Don’t Trust Any “Investor” under 30

Today’s Investment Generation Gap

Jack Weinberg is an American environmentalist and former New Left activist who’s best known as a leader of the Free Speech Movement (FSM) at the University of California, Berkeley, in the 1960s. He’s been acknowledged as the originator of the catch-cry “don’t trust anyone over 30 (years of age).” Often misattributed to The Beatles and others, Weinberg coined this phrase – which encapsulated the “youth counterculture” of that era – during an interview with The San Francisco Chronicle in November 1964.

At that time, it was certainly insouciant and perhaps conceited. Since then, it’s become deeply ironic and even delusional: in two crucial senses its opposite is now sensible.

Firstly, in the 1960s young environmentalists (in those days, most of them were young), as well as their anti-war, civil and women’s rights and other activist allies, denounced censorship and advocated the free expression of divergent – and particularly of their often unpopular – views. That principle prompted FSM’s formation in 1964-65; it also helped to foment the disturbances which pervaded many American university campuses over the next several years. FSM’s adherents demanded that administrators permit on-campus political activity (which they’d previously banned), abolish faculty loyalty oaths (which had been compulsory in many public institutions), and affirm students’ and academics’ right to unregulated speech.

What have the children of 1960s bequeathed to their descendants? There are, of course, exceptions; but these days in the U.S. and elsewhere, academics and students in general and environmentalists in particular are no longer idealistic and open-minded.

Quite the contrary: they’ve been indoctrinated as gloomily rigid ideologues and blatant hypocrites. Now that their ideas pervade university campuses, they champion the authoritarian “cancel culture” which strives to extinguish debate – and the dispassionate enquiry which underlies it.

Secondly, in the 1960s older people mostly defended traditions and allegedly outmoded institutions; hence they resisted the reforms and emphatically rejected the “revolution” that their supposedly “educated” (that is, indoctrinated) children and grandchildren demanded. Today, however, the young uphold – often zealously – the establishment. As an example, and as I detailed in Never mind DeepSeek: here’s why the AI mania won’t last (3 February 2025), they enthusiastically – and gullibly – parrot the fundamental falsehoods of a generation ago.

Yet reality – and thus truth – eventually prevails. The odds are therefore that disappointment, shock and heavy losses await young “investors” (“speculators” is more apt) and others who succumb to their mantras.

I therefore conclude that you should certainly question, and generally reject, the views of any “investor” under 30 years of age. This article, which analyses four age-based cohorts, substantiates this position.

Let’s Be Clear from the Start

Nothing in this article should be regarded as a criticism of young adults per se. They obviously aren’t innately dumb; equally, oldies certainly aren’t inherently intelligent. Yet it’s undeniable: the young lack experience. This shortcoming, combined with their energy and idealism, often produces impatience and imprudence, and sometimes arrogance.

Hence the young, the Anglo-Irish novelist, playwright and poet, Oscar Wilde, sagely quipped, “are always ready to give to those who are older than themselves the full benefits of their inexperience.” They do, however, possess in abundance what older people increasingly lack: the time to learn and recover from their inevitable mistakes.

“Yes, I know I am young and inexperienced, but it is a fault I am remedying every day,” reposted a 26 year-old William Pitt to an elderly critic shortly after he entered Parliament in 1735. (“Pitt the Elder” later became prime minister and 1^st Earl of Chatham; his son, “Pitt the Younger,” became an MP at 22 and Britain’s youngest-ever PM at just 24.)

As they mature, young people become less unproven. Older people, in contrast, certainly age – but don’t necessarily become wise.

The Temporal Luck of the Draw

One of Leithner & Company’s earliest shareholders, born in Brisbane in 1934 and now deceased, recounted to me on several occasions what a fortunate life he’d led. As a child in a middle-class family whose breadwinner remained employed throughout the 1930s, he’d been protected from the ravages of the Great Depression. As an adolescent far from the fighting, he also avoided the horrors of the Second World War; and as a young man he was too young – barely – for the Korean War.

He was, however, perfectly placed to participate in and benefit from the long post-war economic boom. In particular, his studious inclination and the government’s policies dovetailed: not only did the Commonwealth finance his tertiary education (he was the first in his family and one of the few in his high school to attend university); its civil service and universities provided sinecures, good salaries (including defined-benefit superannuation) and steady advancement. From his mid-20s to his mid-30s, marrying, starting a family and buying a home thus imposed little strain and no hardship.

