The misery of youth

[lawtig02]

I was looking at the historical DJIA chart today and it brought one of the main frustrations/resentments of young Americans to mind. The numbers below are inflation adjusted.

If you're an early Baby Boomer (b. 1946), the Dow rose 209% from your birth to your 45th birthday, when you entered your prime earning years. It then rose 251% from your 45th birthday to your 65th birthday, when you began to exit your prime earning years.

If you're a late Baby Boomer (b. 1964), the Dow rose 144% from your birth to your 45th birthday, and 338% from your 45th birthday to your 60th birthday.

If you're an early Gen Xer (b. 1965), the Dow rose 159% from your birth to your 45th birthday, and 295% from your 45th birthday to your 59th birthday .

Now get this. If you're a late Gen Xer (b. 1980), the Dow rose 1,260% from your birth to your 44th birthday!

I don't think the math is meaningful for Millennials yet, but I expect it would be most comparable to the late Gen Xers.

So, there are millions of Americans younger than 45 who have watched the market absolutely skyrocket during years where they've been trying to get their careers started and have been spending most of their free dollars on student loans, starter homes, babies, daycare, etc. They haven't been able to participate in those astronomical gains much at all. But you know who has? Their parents. Their bosses. Their aunts and uncles. 95% of the people sitting in Congress. And now, the market is priced so high that they (probably justifiably) have little expectation they'll benefit from anything remotely resembling the run-up of the last 45 years.

This is probably common knowledge to most here, but it's interesting to me to see the numbers laid out like that. It helps me understand some of the frustration of younger adults and how that's actually exacerbated by the strong market, not alleviated by it.

Source for numbers: Dow Jones - DJIA - 100 Year Historical Chart

 

[hedge]

If you're a late Baby Boomer (b. 1964), the Dow rose 144% from your birth to your 45th birthday and 338% from your 45th birthday to your 65th birthday.

I was born in 1965 and I can assure you that I haven't celebrated my 65th birthday yet...

 

[lawtig02]

I was born in 1965 and I can assure you that I haven't celebrated my 65th birthday yet...

I think I noted that didn’t I?

 

[sringwal]

1) cryptocurrency is the “stock” of choice for a lot of them.
2) what evidence is there that stocks won’t continue to grow at something close to current rates?

As a Gen-Xer, I have a healthy appreciation for the fact that my generation did not have to face many of the challenges that the boomers faced growing up. Millennials and Gen-Zers in the United States certainly face challenges unique to them, but also don’t always show appreciation for the fact that older generations went through some shit far worse than anything they have had to face thus far in their existence.

 

[CFordUNC]

This is a fascinating topic and really interesting to think about. I know that we throw around the phrase “economic anxiety” derisively at times but I think I there’s a ton of truth in it as it pertains specifically to younger generations. As a younger millennial, I have a lot of frustration with what I perceive to be rampant selfishness in the Boomer (and to perhaps a lesser extent) the Gen X generations, as it does feel like many older folks have kicked the ladder behind them.

That said, I’m someone who believes firmly in individual agency and that younger generations (of which I am one) need a kick in the ass of sorts to stop moping about our economic circumstances and actually do something about them. Yes, housing costs, educational costs, and hell the cost of pretty much everything has exploded since Boomers and X’ers were our age. That’s true. But also, there’s never been a better time in our country to participate in the economy and enjoy its fruits. Investing in low cost, passively managed index funds are available to literally anyone who wants them. Sure, we may not see the nuclear explosion of market growth that happens in the 90’s and 2010’s through present day, but the markets only go up over time, and even just mirroring the market has the proven ability to build substantial wealth over time.

I grew up poor. The overwhelming vast majority of my extended family remain poor. But I decided that I wasn’t going to live like that when I had an opportunity to chart my own direction. And I’ve not missed an opportunity to save (even tiny amounts) and invest (even tinier amounts) at all stages of my career over the last ten years: when I was making $20,000, when I was making $60,000, when I was making $120,000, and when I’m making $200,000+. I did it because I have agency and understand that nobody was coming to save me- not my family, not the government, not anyone or anything. So I think that younger generations need to adapt and understand that, yes, everything costs an arm and a leg these days, and yes, our parents and grandparents had it a lot easier economically when houses cost $75,000 and a family of four could thrive on a single income and college cost $1,000 or whatever. But there are so many more opportunities and career paths and options out there that didn’t exist when our parents and grandparents were coming of age. It takes being entrepreneurial, it takes perseverance, it takes being willing to work your way up the ladder, it takes willing to scrap and scrimp and save where you can, but it can absolutely be done.

