Acorns CEO on How Younger Investors Can Fare During Market Volatility

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How is your portfolio faring?

Younger investors who are worried about the market volatility--where 1,000 point swings in either direction have quickly become the norm--may be wondering if now is the time to cut and run?

Noah Kerner, CEO of Acorns, has some advice for those investors. 

After a trading day which saw the major indices soar into the close, futures hit limit down in premarket trading on Wednesday. 

And, on top of that--with the coronavirus shutting down our everyday lives--we're being told not to touch our faces. So, does that apply to our portfolios as well?

Kerner says yes. 

Watch the full video above for more. 

Video Transcript:

Katherine Ross:
The White House is pretty much relying on younger people to settle in and step up. Should they be using this time away from the bar to set up their investing future? Joining me today is Noah Kerner, Acorns' CEO. This is the first time that younger investors are facing severe market volatility. So why should they be relying on either your app or ETFs in general as opposed to individual stocks?

Noah Kerner:
So during this time or before, I mean really at anytime, we espouse diversified investing and it's really the most risk free way to invest your money. So that's what we believe in. Fundamentally, if you're investing in individual stocks, it's obviously riskier than if you're in thousands of stocks and bonds, right? It's just basic math. So ETF investing gives you access to a whole portfolio of stocks and bonds and it sort of optimizes longterm returns against risk. So...

Katherine Ross:
Noah, we're being told not to touch our faces until the virus is under control. Does this apply to our portfolios as well?

Noah Kerner:
Absolutely. And if you go back in history and you think about all of the bear markets, there's been about 12 since World War II, we like to say every downturn ends in an upturn because it has. Every single downturn in history has ended an upturn. And so if you look at what happens when you pull your money out, first of all, you lock in losses. If you pull your money out when the market went down, and second of all, you miss that opportunity to take advantage of the entire upswing that happens, or that has happened every time in history, after a downturn. So this is a difficult moment. It's going to be a difficult period, right? But the people who really stay committed and stay patient and stay the course are going to benefit in the long run. And that's just what history tells us. And again, every downturn in history has ended in an upturn. I always keep that top of mind for myself, for our team and for our customers.

Katherine Ross:
There's always that light at the end of the tunnel. Noah, how did these past two weeks compared to a typical two week span on acorns?

Noah Kerner:
You know what's interesting, so we've been monitoring obviously the data really closely to make sure we're in touch with our customers. Growth in terms of new customers has been some of our best growth we've ever seen. In fact, this last weekend was our biggest new customer growth weekend ever. Last Thursday was our biggest day of the year outside of the first few days of January in terms of new customer volume. And so we think that's people who are engaging in the markets, they know that the market is down and people like to say on sale because when the market is way down, stocks are cheaper. So that represents a buying opportunity. So we think people are coming in to take advantage of the fact that the market is down and it's off. I mean, I don't know what it is this second, but it's been off about 30% and that's happened in the course of a very short period of time, right? A month, a month and a half.

Noah Kerner:
So we went from 29,000 to under 21,000 in an extremely short period of time because of a global pandemic, largely because of fear, because of these kinds of things. So if you think about what will happen over a period of time when people start to calm down, hopefully when this gets under control, when things get back to normal, you're going to see the market come back and you're going to see people who took advantage of that downswing and that moment be really appreciative of the fact that they did that and stuck with it and stayed calm during this period.

Katherine Ross:
As someone who advocates to get younger investors in the market, I'm so happy to hear that. I just have to be very honest there. I guess my final question for you, based on all of your experience and being the CEO of Acorns, when we're looking at the younger investor who's maybe ready to cut it and run away from this market, what's your key piece of advice?

Noah Kerner:
Every downturn in history has ended in an upturn. Stick with it. Stay patient, stay the course.

Katherine Ross:
Noah, I thank you so much for taking the time with us today.

Noah Kerner:
Thanks for having me.

Katherine Ross:
Guys, please stick with TheStreet for all the latest on the coronavirus pandemic and the markets.

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