"Buy the Recession, Millennials Will Keep the Bull Market Alive for Another Decade"

Recession? No problem. It doesn't matter says Federated Investors portfolio manager Steve Chiavarone. "Ten years from now, when the bull market is still intact, we’ll have the avocado-toast set to thank for it," says Chiavarone.

In a recent interview with CNBC, Chiavarone says there’s at least a decade left in this rally due to a demographic tailwind that’s soon to hit.

“Millennials are entering the workforce, but their wages are going to be under pressure their whole career,” he explained to CNBC’s “Trading Nation” on Friday. “They won’t make enough money to pay down their debt, fund their life and fund retirement where there is no pension. So, they’re going to need equities.”Furthermore, Chiavarone says bull markets typically last 15 to 20 years, and, by his calculations, this one hasn’t even topped 5 years yet.“The risk is not being in this market,” says Chiavarone, who helps run the Federated Global Allocation Fund FSTBX.The firm’s current price target is for 2,750 on the S&P SPX, by the end of next year and 3,000 for 2019.“We are probably frankly low on both of them,” he said. “Tax reform could push up the markets.” That’s not to say there won’t be some pain along the way, specifically the potential for a recession in 2020 and 2021, according to Chiavarone.What’s an investor to do in that case? “Buy the recession,” he said.

Millennials who don't have any money, but do have tons of student debt, will be investing in stocks, even if they lose their job in a recession, because they are worried about their retirement.


Someone remind me of this post in a few years.

Mike "Mish" Shedlock

As for stocks, money-supply growth (in the U.S.) is falling rapidly and has been for nearly a year now ... BoJ money-printing has pulled back somewhat as a result of their new 'yield-targeting' strategy ... and the ECB is about to cut their QE by half. Oh, and rates are about to rise again in December. In other words, the juice that has kept this bubble aloft is draining away. The effect of this is lagged ... so the clock is ticking.

I fully believe Bitcoin to be in a bubble that dwarfs the tulip bulb mania. A week ago Bitcoin was up over 800% in 12 months. That's incredible; however, since its inception in 2010 at $0.05 Bitcoin is up ($7800 / $0.05) * 100% = 15600000%. Millennials who have spare change to "invest" in Bitcoin certainly won't have anything for buying stocks when the bubble pops.

The beautiful thing about Bitcoin is that it is a truly pure bubble. There is no underlying physical thing of value at all - not even a tulip bulb. The idea that Bitcoin is somehow a "currency" is just a fig leaf hiding its complete nakedness. The only difference between Bitcoin and any other investment is that you can exchange it for goods directly instead of having the (very slight) inconvenience of converting to $ before spending it.

They are using the money they don't have to buy stocks? Makes sense to me