NEW YORK (TheStreet) -- Every generation has its own cultural imperatives and for the Millennials (20s & 30s) it is presently showing up in securities like Sears Holding (SHLD), RadioShack (RSH) and Market Vectors Coal (KOL), among others. Down the road, it will become even more apparent in auto stocks such as Ford (F) and General Motors (GM). Unlike previous generations of Americans, the Millennials are establishing their identities in manners that are bearish for the automotive, retail and coal sectors.
A study by the University of Michigan reported that the Millennials do not rush to get their drivers license at the age of 16 like previous Americans. Cars used to mean freedom, individuality, and serve as extensions of the owner's personality. Now brand name consumer electronic devices such as an Apple (AAPL) iPhone and robust social media presence courtesy of Facebook (FB) are replacing cars as expressions of individuality. That is showing up in sales as this age group is buying about 30% fewer automobiles than other generations.
While that is negative for the future of the motor vehicle industry, it is showing up even more in the retail sector at the present.
If the Millennials are not obtaining licenses to operate motor vehicles or buying cars from Ford or General Motors, then they are not heading off to the malls to go shopping. That is easily seen by how much shopping mall foot traffic has plummeted. It is much, much more obvious in the collapsing stock prices of stores that populate the malls such as Sears, RadioShack, and J.C. Penney (JCP). That same iPhone or laptop that so establishes the Millennial personality also allows for shopping online and home delivery via Amazon.com (AMZN).The Millennial's increasing environmental awareness is setting the coal industry reeling like the retail sector. Market Vectors Coal, the exchange traded fund for the coal industry, is down more than 10% for the last year of market action to around $19. In June 2008, it was trading in the mid-$50s. Peabody Energy (BTU), a blue chip coal firm, traded for more than $80 a share in June 2008. It now trades at less than $19. The Obama Administration, strongly supported by voters from the Millennial generation, has initiated what has been called "The War on Coal" by some observers due to how its policies have wounded the sector. Along with the evolution of the Millennials in the U.S. as a market force is the ascent of the consumer class in emerging nations. A report from McKinsey Global Institute, the research arm of the consulting firm McKinsey & Co., estimates that the global consumer class will grow by one billion by 2025, resulting in $30 trillion in spending. That will do little good for Ford, General Motors and other motor vehicle firms as McKinsey & Co. defines the income for a member of the consumer class as being $10 a day, far too little to buy a car. It will do even less for Sears, J.C. Penney and other American mall denizens. But emerging market buyers will do much for the coal industry, as it is the most consumer-friendly fuel source in terms of price and ease-of-use. >>Read More: Microsoft Is the Real Technology King >>Read More: How Microsoft Changed the Console Wars >>Read More: Why Facebook Can't Go to China Alone At the time of publication the author held no positions in any of the stocks mentioned. This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
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