Millennials Got Slaughtered With These Post-Trump Bets

December 19, 2016 11:19am NYSE:JNUG NYSE:NUGT

down plunging prices

After Donald Trump’s surprising election win last month, scores of younger investors made big bets on ETFs that have performed extremely poorly, according to data from Bloomberg and TD Ameritrade.


Like most other investors, Millennials — defined as people born between approximately 1982 and 2004 — assumed gold would rise as a safehaven bet. Instead, gold has been absolutely hammered, and gold miners fell even more. From Bloomberg:

“From triple X leveraged products to Vanguard, Millennials have shown they favor the extremes in terms of their growing ETF usage,” said Bloomberg Intelligence ETF Analyst Eric Balchunas. “However, when it comes to calling the Trump rally, they weren’t alone in getting it wrong — every generation thought gold would rally.”

Two of the most popular post-Trump bets among Millennials were the triple leveraged Direxion Shares Exchange Traded Fund Trust (NYSE:JNUG) and Direxion Shares Exchange Traded Fund Trust (NYSE:NUGT). Those extremely risky funds are down 62% and 55% since election day, respectively.

Not all of Millennials’ bets have been bad, but their overall performance since the election has been downright ugly:

The two other ETFs that have attracted the top-five biggest inflows from millennials after Nov. 8, according to TD Ameritrade data, are the iShares Russell 2000 ETF and Vanguard Total Stock Market ETF.  That takes the average performance of the five ETFs most favored by millennials since the election to minus 27 percent.

UVXY US Equity (ProShares Ultra  2016-12-19 08-17-16
Source: Bloomberg

Other bad bets made by Millennials include volatility-based funds that rise when the VIX “fear gauge” jumps. In contrast, market volatility has been extremely low since the election, with stocks trudging relentlessly higher.

Our advice for young investors is very simple: always avoid triple leveraged funds, and stick to the low-cost Vanguard funds. Your portfolio will thank you.


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