I guess my overarching thesis is that I have very little patience for younger people complaining instead of doing, and I have even less patience for them expecting the government or politicians to do it for them.

 

[superrific]

This is a fascinating topic and really interesting to think about. I know that we throw around the phrase “economic anxiety” derisively at times but I think I there’s a ton of truth in it as it pertains specifically to younger generations. As a younger millennial, I have a lot of frustration with what I perceive to be rampant selfishness in the Boomer (and to perhaps a lesser extent) the Gen X generations, as it does feel like many older folks have kicked the ladder behind them.

I haven't read the whole post yet, but absolutely there are people with "economic anxiety." I just don't think many of them voted for Trump on that basis.

 

[Callatoroy]

I was looking at the historical DJIA chart today and it brought one of the main frustrations/resentments of young Americans to mind. The numbers below are inflation adjusted.

If you're an early Baby Boomer (b. 1946), the Dow rose 209% from your birth to your 45th birthday, when you entered your prime earning years. It then rose 251% from your 45th birthday to your 65th birthday, when you began to exit your prime earning years.

If you're a late Baby Boomer (b. 1964), the Dow rose 144% from your birth to your 45th birthday and 338% from your 45th birthday to your 65th birthday.

If you're an early Gen Xer (b. 1965), the Dow rose 159% from your birth to your 45th birthday (you're obviously not to your 65th birthday yet).

Now get this. If you're a late Gen Xer (b. 1980), the Dow rose 1,260% from your birth to your 44th birthday!

I don't think the math is meaningful for Millennials yet, but expect it would be most comparable to the late Gen Xers.

So, there are millions of Americans younger than 45 who have watched the market absolutely skyrocket during years where they've been trying to get their careers started and have been spending most of their free dollars on student loans, starter homes, babies, daycare, etc. They haven't been able to participate in those astronomical gains much at all. But you know who has? Their parents. Their bosses. Their aunts and uncles. 95% of the people sitting in Congress. And now, the market is priced so high that they (probably justifiably) have little expectation they'll benefit from anything remotely resembling the run-up of the last 45 years.

This is probably common knowledge to most here, but it's interesting to me to see the numbers laid out like that. It helps me understand some of the frustration of younger adults and how that's actually exacerbated by the strong market, not alleviated by it.

Source for numbers: Dow Jones - DJIA - 100 Year Historical Chart

There is no reason to believe S&P index funds won't continue to perform in the future as they have in the past. New markets emerge and drive growth. Hell, I bought into a company a few years ago that was showing promise. Nvidia. I got lucky but the point is AI is still an emerging market and there will always be others

 

[gregh1]

I was born in 1965 and I can assure you that I haven't celebrated my 65th birthday yet...

lawtig02 just gave us his predictions for the next 5 yrs of your investing life.

 

[ChapelHillSooner]

I was looking at the historical DJIA chart today and it brought one of the main frustrations/resentments of young Americans to mind. The numbers below are inflation adjusted.

If you're an early Baby Boomer (b. 1946), the Dow rose 209% from your birth to your 45th birthday, when you entered your prime earning years. It then rose 251% from your 45th birthday to your 65th birthday, when you began to exit your prime earning years.

If you're a late Baby Boomer (b. 1964), the Dow rose 144% from your birth to your 45th birthday and 338% from your 45th birthday to your 65th birthday.

If you're an early Gen Xer (b. 1965), the Dow rose 159% from your birth to your 45th birthday (you're obviously not to your 65th birthday yet).

Now get this. If you're a late Gen Xer (b. 1980), the Dow rose 1,260% from your birth to your 44th birthday!

I don't think the math is meaningful for Millennials yet, but expect it would be most comparable to the late Gen Xers.

So, there are millions of Americans younger than 45 who have watched the market absolutely skyrocket during years where they've been trying to get their careers started and have been spending most of their free dollars on student loans, starter homes, babies, daycare, etc. They haven't been able to participate in those astronomical gains much at all. But you know who has? Their parents. Their bosses. Their aunts and uncles. 95% of the people sitting in Congress. And now, the market is priced so high that they (probably justifiably) have little expectation they'll benefit from anything remotely resembling the run-up of the last 45 years.

