“I do believe that millennials will power both the crypto and equity markets,” Cathie Wood, founder and CEO of Ark Invest, said on Monday at the SALT conference.
Wood cited research from Lee’s Fundstrat that suggests the stock market bull market could last until 2026 or even 2038 as millennials build out their investment portfolios. According to Fundstrat, Millennials — people born between 1981 and 1996 — are the largest single generation ever, outnumbering Boomers. Furthermore, the group’s average age is 26.5, as they enter their prime earning years.
Lee, known for correctly predicting the market bottom during the Covid recession, stated that long-term bull markets last between 20 and 42 years, with peak returns accelerating to a cumulative gain of 500 percent.
The current bull market has lasted ten years, and if history repeats itself, the S&P 500 could reach 19,000 by the end of 2029, according to a Fundstrat report. (On Friday, it closed at $4,432.99.)
The long-term forecast is based on strong expected demand in the housing and auto markets, which will be driven by millennials. Fundstrat predicts that housing starts will exceed 2.5 million per year over the next decade.
While Lee believes that millennials will follow in the footsteps of middle-aged Americans by purchasing cars and homes, Wood believes that millennials will upend the world order.
Her fund is down about 5% this year due to a sharp shift from growth to value names; however, the portfolio manager told clients on Tuesday that this shift will be reversed soon.
“We believe we are on the other side of the cycle,” Wood said on Tuesday during an Ark Invest webinar. “We don’t believe we are in a recession yet, but we do believe the market will begin to shift back toward growth and innovation.”
Meme stocks are on the rise.
This year, millennials have already demonstrated their ability to have an impact on the market.
Many legislators and large investors have dismissed novice traders as reckless speculators who do not conduct extensive research. Wood cautioned against underestimating the sophistication and vision of these smaller investors.
Millennials are enthusiastic about growth and cryptocurrency.
While Fundstrat’s bold prediction is for the broader market, the firm notes that the types of stocks preferred by millennials are critical to the market’s ongoing bull run.
According to Fundstrat, millennials prefer growth stocks and companies based on technology.
Many of these younger people are in charge of Wood’s Ark Invest’s $85 billion in assets under management. Wood invests in high-growth, innovative businesses that she believes will upend the world order. Ark Invest holds significant stakes in companies such as Tesla, Teladoc Health, Zoom Video, and Square.
Furthermore, according to Fundstrat, millennials are enthusiastic about bitcoin and blockchain.
“Ether is seeing a surge in developer activity as a result of NFTs and De-Fi,” Wood said. “Our confidence in ether has skyrocketed.”