Asset Evolution

The Great Generational Shift

Unlike their parents in their 30's, they didn't get gifted equities with a P/E of 7, bond yields at 13% or real estate at the lows versus income. They got the opposite. Their opportunity set was an expected negative future returns. They didn't want any part of our financial system.

Then the pandemic hit and everything changed. We gave them free money and they collectively said "fuck it" - let's take risk because their stake was free. If we were given a free stake at the casino, we would do the same. But they didn't buy our precious gold miners, or our discounted value businesses. Why? Because they don't care about 10% returns. The only way to level the playing field was to take MASSIVE risk.

If you can't win the game, change it.

Risk taking met Robin Hood options in 2020 and magic happened... These younger investors changed the entire game. They armed themselves with the skills of Reddit, TikTok and Instagram - communities, virality and memes and stuff that they were told was stupid, like Hertz and Gamestop - and stuck up their middle finger to the rules and broke them. It was MAGNIFICENT.

These young people had been let down by us all. Why should they play by our rules when they could make their own? Screw active management, screw hedge funds. They wanted to just stick money in the markets as they were told (Hello passive!) and punt the rest. Crypto resonated. Huge upside, downside of zero. It was a giant options market. Limited losses, exponential upside. They are right.

They are blessed with The Exponential Age where growth stocks keep going parabolic over time and trade off Metcalfe's Law, thus don't give a shit about our old Boomer mean-reverting valuation models. These new investors aren't interested in your love of oil or commodities or 1950's V8's or your Contemporary art of the 1990's and 2000's. Your Jeff Koons is just a stupid balloon sculpture. It is not their cultural reference. JPEGS are and memes.

This is ALL about culture. They value different things and there are more of them than you or I. It gets more extreme when you get to India or the Middle East, when everyone is under 30! Those societies are going to see seismic shifts. The next 10 years is going to have the fastest, greatest technology change in all human history. The Exponential Age. We will all feel left behind, but we have to trust in this younger generation of people under 40 to lead the way and show us new ways. We need to be led.

Change is upon us. Embrace change. Don't fight it. In change lies all our future.

Across decades, each generation's favored asset class has seen distinct boom–bust cycles. Gold exploded during 1970s inflation – reaching a record high of about $850/oz in January 1980 – before slumping thereafter. The S&P 500 enjoyed a multi-decade bull market: after the 2008–09 recession it steadily climbed, closing near 3,230 in 2019, briefly plunging in March 2020, then surging to ~4,766 by late 2021. The Nasdaq-100 (QQQ ETF), heavy in tech stocks, rallied from about $100 in 2000 to over $400 by 2023.

Bitcoin, launched in 2009, was essentially worthless initially, then skyrocketed to roughly $20,000 in late 2017 and to about $46,000 by end-2021, before falling back (around $30K in 2022) and partially recovering to ~$42K by end-2023.

Each asset's historical peak reflects its generation's coming-of-age: gold peaked in the Silent Generation's later years, the S&P 500 crested during Boomers' peak-earning decades, QQQ rallied in Gen X's mid-career tech boom, and Bitcoin's highs coincide with Millennials/Gen Z reaching investing age.

As of 2022, Americans held roughly $156 trillion in assets, with Baby Boomers controlling about half (~$78.1T or ~50%). The distribution shows Gen X at ~29.5% ($46T), Silent Generation at ~11.9% ($18.6T), and Millennials at only ~8.5% ($13.3T).

A massive intergenerational transfer is expected, with Knight Frank projecting up to $90 trillion passing to younger generations by 2044. Merrill/Cerulli estimates total transfer of $124 trillion by 2048, with roughly $106T going to Gen X/Millennials.

Millennials' tilt toward cryptocurrency is reshaping markets. Bitwise Asset Management forecasts 2025 as a "Golden Age of Crypto," with Bitcoin potentially topping $200,000. Regulatory changes and institutional adoption are expected to channel significant new capital into digital assets.

Surveys by BlackRock/WEF show millennials are already placing large portfolio shares in crypto, implying continued inflows. If these trends continue, markets may see rising correlations between digital assets and equities, potentially leading to higher asset price volatility but also greater mainstream adoption.