Aged in his late-30s and early-40s during the late-1960s and early-1970s, he was too old for conscription to Vietnam; and given his secure positions in academia and the bureaucracy, the inflation, recessions and unemployment of the 1970s and 1980s were no more than headlines and minor inconveniences. So were the retrenchments of the 1990s. By the closing years of the century, given the balance of his superannuation plus earlier inheritances from his wife’s parents, he could easily afford what they never could: to retire on a good and secure pension, enjoy his hobbies and roam the globe. And for the next 20 or so years, he did.

Yet he never forgot or underestimated his sheer good luck. On several occasions he mused to me that, had he been born just a few years earlier or later, he wouldn’t have been nearly so fortunate: if war didn’t take his life, economic vicissitudes might have blighted it.

When You Come of Age – and the Investment Lessons You Unconsciously Absorb

“All of us,” wrote Morgan Housel in The Psychology of Money: Timeless Lessons on Wealth, Greed, and Happiness (Harriman House, 2020), “go through life anchored to a set of views (about economics, finance and investment, and risk and reward) that vary wildly from person to person. What seems crazy to you might make sense to me.” 

“The person who grew up in poverty,” for example, “thinks about risk and reward in ways the child of (well-to-do parents) cannot fathom … The person who grew up when inflation was high experienced something the person who grew up with stable prices (didn’t, … and) the Australian who hasn’t seen a recession in 30 years has experienced something no American ever has.”

Housel is hardly the first to state a related and crucial point: “people from different generations … learn very different lessons.”

Events and experiences – particularly those which occur during adolescence and early adulthood – subtly but fundamentally and permanently affect individuals’ outlooks – and attitudes towards risk. Ulrike Malmendier and Stefan Nagel (“Depression Babies: Do Macroeconomic Experiences Affect Risk-Taking?” NBER Working Papers 14813, National Bureau of Economic Research, 2009), elaborate: “differences in individuals’ experiences of macro-economic shocks affect long-term risk attitudes.” For my purposes, three of their findings are most relevant:

1. If during your late adolescence and early adulthood stocks generated high returns, then subsequently your appetite for risk will tend to be relatively strong – and you’ll invest more in stocks and less in bonds.
2. Conversely, if as a young adult stocks generate weak returns or losses, then your tolerance of risk will be relatively low and later in life you’ll invest less in stocks.
3. If you entered adulthood when inflation was low (high), and bonds’ returns were high (low), then later in life you’ll tend to invest relatively more (less) in bonds.

If, for example, you were 75 years of age on 31 December then you were 18 in 1967 – and, assuming that adulthood occurs at 18-30 years of age, as an investor you’ll weight particularly heavily your experiences during the years 1967-1979. If you turned 30 last year, you were 18 in 2012 and your experiences in 2012-2024 were formative.

Whether specifically as an investor or generally as a person, crucial aspects of your behaviour and outlook depend upon your experiences during adolescence and early adulthood. “Not intelligence or education,” Housel emphasises, “just the dumb luck of when you were born.”

Ten Events That Have Affected Investors’ Perceptions

What major experiences during their formative years might affect today’s investors’ perceptions of risk? If you were 75 at the start of the year and have been following major economic and financial developments since you were 18, you’ve experienced:

1. The recession of December 1969-November 1970 and associated bear market (for example, the bursting of the “Poseidon Bubble” in Australia);
2. The high inflation and oil crisis which triggered the recession of November 1973-March 1975 and associated bear market;
3. Fed chairman Paul Volker, whom another Democrat, Jimmy Carter, appointed, who lifted rates of interest to unprecedented highs and triggered recessions in January-June 1980 and July 1981-November 1982 in order to vanquish consumer price inflation;
4. The oil crisis and bear market of the early-1980s;
5. The Crash of 1987;
6. The interventionist and increasingly extreme monetary policies which Volker’s successor, Alan Greenspan – a George HW Bush appointee and supposedly a free-market Republican – pursued. In order to avoid recessions, Greenspan and his successors permanently loosened financial conditions and thereby inflated ever bigger and more encompassing asset price bubbles;
7. The recession of July 1990-March 1991;
8. The Dot Com bubble and crash of the late-1990s and early-2000s, and consequent recession from March-November 2001;
9. The American residential real estate bubble and crash (that is, Global Financial Crisis) and recession of December 2007-June 2009;
10. The COVID-19 Crisis of 2020 and governments’ panicked and draconian responses. These combined repression from the playbook of the Chinese Communist Party (“mask mandates,” “lockdowns,” etc.), the continuation and intensification of extreme monetary policy – including the suppression of rates to unprecedented lows – and the escalation of extreme fiscal policies.

