‘Generation Moonshot’ investors

This is an audio transcript of the FT News Briefing podcast episode: ‘Generation Moonshot’ investors

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, August 3rd, and this is your FT News Briefing.

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Marc Filippino
The third most powerful US politician is in Taiwan today. Beijing’s retaliation has already begun. SoftBank founder Masayoshi Son says he’s not going anywhere any time soon. So why the concern over his successor? And we’ll tell you about a new kind of investor. Our correspondent calls them “generation moonshot”.

Madison Darbyshire
If they invest and save and, like what, they get one per cent interest on their savings account, what’s one per cent gonna buy you?

Marc Filippino
We’ll bring you more highlights from this week’s episode of Behind the Money, which explores why risky bets are perfectly rational to these investors. I’m Marc Filippino. Here’s the news you need to start your day.

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Marc Filippino
China has suspended imports of more than 2,000 food products from Taiwan. The move is the opening shot in a campaign to punish Taiwan for hosting US House Speaker Nancy Pelosi. Beijing considers the island its territory, and it’s hostile towards any gesture that validates Taiwan as an independent country. In this case, a visit from a foreign leader. Pelosi is the highest-ranking US politician to visit the island in a quarter of a century. Beijing has announced military manoeuvres in response, and analysts call its ban on Taiwanese goods a massive expansion of China’s economic warfare.

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Marc Filippino
The world’s largest technology investor is grappling with the question of succession. Who will take over from Masayoshi Son? He is the founder and chief executive of SoftBank. Our Tokyo bureau chief Kana Inagaki says concerns have been stoked by a series of top-level departures, including that of Rajeev Misra. He’s the head of SoftBank’s $100bn Vision Fund.

Kana Inagaki
One of the striking features to some of these departures is that it seems to happen whenever SoftBank is having a shift in strategic direction of the company. And so Rajeev leaving at this timing has also raised questions about the future of the Vision Fund and whether some might be thinking of doing something new again. And so if there is another strategic shift again, that is going to be hard again to find a successor until Son is more clear about where he’s taking the company.

Marc Filippino
So Kana, what does Masayoshi Son say himself about a future successor?

Kana Inagaki
So Masayoshi Son is always asked at earnings or shareholder meetings what he’s planning to do about succession, and his response recently has been quite bullish. He’s turning 65 next month, but he’s saying he’s, you know, he’s very fit. And so he wants to run the company beyond the age of 70. So he’s saying, you know, obviously succession is an important issue for him, but he’s in no hurry to find a candidate.

Marc Filippino
That’s our Tokyo bureau chief, Kana Inagaki.

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Marc Filippino
In the past, the conventional path towards a secure financial future in the US involved getting a job, investing in a 401k and buying a house. The 2008 financial crisis changed all of that. It shook Americans and the faith they had in the conventional path to economic stability. It also spawned a very different generation of investors. The FT’s Behind The Money podcast delves into this new group called “the moonshot generation”. The host of Behind The Money, Michela Tindera, joins me now to talk about it. Hey, Michela.

Michela Tindera
Hey, Marc.

Marc Filippino
So Michela, this is a story about risk takers, a generation of big risk takers. They gamble their money on things like cryptocurrency and have teased things that people would, you know, they would think twice about dumping money into.

Michela Tindera
Yeah. So our US investment reporter Madison Darbyshire reported on this story and she talked about this mentality that she’s found. And a lot of it has to do with the economic quality of life in the US and how it seems to have become harder and harder to become better off than our parents generation. Here’s how Madison puts it.

Madison Darbyshire
They look at the things that their parents have. They see houses and mortgages and comfortable retirements. And the financial reality of being young now can often make those things feel virtually impossible to access. You have a generation of people who are facing down being less well-off than their parents. If they play by the traditional rules, if they invest and save and, like what, they get one per cent interest on their savings account, what’s one per cent gonna buy you? (Laughter) So people started to think like, OK, I have this, I have $5,000. $5,000 is never gonna buy me a house, but $5,000 in bitcoin like, that could be $500,000 or that could be $5mn. So why not take a chance? You know, the odds are better than zero.

Marc Filippino
OK. That that kind of makes sense. But I think for me, the big enabler is technology. When you think about the past few years, there have just been absolutely huge developments in financial technology and the way that we trade is just completely different. How does that all play into the thinking of the moonshot generation that we’re talking about here?

Michela Tindera
Yeah, well, it totally does. And Madison says that that’s a big part of the story and of this generation of investor. It’s the rise of low-cost stock trading platforms.

Madison Darbyshire
It’s hard to tell this story without telling the story of the rise of low-cost stock trading like Robinhood that, when commissions were eliminated from stock trading, all of a sudden there was no friction in the system. There was no sense of, oh, I have to place a trade that is gonna be this successful in order to cover the amount of money it will cost me to make this trade. So it was very easy to just like throw out shots. And when the market was rising, especially, you know, over the last decade, we saw an unprecedented ten-year bull run. It was very easy to make money on options because the market was only going up.

Marc Filippino
So it seems like a combination of desperation, FOMO and just accessibility. Right. We talked about the technology before combined with the want and need to make more money. It all kind of seems like the perfect storm.

Michela Tindera
Yeah, it really does. And that was something I didn’t really realise until Madison pointed out that there’s this ability, using an app, you know, that you didn’t really have years before when you would need to call up your stockbroker and make a trade. And it really takes away that barrier and it kind of plays into there’s also, you know, more use of social media with investing. It all just takes a lot away, a lot of barriers that weren’t there years before.

Marc Filippino
Yeah. I mean, if I think about social media, the whole big storyline about this was people encouraging each other to buy GameStop stock and egging each other on, encouraging people to hold the line, don’t sell diamond hands. That kind of added fuel to the fire in a lot of ways.

Michela Tindera
Yeah, it really did. And I mean, Madison also kind of pointed out it can lead to good information rising to the top, but also misinformation rising to the top and can also be really confusing. So sometimes it can work out for you and sometimes it doesn’t.

Marc Filippino
Yeah, it’s a box of chocolates. You just never know which one you’re gonna get. How did you feel after you walked away from the story? What was the big takeaway for you?

Michela Tindera
I was really interested in the story because I’m part of this generation too. But kind of on the flip side, my general thinking is that I am a pretty risk-averse person. So a lot of these decisions did not really make sense to me. But then Madison said something and it really clicked for me, like, why people are making these choices.

Madison Darbyshire
The people who are taking these big swings are doing it in a way that feels very rational to them. If you have a one-percent chance of success, but the alternative is failure, the one-percent chance of success is the rational choice, right? Like, if your security or your safety or your future is on the line, big swings make sense. My conclusion was that these investors, even though we might not agree with some of their decisions, were operating in a way that was financially rational. And the problem is that, on a much higher policy level, like, the problem seems to be that we’ve created a generation of people who don’t feel optimism about their futures.

Michela Tindera
And I mean, I of course, think about, you know, what might have happened if I invested in bitcoin, you know, ten years ago and maybe could have sold it when the market was at its peak. And of course, I also would have needed to have remembered my password.

Marc Filippino
Yeah. And like, that’s not at all a guarantee. (Laughter) Michela Tindera is the host of the FT’s Behind The Money podcast. You can hear the full episode on the moonshot economy today. We’ll have a link to that in the show notes. Thanks, Michela.

Michela Tindera
Thanks, Marc.

Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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