The New Reality in Navigating Tough Markets for Young Australian Investors

Person analyzing market on laptop

There’s a viral video that has been doing the rounds of financial social media and other forums for a couple of years now. In the short Tik-Tok-style video, a young pair of influencers address their followers, explaining how they make money in financial markets. “When the stock starts going up, we buy.” The couple informs us. “And then when it starts to fall, we sell.”. The video is hilarious due to the sincerity of the young couple, to such an extent that many wondered whether it was satire (apparently, it isn’t). While the couple later said it was designed to be somewhat tongue in cheek, experienced investors will undoubtedly have shaken their heads in disbelief at the video. 

And yet, there is a modicum of truth in the couple’s assertion. Not in terms of how easy it is to trade stocks successfully – we know that it isn’t – but in the timing of the video. The video went viral in 2021. It was the height of the retail trading and investing boom. Global stock markets were booming, cryptocurrency was at its zenith, and retail investors were lumping into narrative trades with their peers, such as the incredible GameStop trade where a group of Reddit users took on Wall Street hedge funds and won. The point, as such, is that the pandemic years offered huge opportunities for retail investors, particularly young millennials like the couple in the video, and they took it. 

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Young Australians entered the investors’ arena in 2020

The entrance of so many new traders and investors to the market in 2020 and 2021 should not be underestimated. For example, the number of Australian retail investors swelled by around 50% in 2020 alone. Cryptocurrency was particularly alluring to younger investors (one in six Aussie investors are under 25), with many seeing their peers literally become overnight millionaires. Stocks, too, became a major draw as liquid markets sent major publically traded companies’ shares to all-time highs. 

However, we are now entering a new post-pandemic world, and things are looking markedly different. Some are predicting that Australia will go into recession, along with many of the world’s major economies. Even if that doesn’t transpire, conditions are almost the opposite to what retail investors experienced during the pandemic boom: Interest rates are high, as is inflation; the cost of living crisis has impacted disposal income; and marco economic factors look grim. The point, as such, is that markets could trade in different directions, leaving wide-eyed retail investors in trouble. 

For those that do not get shaken out of the market, there are positives. For a start, good traders can make money in all kinds of conditions, and they can successfully trade a recession with as much gusto as a full-blown bull market. Education, however, is paramount. Learning how to navigate choppy markets is much more difficult than picking stocks in the “everything up” bull markets we experienced during the pandemic. 

Trade with advanced platforms like MT4

Perhaps most importantly, the tools you use to trade will be integral to your success. Experts point to MetaTrader 4 as the most popular online trading platform in Australia. Used by the top trading broker platforms, MT4 is actually quite easy for retail traders to use, while providing all the tools needed for professionals. It’s the natural step for those who wish to upgrade from picking stocks on their Robinhood or Revolut apps to trading with professional tools. 

Of course, none of this is to say that individual stocks, commodities, and cryptocurrencies are going to chop around or drop in value in the coming months. In 2023, we have already seen huge winners like Nvidia, which had such a buoyant 2023 that there are calls to change the fabled FAAMG (Facebook, Amazon, Apple, Microsoft, and Google) acronym to incorporate Nvidia as a major player. Bitcoin, which has broadly had a good 2023, certainly recovering from the lows of November 2022, may yet go parabolic, with factors like the halving and mooted hedge fund ETF approvals on the horizon. 

B sign on figures

The point of mentioning Bitcoin and Nvidia above is not to suggest they are winners: We don’t know, and they could easily collapse for a variety of reasons. The point is to show that there can be winners in more uncertain economic times. However, for the young millennials who entered the arena in 2020, flush with disposable income, a new financial reality awaits. The good times can continue, but they must be much smarter about it. 

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