If you were 60 years of age in December 2024, you were 18 in 1982. You therefore experienced or likely recall items 4-10, but not 1 and perhaps not 2-3. If you were 45 last year, you were 18 in 1997; therefore, it’s likely that you experienced only items 8-10. 

If you turned 30 last year, then you were 18 in 2012. Your experience thus excludes items 1-9. What you’ve experienced – and regard as “normal” – is limited to some of history’s most extreme fiscal and monetary policies, and correspondingly inflated stock market valuations.

Results

Consumer Price Inflation

What’s a “normal” rate of consumer price inflation? One answer is its long-term rate, which I define as the Consumer Price Index’s (CPI’s) ten-year CAGR. If Morgan Housel, Ulrike Malmendier and Stefan Nagel are correct, “normal” is subjective: it depends among other things upon the long-term rate which prevailed during your late adolescence and early adulthood.

For four cohorts – those who were 30, 45, 60 and 75 years of age on 31 December – Figure 1 plots American CPI’s ten-year CAGR prevailing each month when they were 18-30 years old. If you’re now 30, you’ve experienced very low and stable long-term inflation: from your late-teens to your mid-20s, it fell from ca. 2.5% to 1.5% per year, and since your mid-20s it’s accelerated to almost 3%. If you’re now 45, your experience is broadly similar: from your late-teens to your mid-20s, inflation’s ten-year CAGR fell from 3.8% to 1.5%; from your mid-20s until you turned 30, it rebounded to almost 3% per year.

Figure 1: Long-Term Rates of U.S. Consumer Price Inflation, Four Age Cohorts, 1967-2024

If you turned 60 last year, on the other hand, your experience differs greatly from those who’re now 75 – and the experiences of both older cohorts differ fundamentally from those of the younger cohorts.

If you’re 60, then between the ages of 18 and 30 you experienced a long-term rate of inflation which fell continuously and cumulatively massively: from almost 9% when you were 18 to 3.8% when you turned 30. Inflation, in other words, decelerated from a very high to a moderately high (by the standards of the younger cohorts) level. If you’re now 75, on the other hand, you also experienced unstable long-term inflation but in an opposite form: it rose almost continuously, from a very low level (less than 2% per year when you were 18) to a high one (7% per year when you were 30).

Interest Rates

What’s a “normal” rate? One answer is its long-term rate, which I define as the yield of the ten-year U.S. Treasury bond. Like consumer price inflation, so rates of interest: what’s “normal” is subjective.

If you’re now 30 years of age, until recently you’ve experienced extremely low and comparatively stable rates: from when you were 18 until you were 26, the Treasury bond’s yield fluctuated around 2% (Figure 2). It then plunged to an all-time low (0.62%), and since you were 28 it’s exceeded 4%. If you’re now 45, you experienced higher but nonetheless relatively low rates: yields fell from ca. 6.5% when you were 18 to 4% when you were 24; until you were 30, they fluctuated around this level.

Figure 2: Yield, Ten-Year U.S. Treasury Bond, Four Age Cohorts, 1967-2024

As with consumer price inflation, so too rates of interest: if you’re 60 years of age your personal experience differs greatly from those who’re 75 – and the experiences of both older cohorts differ fundamentally from those of the younger cohorts.

If you’re now 60, then between the ages of 18 and 30 you experienced long-term interest rates that fell continuously and cumulatively massively: from extremely high (more than 14%) when you were 18 to moderately high (7.25%) when you were 30. If you’re 75, on the other hand, you’ve also experienced unstable rates, but again in the opposite direction: they rose almost continuously, and from a moderate level (4.5% when you were 18) to a very high one (9% when you were 30).

Stocks’ and Bonds’ Returns

What rate of “real” (that is, adjusted for the Consumer Price Index) return is it reasonable to expect stocks to generate? I’ll define the return (this and all subsequent returns are CPI-adjusted) of equities as the total of capital growth and reinvested dividends (expressed as a CAGR from a given starting point) per $1 invested over a given interval in the S&P 500 Index. A “reasonable” return is subjective: it depends, among other things, upon those which prevailed when you were 18-30 years of age.

