Eyeing stocks? Listen to the voice of youth

Netflix and Twitter know the younger generation better than most investors think.

By Jim Cramer Jan 25, 2013 10:06AM

thestreet logoWoman sitting on steps with smartphone Image Source Image Source Getty ImagesMy birthday is in a couple of weeks. My youngest daughter loves to get ideas from me for my birthday. She's really into giving and receiving the right presents.

 

So when she asked me what I wanted I told her I wanted the first-season DVD of "Sons of Anarchy." Everyone tells me it's like "Hamlet" and I was always a big fan of Shakespeare's work.

 

She texts me back immediately -- we ceased to communicate by actual words a long time ago, but I would recognize her voice if she called -- and writes she isn't going to buy it because it streams on Netflix (NFLX) so it is a total waste of money. Memo from me to you: any time, any time whatsoever that a teenager is worried about spending your money, sit up and take notice. My daughter swears by Netflix more than she used to swear by Apple (AAPL).

 

I should have figured that. After all, the new televisions of even the most dubious quality come with Netflix right on the clicker. Can you believe that? No wonder it added 2 million subs this quarter and rallied huge, especially when you consider that it ruled out doing an equity offering to pay for all of its new content. The shorts wanted to buy that stock on the underwriting dip. Forget about it.


My daughter's also the one who told me that she's been buying things off of Facebook (FB) lately, well timed, right when Zuckerberg came on the conference call and said the company had screwed up mobile but was now getting it right. You might have figured that out from when I went positive on its soon after that conference call.

 

She is also the one who turned me on to Apple at $50 when she asked for her second iPod because she had a blue one and wanted a pink one as a fashion accessory.

Alas, she and her sister are also the reasons why I had to cool on Apple as they simply didn't want any of the new stuff and are still angry about the cord and the map and the new iTunes. Her sister, the other day, wanted to know when you could buy shares in Twitter because she said that could be a sensational buy.

 

Which brings me to the takeaway here. Right now there are companies that have no appeal at all to the younger generation. We saw it with Coach (COH) and Tiffany (TIF), two older, out of touch brands that my two kids aren't the least bit interested in, not more interested than they would be shopping at JC Penney (JCP) or using Microsoft (MSFT) software or driving a GM (GM) car. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

 

Yet if you are going to win the younger generation, the generation that will soon have the purchasing power, a generation that is much smarter than we are, you need to talk to kids like my kids. They now think that Apple's old. Not repulsive like a Hewlett-Packard (HPQ) or a Dell (DELL), just old. But that could change on a dime. All Apple would have to do is go buy Twitter, or Netflix, or even an outfit like LinkedIn (LNKD), which is developing quite a following among younger people joining the workforce. Heck, it could buy all three and really get its business back in touch with what younger people want.

 

Netflix knows the younger generation better than most think. Apple used to. That's one of the main reasons why Netflix can soar 40% on a 13-cent profit and Apple can plummet $60 on a $13-dollar gain. It's a lesson that Apple better pay attention to if it ever wants to get back in touch with what the next generation wants, even as it is more sure than ever that it does.

 

Cramer's face

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust  and is long AAPL.

 

 

 

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16Comments
Jan 25, 2013 11:15AM
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Thing about youth is they change their minds constantly, what's in today is out tomorrow.  While I agree they might be a good judge of what not to buy (Coach & Tiffany's being good examples) trying to chase the next big thing with teenagers as your guide sounds like a receipt for disaster.  If you don't understand a sector yourself stay clear.
Jan 25, 2013 10:56AM
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The point is it`s young people that buy.Advertisers concentrate  their ads because they`re

the ones that buy and spend money.The older people are the cheaper people get.Spend-

ing really drops off when people turn 65.The charts show it drops like 50%.

Jan 25, 2013 10:31AM
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Yeah maybe we should just listen more to what the young are talking about. I thought that I could make a killing when Stern was going to satellite with siri, should've listened to the kids talking about apples. 
Jan 25, 2013 12:34PM
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All this putz ever does is point out stuff that just happened ......when Apple is back up and Netflix is back down he will claim to have been on that side of the trade .......

Does anyone believe his kids are a valid reflection of the global economy?  

My guess is he is trying to get them a gig on CNBC ......
Jan 25, 2013 1:39PM
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What kind of man brags that his daughter wants a second iPod as a "fashion accessory" .....rampant greed and expectation amongst America's youth !

Having said that I doubt very much if cramer is actually telling the truth here.
Jan 25, 2013 12:35PM
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Btw ask around .......I have asked hundreds of people and NEVER found anyone who has bought anything off FB.
Jan 25, 2013 12:13PM
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Better advice to YOU, Jim... listen to ALL youth, not just the Kool Aid addicts. The vast majority of younger people are realizing that handheld devices and constant interaction on social networks or social publicity sites is sapping their motivation to go forth and carve a niche in the world. Strong use by adolescents is having disastrous impacts on early twenties trying to pair-up, grow-up and assimilate into the collective economy. Overly "connected" button pushers lack any other skill. Once again, Jim... you pump the wrong stocks. If you are stuck in a low pay economy, you don't retard you future with an excessive debt like the kind associated with Apple Culture. Netflix is fine but it's literally impossible to stay healthy and lounge enough to watch movies.
Jan 25, 2013 2:42PM
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"Global Kool Aid and Bubble Conference"

 

                                            Funny!!

 

 

Jan 25, 2013 10:34AM
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I would be looking for a possible 0.50-0.75% gain on DOW today...With decent earnings and good reports out of Europe...Asia overnight mixed to down a little, with heavy upside on Japan's Nikkei.

DOW pushing closer to the 14,000 mark and breaking through 1,500 on the S&P.

 

Gold down some and stagnating still..

Silver shuffeling around...

Oil near 96.50 a barrel up a little...

Maybe a good finish to a nice week...Any big upside today would be a gift..

 

Jan 25, 2013 2:20PM
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Hey Cramer, try throwing darts at the WSJ to pick your stocks.  Facebook is past book with no future.  Unbelievable.
Jan 25, 2013 12:22PM
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And the Euro continues to move in lockstep with US Stocks.  Money doesn't get any easier than this.

God Bless America!

Jan 25, 2013 2:09PM
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So how do you think Apple, Netflix, Facebook and Twitter will fare as North Korea nukes South Korea to start WWIII? Exxon apparently has the largest market cap and is suspect in aggravating most if not all of our global conflict woes. All of our CEOs are in Switzerland today for the Global Kool Aid and Bubble Conference. Merck's CEO actually thinks the economy will take-off this year... why? Ample supply of a happy medicine on hand? President Obama and Sec St Clinton appear on 60 Minutes to 'splain to us all what happened at Benghazi, but NOT to tell us what will be done with greed, avarice, gun fetishes. business corruption and financial terrorism. It's just another Dumb day in America folks. THIS is what happens when they let the college kids drive the tractor and operate the farm. Keyword: Mayhem. Text that, kids.
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