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Why Apple and Tesla are bad buys for young investors

Shawna Ohm

It’s a well-known fact that the so-called Millennial generation has been slow to invest in the stock market. But that trend may be changing. Patrick O’Shaughnessy is the author of “Millennial Money.” He says it turns out young people like to invest in what they know.

We’re not talking about Snapchat and beer, but rather, tech stocks.

“I’m of two minds about this trend that we like technology stocks so much,” said O’Shaughnessy. “One, I’m very glad that people are interested in the stock market because that’s been a problem for Millennials. But I’m worried that we’re already getting interested in the wrong kinds of stocks.”

Why? Well – Millennials may be too socially conscious for their own good. “It’s really important to distinguish between a good company and a good investment,” he said. Millennials prefer to invest in good companies. So they, like everyone else on the planet, want to own Apple (AAPL).

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“We just prefer to own things that we are comfortable with, that we’re familiar with, products that we use, CEOs that we see on the cover of magazines and exciting new companies and that makes sense emotionally right, you want to be involved,” he said.

The problem, though, is that these stocks aren’t always priced right. So companies that Millennials love – like Tesla (TSLA) and Alibaba (BABA), are “great companies, maybe not great stocks,” said O’Shaughnessy.

“I’d prefer that Millennials be interested in really good investments. So the question remains if these [good companies] are good stocks.”

But hope is not lost for companies, or fund managers, trying to attract a younger generation of investors. “I think the key for us will be to get us through automation and through mobile,” said O’Shaughnessy. Companies already doing this include Wealthfront, Vanguard and Charles Schwab.

“Accessing us through technology is gonna be a great way to get our attention and I think that will be the way you get us into the stock market.”

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