If you’re now 30 years of age, over the past 12 years you’ve experienced a consistently very high rate of return: each $1 which you invested in the Index when you were 18 (dividends reinvested, and ignoring taxes and costs of transactions) has grown almost without interruption – except during the COVID-19 crisis –to $4.20 (Figure 3). That’s a CAGR of 12.7% per year. If you’re now 60, between the ages of 18 and 30 you did almost as well: each $1 invested in the Index, dividends reinvested, grew to $3.73 when you were 30. That’s a CAGR of 11.6% per year.

Figure 3: Total CPI-Adjusted Return per $1 Invested, S&P 500 Index, Four Age Cohorts, 1967-2024

If Housel, Malmendier and Nagel are correct, then, given the experiences during their formative years, these two cohorts will erroneously infer that stocks reliably – indeed, invariably – generate strong long-term returns.

If you’re now 45, on the other hand, when you were 18-30 you experienced relatively poor results: each $1 invested in the S&P 500 when you were 18 grew to just $1.34 over the next 12 years. That’s a CAGR of 2.4% per year. From this experience during your formative years you’d conclude that stocks can make mediocre long-term investments.

And if you’re 75, you experienced extremely poor results: each $1 invested when you were 18 shrank to $0.89 when you were 30. That’s a CAGR of -0.9% per year. You thereby learnt a lesson that’s unthinkable to today’s 30- and 45-year-olds: stocks can generate long-term losses.

What rate of return is it reasonable to expect from long-term, “risk-free” bonds? I’ll define their return as the total (expressed as a CAGR from a given starting point) of capital growth and payments of interest per $1 invested over a given interval in ten-year U.S. Treasuries. Again, I’ll ignore taxes and costs of transactions.

If you’re 60 years of age, in your formative years you experienced a very high and almost uninterrupted rate of return: each $1 which you invested in ten-year Treasuries when you were 18 grew to $2.96when you were 30 (Figure 4). That’s a CAGR of 12.9% per year – higher than the CAGR you received from the S&P 500. If you’re now 45, you didn’t do as well: each $1 invested in ten-year Treasuries, interest reinvested, grew to $1.70 when you were 30. That’s a CAGR of 5.2% per year.

Figure 4: Total Return per $1 Invested, Ten-Year U.S. Treasury Bonds, CPI-Adjusted Four Age Cohorts, 1967-2024

If you’re now 30, on the other hand, you’ve experienced a loss: each $1 invested in ten-year Treasuries when you were 18 shrank to $0.80 when you were 30. That’s a CAGR of -1.8% per year. And if you’re 75, you experienced an even bigger loss: each $1 invested when you were 18 shrank to $0.70 by the time you turned 30. That’s a CAGR of -2.8% per year. So much for “risk-free” returns: that’s more like return-free risk!

Is This Another Reason Why Today’s Young Speculate on Tech and Crypto?

My analysis uses American data, but it’s reasonable to assume that its results apply, more or less, to Australia and other comparable countries. Yet it clearly omits potentially relevant and even fundamental factors. It’s therefore reasonable to ask: are the outsized returns since the GFC, particularly of “tech” stocks and crypto-currencies, enticing young adults not just because they’re impressionable but also because they increasingly doubt that they can follow their parents’ path?

In particular, are young people overconfident about crypto and tech because these “investments” have soared even more than residential real estate? If they don’t roll the dice on crypto and tech, and reap their huge speculative gains, many young adults can’t hope to enter the housing market – and must delay or forgo marriage and the formation of families.

American 30-somethings are generally bypassing or struggling to reach traditional milestones of adulthood, reported The Wall Street Journal (“What Happens When a Whole Generation Never Grows Up?” 31 December 2024). Economists are warning that what was once a temporary lag may now be becoming permanent state of affairs: younger Americans’ rates of homeownership, marriage and family formation are declining steeply.

The longer they take to enter what had previously been conventional adulthood, the less likely they’ll eventually do so. One-third or more of today’s young adults will never marry, projects the Institute for Family Studies, compared to less than one-fifth of those born in previous decades. According to Pew Research Centre, the share of childless adults under 50 who say they’re unlikely ever to start a family increased from 37% in 2018 to 47% in 2023.

Objectively, according to the Survey of Consumer Finances, the CPI-adjusted net worth of young Americans is very low – but twice as great ($39,000 in 2023 versus $18,000 in 1989) as their parents’ was at a similar age. Yet affordable housing existed then – but is but a memory now. Moreover, and more than most of their forebears, today’s young men are struggling in the classroom and labour market (for details, see “American Women Are Giving Up on Marriage,” The Wall Street Journal, 21 March 2025). Student debt has more than doubled over the past two decades; yet a tertiary degree hardly guarantees secure and well-paid employment. Above all, homeownership is beyond the reach of a large and rising percentage of Americans – and of most young adults.

