HUGE Stock Market impact of Teenage Consumer Spending Habits

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HUGE Stock Market impact of Teenage Consumer Spending Habits

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……..

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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.

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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.

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• 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.
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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…..

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  • Ryan

    Hello Rachel,

    I was wondering if you have any Book suggestions for someone looking to get into the stock market?

    • http://www.FoxonStocks.com Fox on Stocks

      Hi Ryan,
      There are so many amazing books on the stock market. The one I recommend for Beginners is called Understanding Wall Street, by Jeffrey B. little and Lucien Rhodes. (This is not a tip, nor do I receive anything for this referral….:)) I recommend it because it explains the very basics a person should know before they invest or trade. For people who like to learn via video, watch the Fox on Stocks 8CORE videos (see Investing Videos page on this Fox on Stocks site). You will learn the basics and will go from Zero to Opening your OwnTrading/Investing Account. Many Happy Returns, Rachel

  • Kenneth

    Hey good points and thanks for the heads up! This article has an dynamic edge although i am going to expand the range to the woman and the children will influence where the bread is spent. Keep them quiet and keep them happy. What I look for in all my investment/trade decisions is gREeN ThE cOloR Of MoNeY! Points taken kids change quickly and today’s popular product may become tomorrow’s trash. Think outside the box. With that I am going to take MSFT symbol and proliferate to NOK. The windows phone had a 51% market share increase from 3.7& to 5.6% in one year. So a move to 11.2% will be another 100% increase from here. Remember MSFT was late to the game in the internet browser and put Netscape out of business. Not claiming a toppling of the giant AAPL but with NOK’s camera technology and the xbox factor I to see the partnership a strong 3rd tier player. In the end a smartphone is a handheld computer with icons that lead to an application. For me the symmetrical tiles on the windows phone appears more child friendly. And remember the first thing we learn is colors, boxes and pics of people, places and things. Jon Najarian was calling for NOK to $9 pointing out the fact there is only 11% institutional ownership because of the below $5 stock. Once it gets over $5 there is a 80% ownership for stocks of similiar kind. I will point out that the dividend cut will go to the balance sheet in way of stock appreciation. I just believe a Bill Gates MSFT + Finland’s NOK is too big and powerful to ignore. NOK to $9 – $12 is like AAPL going to $1200 – $1600. I am willing to TAKE THE BET as I believe AAPL’s troubles are not going away overnight. The market rewards turnarounds and it rewards growth. And hey you might be right some of the teen generation might “dare to be different” and just by a windows phone. Be cool and enjoy ;-)

  • kenneth

    here is a presentation by one of the mygenindex stocks and their strategy with windows phone. it confirms not only the consumers fast changing tastes but what the corporations are faced with today. what used to takes years to design they must be able to more quickly adapt and change to.. http://wmpoweruser.com/albert-shum-windows-phone-design-studio-general-manager-talks-about-rebranding-microsoft-video/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+WmPowerUser+(WMPowerUser)

  • kenneth

    the mygen index and the my CMG experience.. in 2006 I flew back home to d.c. to visit my best friend who is always up on the latest new things.. so he raves and takes me to chipotle’s mexican grill who in the beginning had a a partnership with fast food giant mcdonalds.. so I buy 1000 shares @$40 and watch it range trade $40 – $50 for a year.. it finally breaks out and I sell @$60 and miss the run-up to $155k 12/07.. only to get hammered to $36k 11/08.. the mountain climb to $442k 4/12.. the drop to $233k 10/12 and as of today $360k a 7 year 7 bagger.. how many people would have capitulated in the $155k to $36k fall and missed the $442k run-up Rachel? How do you think you would have played it? believed in the company or played the money, the fear and the euphoria? not so easy some times! but at least we know you have to have a trader’s as well as an asset fundamental analysis working in today’s markets.. another mygen roller coaster ride NFLX $304 7/11, $62 11/11, $133 2/12, $53 9/12 and as of today $214.. what to you call this Rachel? I call it Wild Life and you better be prepared ;-)

  • CMM

    Check out “The Stock Market Game” High School Division Competition. I was a Judge of this real world Wall Street SIFMA Competition. The highly competitive stock market competition involves Financial Analyst reviews of individual stocks, where the High School Students compete for exclusive prizes from Apple, Wall Street Trips and Winner Titles that can be influential in the College Admissions process. The Game is perfect for Fans of The Hunger Games Films.