Dear fellow investors,

My generation, millennials (those born from 1980 to 2000), have been noted for much of the last 10 years to be a risk averse group. As an example, I ran across a 2014 clip from The Wall Street Journal titled, “Chart of the Day: Millennials Are Really Risk Averse.” The article used research from the Brookings Institution to explain how millennials were parking a much larger portion of their savings in cash (52%) versus all other age groups at (23%). While this was true then, we can’t say that today. John Maynard Keynes’s Animal spirits have arrived among my peers in a powerful way.

Anecdotally, myself and our team at Smead Capital Management have run into countless situations over the last six months that verify this. It leaves investors like us with an audacious feeling from what we just witnessed. The most recent example was a conversation with a person at my daughter’s little league game. He asked me what I did for a living, I mentioned that my company works with stock market investors and that we manage mutual funds. Immediately, he began to tell me that he rolled money over to an IRA at an online brokerage firm last spring and bought a very speculative stock. As though this wasn’t enough, he also told me that he made a sum of $30,000 from this. Here’s how we know the animal spirits are present. I never asked him for what he’s done in his investing and how much he made. He felt compelled to tell me this all on his own. Again, animal spirits.

This anecdotal experience is manifesting itself across the USA. To the right is a chart that we got from Cypress Capital that shows equities as a percentage of total financial assets since 1952.

We are at the highest level of equity ownership among US households! The last time we were at/near this level was 1999. The only other period that produced an elevated peak was 1969. In our vernacular, these two other eras led to 10 years of stock market failure.

Learn more about this firm