Young Investors Embrace ‘Vibe’ Trading Over Traditional Research

Young investors are increasingly turning to intuition rather than traditional research in their trading strategies, a trend that is particularly prominent among Generation Z. This group is reshaping investment approaches by relying on personal experiences and emotional responses, as demonstrated by the actions of individuals like Saul Oster, a 20-year-old student at the University of British Columbia. Oster, who began investing in the stock market this year, describes his investment decisions as largely instinctual, stating, “There are times we’ll be sitting around and someone will tell you to buy something, and you’ll buy it. No research whatsoever, just pure gut feeling.”

According to a recent Ipsos poll commissioned by CIBC’s Investor’s Edge, 34 percent of Gen Z respondents find financial advice from older generations irrelevant. They cite rapidly evolving markets, innovative financial tools, and shifting priorities as reasons for this disconnect. The poll reveals that young investors are not only engaged but also diving into investing earlier than previous generations, often using vehicles like Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs).

Intuition Drives Investment Choices

Oster’s experience reflects a broader trend among his peers who are willing to take risks based on their perceptions. For instance, his first significant investment was in exchange-traded funds (ETFs) linked to Canadian mining companies, driven by a belief that energy would be the next big opportunity. “Over the past seven months, I’m up just over 180 percent,” he shared, highlighting the potential gains from his intuitive decisions.

Similarly, Oster noted that a friend invested in Walmart due to personal experiences as a student seeking affordable options. “It’s paid off but that’s not off research. That’s just because this is what he sees and therefore what he put money into,” he explained.

Financial educator Liz Enriquez, founder of Ambitious Adulting, emphasizes that emotional decision-making is not exclusive to young investors. She argues that technology has democratized investing, making it more accessible and relatable. “Now, the investing ecosystem is essentially the same as online shopping,” she said. This shift has led many young individuals to view investing as a necessity rather than an option, particularly in the face of rising living costs and challenging housing markets.

Balancing Risk and Knowledge

While confidence in intuitive investing can yield positive results, experts warn against relying solely on emotions. Andrew Aziz, founder of the online trading community Bear Bull Traders, advises new investors to educate themselves and begin investing early. He points out that building wealth early can significantly aid in achieving life milestones, such as purchasing a home or starting a family.

Aziz recalls his own experience of initial success followed by a substantial loss, stating, “Everybody can survive a couple of $1,000 losses or a mistake. But as you get older, your risk appetite should come down because you don’t have enough time or freedom to recover.” He stresses the importance of understanding investment fundamentals, particularly as influencers proliferate on platforms like TikTok and YouTube, often promoting trending investments without a thorough understanding of the market.

The appeal of social media influencers can lead young investors to make hasty decisions based on popular trends rather than sound financial principles. Aziz cautions, “You have to be careful how much of your wealth is going into following these people.” He advocates for diversification and caution against potential scams in the market.

As young investors like Oster navigate this landscape, both Aziz and Enriquez encourage them to allocate a portion of their income to investments to leverage the benefits of compounding interest. Enriquez notes a common mistake among new investors is holding onto cash instead of deploying it into the market.

Oster aims to maximize his annual contributions to his tax-free savings account, seeking to generate enough returns to secure a comfortable future. “Investing as a whole is a net positive because you only learn when you lose,” he concluded, reflecting a mindset that recognizes both the risks and rewards inherent in investing.