This is probably common knowledge to most here, but it's interesting to me to see the numbers laid out like that. It helps me understand some of the frustration of younger adults and how that's actually exacerbated by the strong market, not alleviated by it.

Source for numbers: Dow Jones - DJIA - 100 Year Historical Chart

To some extent I felt the same way. I was born in 1971 and got my first real job in 1994. By the time the 1990’s boom ended, I maybe had $30k in retirement savings. Then came the dot com bust and later the Great Recession - well over a decade where the markets were just trying to regain what was lost.

On the good side of that, I came out a lot better because of the dot com bust as I was putting money in my 401k at the lower prices. But I certainly would have been a lot better off had I been 5 years older and really been able to benefit from the 1990’s gains.

One unrelated point, those indexes don’t usually consider reinvested dividends so gains are normally higher than what you see in the charts assuming you are reinvesting the dividends.

 

[4thgenheel]

There is no reason to believe S&P index funds won't continue to perform in the future as they have in the past. New markets emerge and drive growth. Hell, I bought into a company a few years ago that was showing promise. Nvidia. I got lucky but the point is AI is still an emerging market and there will always be others

a few years ago?

nvidia has been a strong buy for like 2 decades, lmao.

 

[UNCatTech]

I think I noted that didn’t I?

That you did.

 

[lawtig02]

That you did.

Well, I do think I botched the (very simple) math on the years, which is why I’m a lawyer and not an architect! I’ll fix that tomorrow.

 

[UNCatTech]

This is a fascinating topic and really interesting to think about. I know that we throw around the phrase “economic anxiety” derisively at times but I think I there’s a ton of truth in it as it pertains specifically to younger generations. As a younger millennial, I have a lot of frustration with what I perceive to be rampant selfishness in the Boomer (and to perhaps a lesser extent) the Gen X generations, as it does feel like many older folks have kicked the ladder behind them.

That said, I’m someone who believes firmly in individual agency and that younger generations (of which I am one) need a kick in the ass of sorts to stop moping about our economic circumstances and actually do something about them. Yes, housing costs, educational costs, and hell the cost of pretty much everything has exploded since Boomers and X’ers were our age. That’s true. But also, there’s never been a better time in our country to participate in the economy and enjoy its fruits. Investing in low cost, passively managed index funds are available to literally anyone who wants them. Sure, we may not see the nuclear explosion of market growth that happens in the 90’s and 2010’s through present day, but the markets only go up over time, and even just mirroring the market has the proven ability to build substantial wealth over time.

I grew up poor. The overwhelming vast majority of my extended family remain poor. But I decided that I wasn’t going to live like that when I had an opportunity to chart my own direction. And I’ve not missed an opportunity to save (even tiny amounts) and invest (even tinier amounts) at all stages of my career over the last ten years: when I was making $20,000, when I was making $60,000, when I was making $120,000, and when I’m making $200,000+. I did it because I have agency and understand that nobody was coming to save me- not my family, not the government, not anyone or anything. So I think that younger generations need to adapt and understand that, yes, everything costs an arm and a leg these days, and yes, our parents and grandparents had it a lot easier economically when houses cost $75,000 and a family of four could thrive on a single income and college cost $1,000 or whatever. But there are so many more opportunities and career paths and options out there that didn’t exist when our parents and grandparents were coming of age. It takes being entrepreneurial, it takes perseverance, it takes being willing to work your way up the ladder, it takes willing to scrap and scrimp and save where you can, but it can absolutely be done.

I guess my overarching thesis is that I have very little patience for younger people complaining instead of doing, and I have even less patience for them expecting the government or politicians to do it for them.

I can relate to all of this. I recall times when my broke ass brother went on vacation when I told my family that we couldn't afford it. I have been putting away something for the last 34 years. Had I any real education in this area I would have started 10 years earlier.

But, I do understand that there are so many things involved in finances. I see my kids and what they are facing that I didn't have to. I purchased my first house when I was 25 for nothing down and after a refi had a good rate of 8%. The payment was $900 a month for a nice house 2400 sq ft. My oldest daughter paid 2.5 times what I paid for that house for her house, which is 1000 sq ft. So I do understand. But my kids know, I've talked to them about these things, something no one ever did for me.

