How millennials should invest amid coronavirus outbreak
In light of the coronavirus pandemic, Betches Media and Ellevest have partnered up to help young women make sense of the current market. Ellevest CEO Sallie Krawcheck joins Yahoo Finance’s Brian Sozzi and Alexis Christoforous to discuss.
Video Transcript
ALEXIS CHRISTOFOROUS: In light of the coronavirus pandemic, Betches Media has partnered with Ellevest CEO Sally Krawcheck to help Millennial and Gen Z women make sense of the current market, and also to share some tips on how they might be able to navigate it. We are so happy to have with us this morning Sally Krawcheck herself.
Sally, good to see you, as always. You know, this is a scary time, right? I mean, even for the most seasoned investor. And a lot of these younger investors, this is the first time they've lived through a downturn in the market, never mind a pandemic. What are you telling them? How should they be looking at the stock market right now?
SALLY KRAWCHECK: Yeah. Well, you know, can you believe that we are here, and that you know this downturn, which happened with record speed and had layered on top of it concerns about health, jobs, et cetera, the unemployment rate skyrocketing. It's been an incredibly scary and concerning time. And particularly if you're a younger person, and this is your first downturn, you say, this is exactly no fun.
And it's been very difficult to call. I can't imagine there's anybody who correctly called the downturn and then the bounce back. And to have the NASDAQ having recovered its losses, I think what it points to is you've got to have an investing plan, you've got to stick with the plan, that anyone who's trying to trade in and out of it, you know, maybe if you're a professional investor, Warren Buffett, you're able to. But having the plan and sticking to it are really important because these ups and downs in the market can be so violent that trying to call them is all but impossible.
BRIAN SOZZI: Sally, I follow you on Twitter, and I caught a recent video from you discussing the She session. What is that? And how do we get out of that situation? What's the solution?
SALLY KRAWCHECK: Oh, I am so worried about women going into and coming out of this. So let's start with we talk a lot about the gender pay gap, which is so frustrating, $0.82 to a man's dollar, much worse for women of color, closing very slowly. The gender wealth gap is $0.32 to a man's dollar and then moving in the wrong direction.
And as we all go to shelter in place, you know, women are not as able to go to shelter in place because they're more in the hospitality industries, a lot of the essential workers. They've been losing their jobs at a greater rate than men are because of the industries that have been hard hit. And even the women who are able to work from home, there's new research that says that amongst academics, men are submitting 50% more papers. They're like, gee, I have this time at home. I'm able to concentrate and get stuff done. Women are submitting less.
And so across the board, women went into this in worse shape, and they're getting hit to a greater degree even if they're able to shelter at home. So I'm very concerned about the shape that women come out of this in.
ALEXIS CHRISTOFOROUS: So Sally, what are you telling young women investors to do right now? What are some ways they can shield themselves, protect themselves, and perhaps come out of this pandemic stronger than when they went in?
SALLY KRAWCHECK: Well, if they're fortunate enough to be investors, so they've paid off the credit card debt, they've built the emergency fund, they've still got the job, and they're able to invest. They've done the things and they can invest for the long term, 15 years, what we're telling them is do not look. Do not look because, you know, we tend to think of the stock market does this. It's actually done that, and that if you had invested in the stock market in any given day since the 1920s and stayed in for 15 years, your chances of a positive return were 99%.
And so this downturn, as painful as it is, I am willing to bet will be a blip in an upward trend when we look back on this five 10, 20 years from now. So if they're able to, don't look, because if you look, you're going to want to do something. And that something is probably going to come from a place of emotion and therefore won't be the right thing to do.
ALEXIS CHRISTOFOROUS: And I think what you're describing here is somebody who has a long time horizon. But even if you have a long time horizon, you should still be thinking about retirement, right? I mean, how should young people, young investors during this very tumultuous time, be thinking about investing for retirement?
SALLY KRAWCHECK: Well, you know, you can afford the risk in order to earn the return that historically has been available from investing in the stock market, and so therefore you should do it. The real key is starting early. And even if you don't think you can invest very much, starting in your 20s, 1% out of every paycheck, 2% out of every paycheck, 3% out of every paycheck, whatever you can do, because our human brain underestimates the power of compounding and the importance of starting early. $1.00 in your 20s is worth multiples of $1.00 invested in your 30s, 40s, 50s.
BRIAN SOZZI: Sally, real quickly, we can't let you go without some thoughts on the markets. This market now seems on autopilot, more specifically, tech stocks. Are you surprised just how fast this market rally started to feed on itself?
SALLY KRAWCHECK: I hope everybody is. I mean, what is more interesting to me than the rally is the fact that we've got different markets telling us different things. The NASDAQ says that everything's amazing, right? You know, the broader stock market's saying, well, we see the end of the recession. You know, the bond market and oil may be telling us we're going into not a depression, but a recession-- depression.
And so you've got these different messages, which says there's still such great uncertainty and really a lack of-- I don't want to say discipline, but sort of a lack of a common understanding across the different markets.
ALEXIS CHRISTOFOROUS: Yeah. Makes it a confusing time for us all. Thankfully we have--
SALLY KRAWCHECK: Alexis, in so many ways it's a confusing time, in so many ways.
ALEXIS CHRISTOFOROUS: It is. All right. Always good to see you, Ellevest CEO Sally Krawcheck. Be well. We'll talk to you soon.
SALLY KRAWCHECK: Thank you. Bye bye.
