The Importance of Youth

Over the past few business days, Netflix's stock, NFLX, has gone up 60%.  I am very interested in the stock market and have my own brokerage account, so I follow stocks that have had unexpected gains.  Netflix jumped because its earnings were higher than expected; however, there is a bigger reason that this movie rental company soared above projections.  An article I read, by Jim Cramer, a stock analyst, explains why Netflix is doing so well and Apple, AAPL, is not.  

"My youngest daughter loves to get ideas from me for my birthday.  So, when she asked me what I wanted I told her I wanted the first-season DVD of Sons of Anarchy.  She writes she isn't going to buy it because it streams on Netflix".  Cramer believes that if the younger generation is talking about a product constantly, then it will be a better investment.

This is also one of the reasons why Apple has dropped recently.  Despite average earnings, the shares of Apple have plummeted 20% in the last month.  Although it owns the market share and everyone owns Apple products, Apple is not creating the buzz it used to.  No one is talking about Apple's new products because they haven't created any new products since the Ipad.  In order to rebound, Apple needs to either make a new product or buy a trending one.  The youth dictates what is popular in the future so it is important to appeal to them now.

Enough of this stock mumbo jumbo.  The point I'm trying to make is that our generation, kids aged 13-20, are the "trend-setters".  We are the ones who create the buzz and determine whether a product is a diamond in the rough or a complete bust.  For those investors out there, it is important to identify what kids are talking about and what seems second nature to them.  For my AS final, of the kids who brought in laptops, probably 90% of them had an Apple computer.  Apple was "in style" when the majority of people bought their laptops, making it a good buy within the last 5 years.  On the other hand, practically no one had a dell computer, showing how Dell has fallen off the charts.  It is just very important to know that when you go buy a stock, a good investment is one that the upcoming generation uses.

What new trend/stock do you think will do better than projections because of the younger generation?  Please leave comments below.