The Ultimate Millennial Play!
Now that millennials are the biggest demographic segment, politicians and corporations are taking young voters and investors seriously. We’ve witnessed a massive influx of money – and with it, a major influence shift – coming from millennials in the 2020’s.
And just as political candidates are now courting younger voters, businesses are focusing on what I call “millennial money.” From Beyond Meat to the slew of electric vehicle manufacturers out there, companies are working around the clock to understand and anticipate the millennial mind-set, needs and consumer preferences.
The financial markets are also laser-focused on millennial money. With the advent of low-fee, app-based trading, young investors have been brought into the fold and encouraged to invest in the companies they believe in.
This modern phenomenon – which has been years in the making, but we’ve seen it really come to the fore since March of 2020 – has had a profound impact on the financial markets. Today’s most heavily traded stocks bear little resemblance to the favorites of yesteryear (IBM, General Electric, Ford, etc.).
Taking the place of those legacy companies are businesses that are new to the markets – sometimes introduced through traditional IPO’s, but increasingly through special purpose acquisition companies, or SPAC’s.
SPAC’s eliminate some of the middlemen involved in a conventional IPO, and allow companies to be more efficiently brought to the market through a shell company. The number of SPAC’s has ballooned in the 2020’s, and this has enabled younger, more open-minded investors to take a chance on bold, disruptive businesses.
In response to this, businesses themselves are following the trend and investing in SPAC’s. For instance, Palantir Technologies, a provider of data-analytics software for commercial and government customers, recently expanded its investments in SPAC-introduced companies to more than $300 million.
Palantir is itself a hot item among millennial stock investors. Thus, it’s big news that Palantir is committing so much capital to these relatively new businesses.
As you might expect, at least one of the companies targeted by Palantir is an electric vehicle company. Others include an autonomous aerial vehicle company, a cloud manufacturing platform, a developer of electric vehicle chargers, and an Asian financial-services company.
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This certainly sounds exciting, but it’s not the full story. For one thing, investors of all ages must remember that SPAC investing is a risky business. Just like IPO’s, SPAC-introduced companies sometimes survive and thrive, but sometimes don’t.
In other words, if you’re going to invest in start-up companies, you’d better also have some sort of hedge against excessive risk in your portfolio. And, it appears that Palantir is following that guideline by purchasing a sizable quantity of gold bullion.
An SEC filing reveals that, along with all of those speculative SPAC investments, Palantir also bought $50.7 million worth of 100-ounce gold bars.
“Such purchase will initially be kept in a secure third-party facility located in the northeastern United States and the company is able to take physical possession of the gold bars stored at the facility at any time with reasonable notice,” Palantir stated in the SEC filing.
If Palantir bought all of that gold recently, then they got it at a terrific price. Gold under $2,000 won’t last forever, and it’s as solid a risk hedge as it’s ever been.
Even more than all of those SPAC stocks, gold is and will continue to be the ultimate millennial play. As young investors discover that Palantir is balancing its more speculative investments with gold, they’ll be motivated to learn more about gold’s enduring value.
And with that, they’ll see that billionaires and central banks are loading up on gold in the 2020’s. Hopefully, they’ll take a position in gold before it permanently breaks above $2,000.
Now that millennial investors control such vast amounts of capital, the financial markets can’t go back to the way they were in previous generations.
But that’s not a bad thing at all. If anything, millennial money has the power to promote the growth of fresh, innovative businesses – and to boost the demand for a reliable stand-by like gold.
Chief Editor, CrushTheStreet.com
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