Where Are the Millennials' Yachts?

Even if you’ve never heard of Fred Schwed Jr., it’s likely you’re a beneficiary of his work. After his expulsion from Princeton for entertaining a lady in his room after the late hour of 6PM, Fred followed his father into the family business of investing, taking a job as a stockbroker.

Fortunately[i], Fred Jr. lost everything as a short seller during the Roaring Twenties, eventually leaving Wall Street to become an author, writing Wacky, the Small Boy, a children’s book.

However, it was Schwed’s other work, Where Are the Customer’s Yachts, you should be thankful for, if you have any money in the financial markets. The 1940 book was a humorous, yet powerful indictment on Wall Street’s self-largesse and lack of concern for their clients.

Yachts has since been reprinted numerous times and is considered a seminal, paradigm-shifting book as it relates to misaligned incentives in the investing industry. Warren Buffett recommends the book noting, “Its wisdom and humor are truly priceless.”

Where are the Millennials’ proverbial yachts?

A variation on Mr. Schwed’s question arose during my summer vacation. My wife’s father owns a second home in Put-In-Bay Ohio, and is a member of the island yacht club.[ii]

While eating dinner at the clubhouse[iii], I couldn't help but notice there were no young boat owners, only those over 55.

After conversing with a few members, most noting they've been members of the club for decades, the question presented itself: Where are the Millennials' yachts[iv]? What’s so different then than now?

The answer: adulting is hard…now

Summarizing most answers: the average boat owner, let’s call him Joe Yachtman:

·         Is moderately educated, having a bachelors or high-school education.

·         Notes with pride they worked their way through school.

·         Has a pension and may have company-paid healthcare retirement plan[v].

·         Paid less than $75,000 for their first house.

Joe loves his children, generally has two or more, and notes he is helping to pay for their post-secondary education. However, Joe is convinced Millennials and Gen-X are, as a group, lazy and pampered and "wouldn't survive if they had to grow up in my America."

The truth is different: Millennials are more likely to have a bachelors degree and take less vacation time than their parents, the Baby Boomer generation.

However, the difference is being an adult is more difficult now, at least from a financial standpoint. And the reason why is the traditional hallmarks of becoming an adult have grown at a higher rate than the average starting paycheck. The chart below shows the growth of $1 from 1993 through 2016 in both salary and purchasing power.


Out of the three hallmarks of adulthood (post-secondary education, medical care, and housing) two have significantly increased more than salaries for starting workers (16-24 years). The answer to what happened to your yacht is it went to your Baby Boomer doctor and dean, which were able to get bigger yachts.   

A millennial playbook: be smarter at saving and be smarter at investing

The upshot is Millennials have to be smarter than prior generations at both saving and investing than the Boomer generation. In addition to higher living expenses, a lower percentage of private-sector Millennials have guaranteed retirement plans (pensions) – the figure has dropped from 38% in 1980 to less than 15% today.

It is for this reason I started my site, 567 Capital. I hope to pass along a few of the lessons I’ve learned in my decade of working in the financial industry, including some of the mistakes I’ve made. It is my hope to inspire and educate a generation of young investors. 



[i] Yes, fortunately. It’s likely in a parallel universe where Schwed didn’t lose anything the book wouldn’t have been written.

[ii] You should visit Put-In-Bay if you get the chance – it’s gorgeous.

[iii] Yes, I realize this sounds arrogant.

[iv] Yachts is a figurative term here meaning the life you want to have.

[v] Put-in-Bay is in Ohio, near Detroit and other union-heavy areas, which likely skews the percentage with pensions and post-retirement healthcare benefits.


Jamal Carnette