Canadian Millennials got SLAMMED by the 2nd Financial Crisis!

Canadian investors suffered a financial setback in the second financial crisis, despite tech stocks like Shopify Inc (TSX:SHOP)(NYSE:SHOP) outperforming.

| More on:
Man with no money. Businessman holding empty wallet

Image source: Getty Images

The COVID-19 crisis has impacted Canadians from all walks of life. Shutting down ordinary life and slowing down the economy, the pandemic has been an unprecedented challenge for all groups. However, not everybody has been impacted equally. Older Canadians have been impacted more by the direct health impacts of the pandemic, while younger Canadians have been more impacted by joblessness.

Millennials in particular have been hit hard by the financial crisis. Already contending with student debt and unaffordable housing, many millennials were put out of work due to business closures. As Nathaniel Dove pointed out in Global News, many millennials were were looking into buying homes when COVID-19 hit. Now, many have had to put those purchases off thanks to joblessness. It’s been a major setback for Canadian millennials, and it could get worse.

The second financial crisis in two decades

For millennials, the COVID-19 financial crisis is the second they’ve had to deal with in two decades. The Great Recession of 2008/2009 hit when many millennials were just graduating from university, delaying job hunts. The COVID-19 crisis hit when millennials were beginning to rise in their careers, putting a damper on professional advancement.

The two crises were a devastating one-two punch. Now, some say that millennials may never recover. According to Concordia Economist Moshe Lander, it can take years for people to recover the income they lost early in their careers. When you’re laid off, not only do you lose income, but also potential opportunities for advancement. So far, the CERB has helped millennial Canadians with the direct income loss, at least. But that will be coming to an end soon.

The CERB is running out

As of August 2020, the CERB is set to end on October 3. Benefits can be received retroactively, but most long-time applicants are about to see their benefits run out. That includes many millennials who were laid off due to COVID-19. When they’re laid off, many will be moved on to EI, which could help pay the bills. However, EI pays much less than the CERB on average, and you need to have paid into it to receive it.

One bright spot

There is one financial bright spot for millennials amid the COVID-19 pandemic.

The types of investments they favour have been doing well. According to the Financial Post, the stocks held on Robinhood — a millennial-dominated trading app — have been beating hedge funds in 2020. In its coverage, the Post said that Robinhood picks have enjoyed a 16% lead over hedge funds and a 25% lead over the S&P 500.

That’s not surprising. Millennials’ portfolios tend to skew toward high-growth tech stocks like Shopify (TSX:SHOP)(NYSE:SHOP), which have been beating the market this year. The list of the 100 most popular Robinhood stocks includes many such market beaters. Interestingly, SHOP itself isn’t on the list, but similar foreign companies like Amazon and Alibaba are topping the charts.

SHOP’s lack of representation could simply be due to the fact that Robinhood’s userbase is largely American. While SHOP has seen major interest from financial professionals in the U.S., it still doesn’t have a lot of recognition with U.S. retail investors. That could change. If SHOP keeps up the kinds of gains it has posted in the year, it would take just three more to become a trillion-dollar company. If that happens, people the world over will take notice. And many Canadian millennials will see their portfolio values surge.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Andrew Button has no position in any of the stocks mentioned. David Gardner owns shares of Amazon. Tom Gardner owns shares of Shopify. The Motley Fool owns shares of and recommends Alibaba Group Holding Ltd., Amazon, Shopify, and Shopify and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon.

More on Tech Stocks

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Business man on stock market financial trade indicator background.
Tech Stocks

1 Growth Stock Down 50 Percent to Buy Right Now

There are plenty of growth stocks in the market worth considering, but Shopify (TSX:SHOP) looks like one of the best…

Read more »

Woman has an idea
Tech Stocks

Prediction: 1 Stock That Could Trounce the Market 

The TSX has been favouring tech stocks, but not this one. However, it has the potential to trounce the market…

Read more »

clock time
Tech Stocks

Long-Term Investing: 3 Top Canadian Stocks You Can Buy for Under $20 a Share

These three under-$20 stocks offer excellent buying opportunities for long-term investors.

Read more »

Businessman holding AI cloud
Tech Stocks

AI Will Transform Everything: Investors, Be Early Adopters and Buy These 3 Stocks

Investors looking to invest in companies doing big things in AI should consider these three stocks for their portfolios.

Read more »

stock research, analyze data
Tech Stocks

Forget Shopify: These Unstoppable Stocks Are Better Buys Today 

Should you consider buying Shopify stock while rivals consider a buyout or should you go for stocks with a stronger…

Read more »

A colourful firework display
Tech Stocks

2 Potentially Explosive Stocks to Buy in March

These two growth stocks are destined for many more years of market-crushing returns.

Read more »

edit CRA taxes
Tech Stocks

TFSA Millionaires Are Learning They Can Still Be Taxed

If you day trade stocks like Shopify (TSX:SHOP) in a TFSA, you may be taxed.

Read more »