Those pesky millennials keep changing the landscape and both Wall Street and Main Street seem oblivious to how their moves impact our country.
It's difficult to discern their moves. They seem disguised to the naked eye. They are fickle, they sample, they try something, like something and then move on from something almost in unison. They like cruises for the value, then the value gets erased by higher prices, often to please investors over customers, and they move on to something else. They like camping, calling it glamping, and then they lose interest, jumping to another instagrammable pursuit. They love putting on make-up, storming the aisles of Ulta Beauty (ULTA) for the best of the best, and then they turn on make-up for lack of newness -- is it too caked and looks ridiculous on the finely tuned new cellphones from Apple (AAPL) ? Who knows?
But one thing's for certain. They are always on the move. Hard to typecast, hard to define, but on the move nonetheless.
There's no real millennial analyst cohort on Wall Street, although there sure should be. Instead you have to break down silos to find the movements of a group that's now as large as the baby boomers with a lot more spending power -- and a lot more trepidation about spending, courtesy of the great recession and years of living in bedrooms they would have long abandoned during my generation. My mother made my room in to a den the moment I graduated high school.
You want a good silo to peak into to chart their latest moves? Join me on the always-thoughtful Toll Brothers (TOL) conference call, the dissection of business from the company that calls itself, justifiably, America's luxury homebuilder. It's a shame that we view conference calls as nothing more than "raises forecast, cuts forecast, raises gross margins, feels margin pinch" affairs because the utile terminology totally obscures the thematic approach Toll offers to those who bother to listen to it.
The thrust this quarter, 10 years after Americans started coming out of the bunker and started buying houses post-the Great Recession bottom? Let me just quote CEO Doug Yearley about the new buyers, the "growing numbers of millennials who are older, more affluent and more discerning when they buy their first home." How do we characterize what they want? "Think of it as a BMW 3 Series, a great example of affordable luxury." Stunning fact that buttresses the characterization? "Over 20% of all closings have one purchaser 35 years old or under."
This is no fluke: These buyers are nationwide in places as diverse as Boise, Northern Virginia, Denver, Orlando, New Jersey, Massachusetts, New York, Las Vegas, Reno, Phoenix, Philadelphia, Jacksonville and Seattle. Those are regions not beholden to Silicon Valley. They aren't constrained by the elimination of State and Local Tax Deductions, as they were supposed to be. They are simply people who have jobs, who feel confident and are taking advantage of affordable luxury, a term that defines their ethos.
Why is this cohort so important to understanding the investing landscape? I think it's because the empirical work that Yearley and co-founder Bob Toll -- still chiming in on the call -- is non-political. Everything is so charged these days it's hard to see the forest through the trees. Classic example: just yesterday I said that the new trade agreement among the United States, Canada and Mexico was a win for the American worker in the face of big business -- something that both Speaker Pelosi and the president's people have told me -- and I was criticized on Twitter from both sides saying I was in the pocket of both the Democrats and Republicans.
I have no idea what party affiliation Doug Yearley hails from, I just want his unfiltered view -- and he provides it. After a decade of cocooning, the millennial wants a home that, like everything else she chooses, represents value, in keeping with her newfound frugality. The delay is over. The spend is beginning. The prices of these homes are not going up any time soon: Costs are stable for the first time in a very long while. Rates remain low.
The millennials will go to Amazon (AMZN) , Costco (COST) , Home Depot (HD) , Target (TGT) and Walmart (WMT) to personalize their places. They will use their cellphones to order what they can't pick up and get it delivered. They are changing the landscape for the positive in an undeniable fashion. You just don't know if you read the funny, biased papers, or watch TV, both of which obscure the good trends and make it impossible to see the investing light. I say go read the Toll call and walk into the light. It will make you money.