Millennials and remains at the low end of their economic priorities. Retirement savings also remain historically low for this cohort, with only one-third of Millennials contributing to a 401(k) account. Millennials are experiencing a sort of cognitive dissonance to wealth accumulation, as they understand that they should be saving a larger percentage of their income and contributing to their retirement accounts more often.

3) Student Loans Don’t Go Away

Millennials owe a significant portion of the $1.51 trillion in outstanding student loan debt in the US. This economic albatross has blunted the timeline of life’s major milestone purchases for this group and has become a key political topic.

Even as student loan interest is temporarily deferred for millions of Federal student loans, principal payments still remain an issue for households. With the average monthly student loan payment reaching almost $400 a month, finding the hundreds of dollars necessary to meet this monthly cash flow item remains a top priority.

4) Wage Stagnation is Real

One of the largest predictors of wealth accumulation is income. According to the 2019 study on the economic status of Millennials households compared to previous generations conducted by the Government Accountability Office, generational economic mobility has declined over the last several decades, both in absolute and relative terms.

Millennials feel this tangible decline in their economic outlook.

Millions of Millennials are struggling to keep up economically with their parents at the same stage in life. In fact, Millennials are earning 20% less than Baby Boomers at the same point in life, leading to real economic consequences, such as delays in major life purchases and decisions such as when to start a family.

5) Prioritization of Other Economic Goals

As the stock market rises and falls based on the latest economic barometer — unemployment reports, COVID-19 case count, or the Federal Reserve interest rate — Millennials are left focusing on their near-term financial goals. When they finally have the opportunity to move past the chaos of the moment, they are often funneled away from stock market investing and into life-stage goals that they can more readily control.

Saving for a down payment for a first home, purchasing a newer car, or contributing to a wedding savings fund all seem to be safer bets during this time of extreme market uncertainty. They are simply waiting on the sidelines and reprioritizing their financial goals, de-risking their current exposure to a tumultuous market, and focusing on what they can control, whether bull or bear market.

Time is one of the greatest assets in investing, and Millennials are rich in this asset class. This silver lining should encourage Millennials currently sitting on the sidelines because they have decades of investing opportunities. For those that begin investing now, or in the near term, the law of compound growth still applies. Small investments, over time, can snowball into large savings.

As the historic stock market volatility and economic uncertainly continues, Millennials with a long-term focus will have the benefit of being largely buffered to its sways, making the bear not seem so bad after all.

Conor Richardson, CPA, is the author of Millennial Money Makeover and the founder of ConorRichardson360.com where he helps Millennials master essential money matters. Richardson began his career in New York City, working in finance and accounting and running his own businesses. Richardson’s business experience ranges from working with early-stage startups to publicly traded companies. He has been featured in Fox Business, The Washington Post, and more. Richardson received his Bachelor of Business Administration in accounting from the University of Georgia and earned a Master of Accounting and Professional Consultancy from Villanova University. He currently lives in Austin, Texas.



Imprints include Red Wheel, Weiser Books, Career Press, New Page Books & Hampton Roads. Books to live by.

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Imprints include Red Wheel, Weiser Books, Career Press, New Page Books & Hampton Roads. Books to live by.