Mike Gitlin, CEO of Capital Group, wants Gen Z investors who have balked at war-driven commodity trading to start thinking long-term as the wealth management industry races to win over a generation with fundamentally different investment rules.
Responding to questions from viewers at CNBC’s Converge Live conference in Singapore on Wednesday, Gitlin said young investors should approach the market with a long-term wealth-building mindset, rather than “hobby investing” that adds personal gain to a portfolio.
The question came from a father in the audience who said his teenage children opposed the gold-to-oil scheme and accused it of “war profiteering.” She added that an informal survey conducted at her child’s school found that about 80% of her Gen Z classmates share the same aversion.
Whether it’s gold or oil, “you don’t have to think about where you’re going to put your money for the next 75 years,” said Gitlin, who heads Capital Group, the world’s largest active investment manager with $3.3 trillion in assets.
“Trying to time the commodity market is very difficult for a professional, let alone a 13-year-old. Get them interested in the broader market,” he said.
Instead, Gitlin urged young investors to build “paper portfolios” of stocks, use artificial intelligence tools to conduct due diligence research, and focus on fundamentals rather than market fluctuations.
“Get them interested in stocks and bonds, the broader macro picture, and what’s going on in the world,” he added.
The comments come against a backdrop of what researchers describe as growing disillusionment among young investors and growing distrust of asset management institutions.
According to the World Economic Forum’s Global Retail Investor Outlook, Gen Z’s trust in traditional financial institutions has declined over the past two years, with nearly 20% of non-investors citing distrust in financial institutions as a reason to stay away from the markets altogether.
A small but growing group has embraced what has come to be known as “financial nihilism,” a complete rejection of traditional wealth-building milestones. The majority of young investors surveyed by WEF also said they would invest more if they had more trust in their investment platform.
‘Very resilient’ market
Mr. Gitlin’s remarks came against a backdrop of remarkable market resilience as the U.S.-Israel war with Iran dragged on for nearly two months, with prospects for a permanent ceasefire uncertain.
People are looking three to five years down the road, where the bottom line (and) the profitability of the company is going to increase. We need to look at it over the long term.
mike gitlin
Capital Group CEO
Global stock markets have returned to pre-war levels, with the MSCI World Index erasing a post-conflict 3.29% slump and trading nearly 2% above its close on March 2, the first session since the conflict erupted, as investors eased hedging against geopolitical risks even as the conflict remains unresolved.
“The market is very resilient,” Gitlin said. “People are looking three to five years down the road to seeing revenue and company profitability increasing. You have to look at that over the long term.”
Notably, despite disruptions to shipping through the Strait of Hormuz, some of the world’s best performing markets this year are major energy importers. South Korea’s Kospi is up 50% and Taiwan’s benchmark is up 30%, far outpacing the S&P 500’s 3% rise.
Gitlin cautioned that the key wild card is how long the high oil prices last. “The only ‘what if’ in all of this is how long oil prices will be inflated,” he said. “If oil prices remain elevated for an extended period of time, this will lead to higher inflation and lower growth, and markets will react accordingly.”
