Millennials are making big money on most of their favorite holdings — including some in the S&P 500. But they own a few losers, too.
Millennials are down 50% or more on three of their most popular 100 stocks, which they also were big holders of coming into the year. The big losers they’ve ridden down this year include industrial American Airlines (AAL), financial Wells Fargo (WFC) and energy Exxon Mobil (XOM). These losses show up on an Investor’s Business Daily analysis of millennials’ holdings from Apex Clearing plus market returns from S&P Global Market Intelligence and MarketSmith.
And these are just the big S&P 500 duds millennials held onto all year. Some other falling stocks down 50% in 2020 became popular this year with millennials, including consumer discretionary Carnival (CCL), industrial United Airlines (UAL) and real estate play Simon Property (SPG).
Biggest S&P 500 Losers Hurt By Pandemic
Most of the ailing stocks commonly found in millennials’ portfolios are pandemic-battered areas of the market and S&P 500. Many millennials sought pandemic-stricken values in the consumer sectors. But time-tested investing rules show cheap stocks often tend to lag.
Bets show where millennials “see opportunity and the sectors that excite them,” said CEO of Apex Clearing Bill Capuzzi. “One thing’s for sure, they’re definitely bullish in the face of uncertainty.” Apex is the firm that handles much of the heavy lifting of processing trades.
S&P 500 Airlines Shake Up Millennial Portfolios
Millennials added aggressively to their S&P 500 airline holdings this year — even as Warren Buffett bailed out. There were opportunities to trade these stocks, but they’re mostly in freefall still.
Some of the buying was opportunistic. United Airlines is millennials’ No. 31 most popular holding. It wasn’t even in the top 100 in 2019. But the stock is a disaster, collapsing 58% this year. Millennials backed off of it a bit, as it was their No. 22 top stock in June. But the disappointment doesn’t stop. United is only up 7% from June 30, lagging the S&P 500 which is up more than 11% in that time.
But millennials took some serious knocks on American Airlines (AAL). Coming into 2020, the struggling airline was millennials’ No. 76 holding. That means they’ve ridden it down 54%. In fact, millennials are aggressively doubling down on the airline’s elusive recovery, making it their No. 22 holding now.
And it’s not just American and United. Millennials hold many airlines in their top 100, including Spirit Airlines (SAVE) (No. 75) and Delta Air Lines (DAL) (N0. 17). All these stocks are down big this year and recovery has been slow.
In fact, Boeing (BA) is one of the few top 10 holdings for millennials that’s down this year. Boeing is millennials No. 10 holding. It’s down nearly 50% this year.
Tricked By S&P 500 Blue Chips
Wells Fargo and Exxon Mobil probably looked like money in the bank in early 2020. And millennials held big stakes in both seemingly blue-chip giants.
Buffett’s favorite bank stock for years, Wells Fargo, was millennials’ No. 51 holding coming into this year. But the stock has been freefall all year, with shares of the bank plummeting 53% so far. And with an IBD Composite Rating of just 5, there’s little reason for optimism. Analysts think Wells Fargo’s profit this year will plunge 92%.
It’s just as ugly over at fallen blue-chip Exxon Mobil. Millennials made the energy giant their No. 30 holding in late 2019. And they’ve ridden it down all year and actually boosted’ it to their No. 28 by September. But the stock has been a disaster this year, falling 50.2%. It was kicked out of the Dow Jones Industrial Average.
Millennials Getting Sunk By Cruise Lines
Millennials are betting cruise ship operators will set sail again. But delays and collapsing revenue is getting costly for all involved.
Carnival, by far, is the worst S&P 500 stock among the most 100 most popular with millennials. Shares are down a bruising 69% in 2020 so far. They have a rock-bottom IBD Composite Rating of 14.
And it’s not that millennials are long-term aficionados of cruises. They’re just looking for a pop. Carnival wasn’t even in their top 100 holdings in 2019. But depending on when they bought this year, the losses are starting to sting. Anyone who bought in the last month is down 11%. Even so, Carnival is the No. 23 most popular holding with millennials as of Sept. 30, down just two slots from June 30. Do you know what to look at when thinking about buying Carnival stock?
And millennials actually doubled-down on sinking cruise companies. The No. 2 worst stock this year in the portfolios now is Norwegian Cruise Line (NCLH). It’s down almost as much as Carnival this year, 67.9%. Norwegian, too, probably isn’t picking up as fast as millennials may have hoped. Perhaps they’re losing faith in it. It’s now millennials’ No. 37 most popular stock, down from No. 25 in June.
If millennials are hoping for a cruise recovery, they’ll need patience. Norwegian is on pace to lose $3.8 billion this year and nearly $1 billion in 2021, analysts say. And when it returns to profitability in 2022, it will make 82% less than it did in 2019.
REITs Pound Millennials, Too
Like many investors, and the S&P 500, millennials have added real-estate investment trusts to their portfolios. But REITs haven’t worked out for them, either.
Shopping mall owner Simon Property is the No. 67 most popular millennial holding. Perhaps the yield, now 7.4%, was a draw. But that hardly makes up for the stock’s 54.5% drop this year. That’s an especially tough hit, as the diversified Real Estate Select Sector SPDR ETF (XLRE) is only down 3.4% this year. The ETF owns a broad array of real estate companies in the S&P 500.
Millennials Know When To Bail Out, Though
Millennials, though, seem to appreciate an important rule when owning some individual stocks: Cutting losses.
They bailed out of the cannabis crash. Aurora Cannabis (ACB) was millennials’ No. 62 holding in late 2019, and now it’s not even in the top 100. Good thing they got out as Aurora is down 80% this year.
Similarly, they ducked out of the Lyft (LYFT) debacle. The ride-sharing stock isn’t in millennials’ top 100 anymore, even though it was No. 56 last year. That was a near miss: Lyft is down 35% this year. In contrast, Uber (UBER) is still No. 30 in millennial portfolios, and it’s up 25% this year.
Good call, millennials.
Top 100 Holdings Of Millennials Down The Most This Year
|Rank||Company||Symbol||Stock YTD % Chg.||Sector||Composite Rating|
|37||Norwegian Cruise Line||(NCLH)||-67.9%||Consumer Discretionary||20|
|67||Simon Property||(SPG)||-54.5%||Real Estate||19|
Sources: IBD, S&P Global Market Intelligence, Apex Clearing. Holdings through Sept. 30, performance through Oct. 9. * = a top 100 holding as of Dec. 31, 2019 and Sept. 30, 2020, ** = not down 50% in 2020, but shown for illustrative purposes
Follow Matt Krantz on Twitter @mattkrantz
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