Also, I've been listening to Ramit Sethi for the last 6-8 weeks. The people he interviews are amazing to think about. It shows how little financial education so many have and how ones life and struggles clearly factor into how they handle money. And I'm not talking only about people struggling. He's had interviews with people with income over $500K a year that had little quality of life and didn't know anything about why they are the way they are with money.

The latest one is a couple in their mid 40's with basically nothing living pay check to pay check. It's sort of heart breaking to listen to them. I don't think it's simply that they didn't have the agency, it's their financial education that failed them.

And our country is set up to help people fail financially, just look at the money flowing through the credit card industry, the money lost to scams each year, etc.

 

[CFordUNC]

I can relate to all of this. I recall times when my broke ass brother went on vacation when I told my family that we couldn't afford it. I have been putting away something for the last 34 years. Had I any real education in this area I would have started 10 years earlier.

But, I do understand that there are so many things involved in finances. I see my kids and what they are facing that I didn't have to. I purchased my first house when I was 25 for nothing down and after a refi had a good rate of 8%. The payment was $900 a month for a nice house 2400 sq ft. My oldest daughter paid 2.5 times what I paid for that house for her house, which is 1000 sq ft. So I do understand. But my kids know, I've talked to them about these things, something no one ever did for me.

Also, I've been listening to Ramit Sethi for the last 6-8 weeks. The people he interviews are amazing to think about. It shows how little financial education so many have and how ones life and struggles clearly factor into how they handle money. And I'm not talking only about people struggling. He's had interviews with people with income over $500K a year that had little quality of life and didn't know anything about why they are the way they are with money.

The latest one is a couple in their mid 40's with basically nothing living pay check to pay check. It's sort of heart breaking to listen to them. I don't think it's simply that they didn't have the agency, it's their financial education that failed them.

And our country is set up to help people fail financially, just look at the money flowing through the credit card industry, the money lost to scams each year, etc.

Dude yes! I absolutely love Ramit's podcast.

 

[UNCatTech]

Dude yes! I absolutely love Ramit's podcast.

He's helped me to figure out some things.

I've always been a math person, so some money things just make sense. But I've picked up on some of the psychology of why I am the way I am concerning money.

 

[hedge]

I think I noted that didn’t I?

Yes, but those born in 1964 aren't 65 yet either...

 

[CFordUNC]

He's helped me to figure out some things.

I've always been a math person, so some money things just make sense. But I've picked up on some of the psychology of why I am the way I am concerning money.

Oh man, I knew you were my kind of guy! I am a huge nerd about this stuff. If you haven’t heard of it already, you would absolutely love the book “The Psychology of Money” by Morgan Housel.

 

[Callatoroy]

a few years ago?

nvidia has been a strong buy for like 2 decades, lmao.

Nvidia didn't really show much revenue growth until 2016 / 17. It had net losses as recently as 2010. Maybe you are a chip stock junkie but I never invested heavily in chip stocks until 2019. AI was just becoming a thing in the market. The point is that AI is/was an emerging market and there will always be emerging markets. The beauty of index funds is historical performance provides a window into the future and sector funds provide an avenue of growth despite the broader market's performance. I don't necessarily buy the notion that younger investors are priced out of the market, although I get the point lawtig is making.

 

[lawtig02]

Nvidia didn't really show much revenue growth until 2016 / 17. It had net losses as recently as 2010. Maybe you are a chip stock junkie but I never invested heavily in chip stocks until 2019. AI was just becoming a thing in the market. The point is that AI is/was an emerging market and there will always be emerging markets. The beauty of index funds is historical performance provides a window into the future and sector funds provide an avenue of growth despite the broader market's performance. I don't necessarily buy the notion that younger investors are priced out of the market, although I get the point lawtig is making.

I’m not sure they are either, but a lot of them think they are, and it’s understandable why when you look at the numbers.

 

[lawtig02]

Yes, but those born in 1964 aren't 65 yet either...

Yeah I botched that. I’d like to think it’s because I’m pretending it’s already 2029, but it’s really just that I’m bad with numbers and was rushing my post. I’ll fix it in the morning.