And can you blame them? If you're in your late 20s, you've probably experienced two epic stock market collapses: the collapse of the Nasdaq/dot-com bubble in 2000, and the end of the leverage-fueled stock market bubble in 2008.
Further, if you started investing in late 1999 (an unfortunate entry point), your 401k plummeted, took about a decade to recover, only to sustain major losses again in 2008. In many cases, individual stock portfolios are probably not that much higher today, in real dollars, than they were in 2000. It's been an equity market run that certainly didn't do much to encourage younger citizens to invest and believe in the long-term benefits and advantages of stocks.
Moreover, the sad part is that much of the stock market's losses of the past eight years could have been avoided, had the United States steered a different economic course. Had critical investments been made in infrastructure, education, energy conservation/fuel efficiency, and health care, among other policy initiatives, starting in 2001, the U.S. economy would have a sounder foundation today. But they weren't, and added on to the above decade of policy errors was about $1 trillion in deficit spending for national defense, and a tax cut that did little to help the middle class/working class citizens. In other words, today's 20-something generation's first experience with investing occurred when American economic policy was at its worst, and with an economy that was headed in the wrong direction: toward unsustainable, unbalanced growth.
What will it take to renew the faith of 20-somethings in investing and the U.S. economy? Well, part of what's necessary is already underway: the nation, through the new president and Congress, has committed funds to improve the nation's infrastructure, enhance educational opportunities, make the nation more energy-efficient, make the tax code fair for typical Americans (including deficit reduction), and rein-in health care costs while establishing universal health care coverage. These changes, combined with the U.S. economy's ability to adapt and innovate, and create new sectors of growth, will help lay the foundation for sustainable U.S. GDP growth.
Will the above be enough to convince today's 20-somethings to give stocks a third chance? I think so, for two reasons. First, the United States has faced larger crises, implemented reforms, and then experienced a new era of prosperity, and a new birth of freedom. Second, 20-somethings have, in most cases, about 40 years of investing ahead, and a remarkable amount of money can be made in stocks over a 40-year period. As the late, great baseball manager Casey Stengel used to say: "and you can look it up."