The National Association of Realtors has found that the median age of first-time homebuyers in the U.S. hit a record high of 38 in 2024 – up from 35 in 2023 and 29 in 1981.

Some 20- and 30-somethings are consciously choosing a less traditional path. Many more maintain that their parent’s route – marriage, mortgage and 2-3 kids by the age of 30 – is and will remain beyond their means. As a result, and according to a WSJ/NORC poll published in July 2024, young adults are far less likely than those aged over 50 to agree that “achieving the American Dream from hard work is still possible.” If slogging and saving avails nothing, then why not speculate in crypto and tech?

If toiling and saving 30% or more of your income for a decade won’t accumulate the deposit for a home loan, then – just as the poor buy lottery tickets – young adults punt in tech stocks and crypto-currencies.

A Summary of Results

Figure 5 summarises my results. Over the 12 years between the ages of 18 and 30, the four cohorts receive average CAGRs of 6.5% per year (S&P 500) and 3.3% per year (ten-year Treasuries). These long-term returns aren’t too far from these assets’ average 10-year and 20-year CAGRs over the past century.

Figure 5: CPI-adjusted CAGRs per $1 Invested, S&P 500 and Ten-Year U.S. Treasury Bonds, Four Age Cohorts, 1967-2024

Yet each cohort received greatly different returns – and, if Housel, Malmendier and Nagel are correct, drew vastly different conclusions from their formative years:

If You’re 30 …

Your personal experience is limited to the years since the GFC. From this extremely unrepresentative interval you’d reasonably infer that stocks – particularly tech stocks – generate consistently strong returns, and that bonds usually produce losses; hence you’ll tend to concentrate your portfolios heavily towards equities and shun bonds.

If You’re 45 …

You’re a member of Generation Crisis and Bust: the Dot Com bust and GFC bookended your formative years. Hence your expectations will likely be modest, and you’ll tilt your portfolio in a conservative direction – that is, towards the bonds which will withstand crises.

If You’re 60 …

Your formative years commenced in 1982 – which, coincidentally, also marked the start of the equities bull market which has arguably persisted to the present. It also included the cumulatively tremendous decreases of rates of consumer price inflation and interest which put a rocket under bonds’ total long-term returns. You’ll therefore tend to balance your portfolio and expect strong long-term returns from both.

If You’re 75 …

Your formative years commenced in 1967 and concluded in 1979. During this interval sharp rises of consumer price inflation and rates of interest, as well as recessions, crushed both stocks and bonds. You therefore experienced what the other cohorts haven’t: equities and bonds can simultaneously generate long-term losses.

Implications

“A key implication of the experience hypothesis,” say Malmendier and Nagel, “is that differences between … attitudes should be correlated with differences in life-time experiences … More recent return experiences have stronger effects, but experiences early in life still have significant influence, even several decades later.”

Housel is goes further: “people’s lifetime investment decisions are heavily anchored to the experiences those investors had in their own generation – especially experiences early in their (adulthoods).”

An investor’s assessment of investment risk and prognoses of stocks’ and bonds’ long-term prospects thus tend to weight two periods disproportionately heavily: the relatively recent past and his formative years (which, I’ve assumed, occur between 18 and 30 years of age). Few people regress present and recent past returns to their long-term mean; instead, most extrapolate them into the future. Perhaps subconsciously, they also expect what’s “normal”– which is what they experienced during their formative years.

“If you’re young,” writes Jason Zweig (“The Mistake You’re Making in Today’s Stock Market – Without Even Knowing It,” The Wall Street Journal, 25 April), “you know stocks and bitcoin can lose money at lightning speed ... But your experience also tells you they will bounce back even faster and go on to new highs. If you’re a middle-aged bond investor, you lived through almost nothing but falling interest rates and bountiful returns from 1981 through early 2022.”

Zweig continues: “investors have memory banks: the market returns collectively earned by people of similar age. Experience shapes expectations. The problem is that your memory bank can deceive you in dangerous ways. Your experience of the past is a reasonable guide to the future only if the future turns out to resemble the portion of the past that you’ve lived through. And it often doesn’t.”

If you’re 75, your experience of stock market losses when you were 18-30 tempers your extrapolation of recent stellar gains; the result is a justifiable (by long-term standards) expectation of future returns.

