By Sally French, MarketWatch
Millennials -- they are just like us!
They spent 2015 trading the same stocks everyone else did, according to data released by TD Ameritrade.
Apple Inc. /zigman2/quotes/202934861/composite AAPL +0.34% , Netflix, Inc. /zigman2/quotes/202353025/composite NFLX -2.17% , Facebook Inc. /zigman2/quotes/205064656/composite FB +0.23% , Bank of America Corp /zigman2/quotes/200894270/composite BAC +1.31% , Amazon.com, Inc. /zigman2/quotes/210331248/composite AMZN -0.84% , Twitter Inc. /zigman2/quotes/203180645/composite TWTR -0.47% , and The Walt Disney Company /zigman2/quotes/203410047/composite DIS -0.37% all made the top 10 lists of stocks traded in 2015 by millennials (people born between 1981 to 1997), Generation X (people born between 1965 and 1980) and Baby Boomers (people born between 1946 and 1964).
But there’s one trading strategy that set millennials apart from other generations: the Velocity Shares 3X Long Crude ETN came in at No. 5 on the list of top 10 stocks traded by millennials in 2015.
This ETN tracks futures contracts on WTI crude oil, and is designed for aggressive traders with short holding periods. It’s widely traded -- but it didn’t appear in the top 10 for any other generation in 2015. ETNs are similar to exchange traded funds except that it is an unsecured debt note and if the underwriter were to go bankrupt, the investor would risk default.
The ETN ended 2015 down about 92%, according to FactSet. But millennial traders weren’t buying to hold in the long term.
Nicole Sherrod, managing director for trading at TD Ameritrade, said that short-term trades on this ETN were more popular among millennials because of the risk factor -- older investors might not want to invest in such a volatile sector.
“It’s way more risky than the broad market,” Sherrod said. “I would not say this is dangerous, just that’s it’s more risky. The younger you are, the more aggressive you can be in your investment strategy.”
It was 5th on the list of equities bought by millennials -- and 4th on the list of stocks sold. It’s low priced, so young people can invest a small amount of capital and chase a good return.
One place where millennials aren’t investing? Mutual funds.
“The millennial audience has a distrust for Wall Street,” Sherrod said. “They steer away from products that are managed by a professional.”
Instead, they head toward places to invest with no management and no fees.
What are millennials investing in for 2016?
Chipotle is back on the list as the 10th most traded stock for millennials trading through TD Ameritrade.
“It’s declined so much that millennials are speculating where the comeback is for the stock,” she said.