Spending and power undergo a generational shift

Gen Y lifestyles and values are beginning to redefine a world long-dominated by baby boomers.

Seventy eight million baby boomers are entering their retirement years just as 86 million Gen Y’ers, now mostly in their 20s and 30s, are hitting their greatest consumption years. This is creating a barbell effect on the economy with boomers on one end and Gen Y on the other.

Everything from investing to politics and pop culture is about to be redefined, said Michael Williams of Truvestments at a recent private equity conference in Santa Monica, California. The barbell is beginning to tilt to the soon heavy Gen Y side.

“Think of these bubbles like a group of people moving through life opening up doors,” he offered to investors. “Each door they open is economic activity of some kind, from renting an apartment to buying a car to consuming food.” Williams argues that long term investing into these bubbles is a great strategy. “Down markets only define about 7% of the total time these bubbles run through our economy, making it a great bet to invest whenever a bubble comes of age.”

Boomers ought not be dismissed just yet, though. An investor keen on monetizing their spending can summarize the doors they are opening now very simply: They are trying hard not to die. Their appetite for pharmaceuticals and an active lifestyles is unique to their generation as they move into their 60s and 70s.

Gen Y’ers, by contrast, slightly delayed because of either student debt or struggles to find stable employment in their 20s, have now arrived and are knocking hard on the diaper, housing, food and clothing doors the boomers have aged past.

But there’s more than just an investment strategy to pay attention to, of course. Gen Y’s values and stage of life will define our economy as much as they’ll define politics and pop culture due to their sheer size.

Unlike their boomer parents, Gen Y might be defined by how indefinable they are because of the diversity of their life experiences. Yes, some are dubbed snowflakes by boomers; although blaming them for how they were raised and what they’ve been taught in institutions shaped by boomer values seems like misplaced blame. Some are naïve, thinking the American experience is not under constant threat while assuming the world agrees with our values. Some are confused, wondering what happened to the traditional values they grew up on that seemed to work pretty well back home but which seem out of touch with many of their peers as they open new doors.

They are connected, though. Powerful computers in the hands of 8 billion people around the world likely explains why today only five countries are not experiencing economic growth. What they do with that reality alone might define their impact like the doors the boomers opened for the past 40 years.

Tom Hoban is CEO of The Coast Group of Companies. Contact him at 425-339-3638 or tomhoban@coastmgt.com or visit www.coastmgt.com. Twitter: @Tom_P_Hoban.

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