Why the MyGenLoves index is important to Stock Traders and Investors
Teens love to shop…. and when we shop, we shop.
“Teens have big purchasing power in a household. Their willingness to spend money and obtain the latest items makes them one of the largest spending demographics of consumer goods,” according to Lindsay Woolman in her article, “Teen Consumer Spending Habits.” And, according to Packaged Facts, online forecaster for spending research, the large number of teens plus the fact that teens make many buying decisions for households translates into “making teens one of the most lucrative U.S. consumer markets ever.”
How much money do teens spend on consumer goods? Billions and billions……..
It is projected that the approximately 30+ million teens across the U.S. will spend between $200 billion – $300 billion. That’s just in the U.S. alone. MyGen (short for my generation) seems to have this global connection with one another, probably because of Twitter, Instagram, Facebook, and YouTube. We feel like we’re connected, like we know each other, and we kind of do. That means if teens in the U.S. like Michael Kors, Apple, and Louis Vuitton, likely so do teens in Spain, Sweden, and Singapore. Translate that into worldwide buying power of teens and you go from Billions to Mega-Trillions in Teen Spending Power.
What is the HUGE Stock Market impact of Teenage Consumer Spending Habits? The huge impact is this: What teens buy (or don’t buy) can make or break a company and also its stock.
Important points about Teenage Consumer Spending Habits:
• Teens change quickly, but at the same time, exhibit deep brand loyalty.
• Today’s most popular product may become tomorrow’s trash.
• Teens are brand conscious and are greatly influenced by friend’s opinions.
• Teens make many, if not most, household spending decisions.
In April of 2013, Piper Jaffray conducted research on the spending habits of over 5,000 teens, with an average age of 16.3 years old, from 37 states. Here are very interesting results from the “Taking Stock with Teens” market survey conducted by Piper Jaffray.
• Fashion = 40% of a teen’s budget.
• Fashion trends for 2013 – Classic, preppy, fashion athletic wear
• Approximately 79% of females and 76% of males shop online
• Streaming accounts for 46% of movie rentals
• Facebook is becoming less popular, with 33% citing Facebook as the most important social media outlet. This is down from 42%, six months prior
• Twitter and Instagram are becoming more popular and all three (FB, Twitter, Instagram) are important to teen buying decisions, with 53% of females and 52% of males indicating that social media impacts their purchases
• 91% of teens said they will purchase a Smartphone for their next wireless device. Their next Smartphone purchase will be:
Apple – chosen by 60% of those surveyed
Android – chosen by 21% of those surveyed
• iPhone ownership is increasing among teens, with 48% – up from 40% six months prior
• 51% said they own an Apple iPad, up from 44% six months prior
• Teens represent more than one-third to one-half of all gaming purchases
• For food options, organic is gaining ground quickly going from 33% to 42% in two years.
• For dining out, 57% of teens prefer limited service restaurants.
• In overall dining out, 41% selected quick service, 36% voted casual dining, and 15% liked fast casual.
• Best Loved restaurants from this teen survey:
American food: Cheesecake Factory
Italian food: Olive Garden
Mexican food: Chipotle
This all leads to the importance of the MyGenLoves index, now fully completed with 21 stocks in a price-weighted-average-calculated index. The original 14 were selected before I did this research on Teen Buying Habits, which is pretty cool because some of my picks were clearly uncovered and highlighted as highly important to teens in all this research, and I would have been a fool not to include them….. Chipotle, Facebook, (owner of the lovely and talented Instagram) Apple, Pandora, Netflix, and Activision.
I do have to admit to a flub on my part when putting together the original 14-stock MyGenLoves index. In my rush and excitement, I mis-read BEAT to be the ticker for BEATS by Dre.
Huh-hummm…….Beats by Dre is a private company, and the ticker symbol BEAT is for a public company called CardioNet, a cardiac device-making company, you know, the BEAT in heart beat. Blush. I removed BEAT from the MyGenLoves index.
The number of stocks was reduced to 13, to which I added a healthy eight new stocks to finalize the index at 21 stocks. I would like there to be more than 21 stocks. People sometimes complain that there are only 30 stocks in the Dow and say that so few does not provide an accurate indicator of the entire economy. Maybe so. That’s another blog for another day.
Since the purpose of the MyGenLoves index is to track the performance of stocks that are hot and important to teens, and it is supposed to measure a very specific niche to alert stock traders and investors that teen buying habits may be changing, maybe the number of stocks is sufficient. I do not want to pick stocks just to increase the number. Each choice was made carefully and truthfully, and belongs because teens I know and teens around the world love and buy the products of these companies. Like the Dow, stocks will be removed and others added.
I give you the complete list of 21 stocks in the MyGenLoves index. Check out the very cool graph of day-to-day performance since early 2013. Drum roll, please. Ba-ba-ba-ba-ba-ba-ba-ba…..