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Gen Z, Millennial investors tend to chase FOMO trade: Survey

Younger investors — Millennials and Gen Z — seem to have FOMO as they are more likely to chase momentum behind earnings, according to Apex Fintech Solutions latest survey.

Apex Fintech Solutions CEO Bill Capuzzi sits down with Yahoo Finance to discuss these FOMO trading trends observed from the most recent earnings seasons, especially across the Magnificent 7 tech stocks.

"When I look at the data in terms of the pattern, those 26 and younger year olds, there was a bit of fear of missing out. The great earnings and the amount of activity in that name [Meta (META)] was significant compared to something like Uber (UBER), which also posted really good earnings," Capuzzi says. "What it tells me is you have this younger generation — this notion [of] Peter Lynch which is 'invest in what you know, invest in what you use' — in this case, you have this younger generation leaning into things they use today, number one, and number two, think that there's opportunity for that stock to continue to run."

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.


Editor's note: This article was written by Luke Carberry Mogan.

Video transcript


- A new survey reported that Gen Z and millennials are having FOMO when it comes to investing, especially around earnings. But Gen X and baby boomers are a little more conservative when it comes to investing. Here to help us break down the data, the CEO of the company that did the Survey Bill Capuzzi of Apex Fintech Solutions.

Hey, Bill. You know, there's always a lot of talk about the sort of generational differences. But a couple of things did strike me in this. And one of them, it seems to be that you found that younger investors, they trade a lot around earnings, but not just before. They also, it seems like, sort of chased momentum upward. Is that accurate to say?

BILL CAPUZZI: Yeah, I think before we get into the specifics, at a broad level, we have about 25 million end investors that are on our platform. And typically are-- the predominant percentage of them are young investors. Roughly 70% are under the age of 40.

And exactly what you just said, which is really interesting, the statistics, especially around the earnings season this year. You know, this past quarter, we saw quite a bit of activity by the Gen Z-- you're talking 26 and younger-- and the millennials, which are 40 and younger, trading into the earnings. And then a lot of activity in and around or after the earnings.

- And, Bill, I'm just interested. You call out certain names in particular. Meta was interesting, for example. Talk about that one.

BILL CAPUZZI: Yeah, you know, it's really interesting. I looked at that. And you look at the data coming into the earnings. Let's just focus on Gen Z, young investors, 26. What I look at the data in terms of the pattern, those 26 and younger year olds, there was a bit of fear of missing out, right? The great earnings and the amount of activity in that name was significant compared to something like Uber, which also posted really good earnings.

And what it tells me is you have this younger generation, this sort of notion, Peter Lynch, which is invest in what you know, invest in what you use. In this case, I have this younger generation is sort of leaning into things that they use today, number one. And number two, think that there's opportunity for that stock to continue to run.

- And so I-- you know, when I saw this report and was reading it this morning, it made me wonder if the idea that old sort of sell the news is still in effect if you look at the younger investors, the sort of the swing vote in the market, so to speak. You know, I wonder if that sell the news effect will diminish.

BILL CAPUZZI: Well, you know, let's just take NVIDIA. Let's talk about NVIDIA for a second. You know, first of all, the amount of activity is probably not too unusual. But the amount of overall activity, especially in this younger cohort of these 25 million end investors that we support today, it was about double the activity today versus where it was a year ago. Probably not too crazy given the fact that there's been a lot of activity and a lot of news on NVIDIA.

The second part, I think, especially in that younger generation, the buys versus sells was about 2 to 1 ratio. So you had young folks buying pre-earnings into the earnings the day of last week and then still continuing to buy after the earnings. So, you know, again, I think that-- you know, the amazing part today is the environment that we've created as an industry has allowed for these young investors to get access to information and insight as to what's happening within these companies.

And you rewind the tape 10 years, 20 years ago. That same access-- first of all, you couldn't open an account without the likes of an Apex, right, with $100, $200 in the account. And then the second part is all the access information allow people to actually make good, prudent investment decisions.

- And, Bill, we're talking a lot about younger investors. But what about relatively older investors on your platform, Bill? I'm just interested the kind of themes you're seeing there in terms of activity engagement, the names and themes they're interested in.

BILL CAPUZZI: Yeah, I'd say a couple of things. Number one, there's not as much of a pronounced-- let's just talk earnings season, right? We're at the tail end of earnings season. This is probably not too surprising.

We didn't see a lot of pop in activity in the baby boomers. We saw some in Gen X, right? So we're talking the 43 to 50-something year olds. And then the baby boomers, older. We saw activity but not nearly as much activity in and around the earnings as we did in the younger cohort.

The one exception, which is really interesting, was NVIDIA. The second largest sort of cohort that the volume was up was the baby boomers. So you had Gen Z on one side. And you had the baby boomers on the other were the two largest sort of increase in volume over the course of, you know, that sort of two or three days where NVIDIA reported earnings last week,

- Bill, thanks so much for joining the show today. Really interesting insight. Appreciate it.

BILL CAPUZZI: Good to see you both. Thanks so much.