If, however, you’re 30 or younger, then – probably unknowingly – you have a big problem: the past 12 years and your formative years coincide. Hence your personal experience of unusual stock market gains since you were 18 magnifies your extrapolation into the indefinite future of equities’ exceptional gains since the GFC. The result is an unrealistically bullish outlook, that is, overconfidence.

But surely young people can experience the long-term past indirectly and impersonally? Can they not study economic and financial market history, learn its lessons and thereby acquire perspective and wisdom? Malmendier and Nagel doubt it: “our results are consistent with the view that economic (and financial) events experienced over the course of one’s life have a more significant impact on individuals’ risk taking than historical facts learned from summary information in books and other sources.”

“Social” media (which on the whole are clearly anti-social) seem to worsen today’s obsession with the here and now – and some money managers believe that they’ve exacerbated speculation.

Cliff Asness, for example, has lambasted the herd mentality which characterises speculators in grossly overpriced markets (see “The Less-Efficient Market Hypothesis,” 3 September 2024). He reckons that financial markets are now less efficient than they once were, and blames “social” media: “has there ever been a better vehicle for turning a wise, independent crowd into a coordinated, clueless, even dangerous, mob?”

Wisdom can’t be learnt quickly and easily from books, and it can’t be acquired at all from social media. Ultimately, it must be accumulated the long and hard way: from adverse personal experience throughout one’s life. Accordingly, considered as a whole and probably even more than their forebears, today’s young people necessarily lack wisdom.

Their experience is highly unusual – and thus vulnerable to disappointment, shock and loss. Of the four cohorts I’ve analysed, the youngest is the only one which experienced unusually low and stable long-term consumer price inflation during most of its formative years; remarkably low and stable long-term bond yields; remarkably high and continuous stock market gains; and – oddly, given the low inflation and low yields – high and continuous bond market losses.

On that basis, and although he doesn’t address it specifically to them, David Rosenberg’s assessment applies particularly to the young: “we are in this strange backdrop where investors believe there is no recession risk, no risk of earnings disappointments, no risk of equity (selloffs) and zero risk of any credit defaults. We are in a (once-in-a-generation) situation where the concept of risk has been totally distorted: an investment world where there is no more differentiation between what has traditionally been risky and what is riskless”(see “Investors’ concept of risk has been totally distorted and not for the better,” The Financial Post, 23 December 2024).

Unless it becomes the new norm, what’s highly unusual can’t persist indefinitely – and the confluence of unusual trends is particularly ripe for reversal. If Housel, Malmendier and Nagel are correct, then today’s young people’s portfolios are stuffed not just with equities, but with crypto-currencies and tech stocks – and are bereft of bonds.

Yet the golden calf whom today’s bulls worship – the same one they also adored during the Dot Com bubble – is an idol: the present “tech revolution,” like its predecessor a quarter-century ago, hasn’t accelerated productivity’s rate of growth. It therefore undermines nosebleed “tech” valuations (see, for example, Never mind DeepSeek: here’s why the AI mania won’t last, 3 February 2025).

When today’s conventional wisdom and enthusiasms collapse (they always do; it’s simply a matter of time), the oldest cohort – if Housel, Malmendier and Nagel are right – will suffer relatively little: they’ve been in the market longest, and thus accumulated the biggest nest eggs; moreover, their relatively modest expectations will temper their disappointment and shock. The two middle cohorts will incur greater losses (they’ve had less time to accumulate assets), but their bitter (45-year-olds) and balanced (60-year-olds) experiences during their formative years will temper their shock.

The youngest cohort will suffer most. Its portfolios are stuffed with the most vulnerable and unsustainable assets, their expectations about future returns are the most overconfident, and are thus the least realistic: financially and psychologically, they’ll therefore sustain the biggest losses.

Although it applies to people of all ages, Zweig’s conclusion is most relevant to the young: “as you examine your beliefs, be sure to consult the longest-term data available, to capture periods you didn’t experience personally. Testing the validity of what’s in your memory bank won’t prevent you from being guided by your investment experience. It might help prevent you from being its prisoner.”

Hence my conclusion: in matters related to investment you should generally doubt anybody under 30 years of age. It bears emphasis: today’s young obviously aren’t innately dumb, and the middle-aged and elderly certainly aren’t inherently intelligent. But the young necessarily lack varied life experience and wisdom; they’re therefore more impassioned – and thus impressionable – than older people.

Most importantly, they lack the direct experience of extended market adversity, disappointment and loss – and thus perspective, scepticism and above all wisdom – which successful long-term investment requires.

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