Much like the old Ukrainian families that still inhabit the infamous nuclear wasteland Chernobyl, I too am exposed to my share of radioactive waste - via bad content on Money Insta and Twitter.
This newsletter is a word of warning about a) the wrongheadedly headstrong people who dish out advice about investing and crypto, and b) our tendency to explain complicated events with broad brushstroke and often sensational narratives.
As you may have read previously in stories, posts, or in an earlier edition of the newsletter, The Money University has a problem with advice. The incentives are all messed up (including mine). Most of the advice you see on the internet is either nonsense or simply won’t work for you.
Remember Naval telling you to tell your boss to piss off? Thanks Naval, I just got sacked following your advice and now my wife and kids have left me.
The content I'm seeing out there is something like digital Slimfast.
Slimfast bars aren't good. If you want to lose weight, fine, but this? I don't like it.
A Slimfast Chocolate Caramel Treat is not as satisfying or indulgent as some actual chocolate, but it's not super healthy either, despite what they tell you. Eating these bars also does not break or make any meaningful habit that will move you towards your goal (weight loss) in a sustainable way. It's not good.
And who benefits most when you buy Slimfast bars? (Clue: It's not you).
Anyway, it’s hard to say whether things are getting worse recently, or if my Slimfast allergy has just flared up, but a lot of posts on the timeline at the moment don't sit right.
Let's look at some two examples.
- The guy who says he invested £180,000 in Rolls Royce shares without knowing what the company did, and said it tripled in price which isn’t likely at all.
- The hyperinflation narrative, that seemingly every man and his dog is talking about.
Rolls Royce guy
Okay, I’m sorry to do this but this clip is a perfect example of the bad advice and skewed incentives The Money University doesn't like.
You can judge the video for yourself, here it is. The section I want to talk about starts at 58:55 until 1:02:56.
I don't know who this is, he popped up on my feed and seems to have a big following. To be clear, all I'm talking about in this article is the 3ish minute clip I referenced above and saw on my feed.
Let’s look at some of the things said in this clip:
- He said he invested in Tesla in 2019, and also said he was in from when the price was $300.
- These statements don’t add up, in 2019 the price was much lower than $300, it was around $60-$90. So which was it, in Tesla since 2019 or since it was $300? (It hit $300 first in July 2020).
- “Sell when we think is right to sell”, fair enough. But not really sharing actionable advice for anyone watching.
- He goes on to talk about buying shares in Rolls Royce “during lockdown”. Since we don’t know exactly when this would be bought, it’s hard to work out what return he might have made.
- But looking at the chart it’s not actually possible he tripled his money like he said.
- Tripling would be a 300% return, and for him to have gotten anywhere close to that would have meant he timed the bottom perfectly, which is very unlikely.
- If that was what he did, he’s made a ~250% return on his money, not a ~300% return, which is a fairly big difference.
- More likely he didn’t buy at the exact bottom, meaning his returns could range from ~250% to a much more modest ~10% in the “lockdown” period.
- Finally, he talks about the reason he bought Rolls Royce shares. He had £180,000 that he wanted to spend on a Rolls Royce car, but he chose to buy shares instead. Fair enough.
- He also said he didn’t know at the time of buying the shares that Rolls Royce don’t actually own the car brand, and that he only later realised that they make engines for the aerospace and defence industry. BMW owns the cars.
- He jokes about this, fair play it is funny and everyone has their own stories about making mistakes trading.
- Then he says “we can buy four now”. Assuming he means Rolls Royce cars at £180,000 this is an exaggeration. As we’ve covered he at best got a ~250% return, though likely much lower. So no, he can’t buy 4 based off that, I'd guess maybe more like 1 and a half.
Maybe this guy has got his numbers muddled up. Maybe I'm getting too bogged down in the details like the little neek I am and no one else cares. Maybe he did perfectly time the bottom and make ~250% on his trade (not tripling or quadrupling).
But even if any of that was the case, the clip is misleading.
It's bad and lazy content about money, investing and bEliEviNg iN yoUr GrInD and MakInG MoNeY woRK fOr YoU.
It does more damage than good. It's digital Slimfast. It's giving the illusion of being helpful (I mean, look at the title of the video), yet only benefits the person selling it.
Final point. He starts off the video with a long spiel about how he invests based on what he thinks the world will look like in the not too distant future. Fair enough, that’s a valid way to approach investing.
But the only companies mentioned in the clip are Rolls Royce, Tesla, Luis Vuitton and BMW. This is a pretty poor showing for someone who’s gone out of their way to emphasise how forward looking they are.
The goggles do nothing
People are just going to pump radioactive Slimfast waste into your eyeballs now. That's it.
Any questions around the quality of content get dismissed. "They're doing their best", or some similar thing which puts the fact that the creator is "hustling" or "grinding" above anything else.
People pump out content to get clout, get wider reach as people share the content, get more views and followers who are ultimately people in their marketing funnel that they can sell products to. Or they can auction off advertising slots to the highest bidder.
These sorts of lazy videos are bad for lots of reasons. Two big ones: either the people who do them are accidentally being misleading and giving out questionable advice and tips. Or, they’re doing it deliberately and don’t care.
People are put at risk of losing their actual money when sloppy content like this goes out. I’d stop short of calling this sort of content scammy, but if the point of this content is to help people think and learn about money, surely it should leave you better off after you've consumed it.
I’ll leave you with a saying in investing that I think sums up the video.
“Everyone is a genius in a bull market”
Right, onto the hyperinflation story.
It’s coming for you, hyperinflation it’s coming for you
Quick reminder, inflation is a general rise in prices - or, to put it another way, the fall in purchasing power of your money.
Inflation is in the news a lot at the moment. This is because inflation is high! Aaah!
Okay, so what is actually happening with inflation then?
Well it's higher than it was. look at this chart showing UK's CPI inflation since 1990:
But that's not the end of it.
In typical fashion for the times we're living in, a lot of inflation "truthers" out there who believe the powersthatbe™️ are hiding the truth by using graphs like the one above.
The hyperinflation truther narrative is something like this: Western governments are hiding true inflation numbers, cost of living is going to be (or already is) spiralling higher and higher uncontrollably, leaving the average person much worse off, and all of this is going to cause massive social upheaval.
The Money University is all for questioning normal thinking. Inflation is genuinely higher at the moment, and of course it’s good to scrutinise the figures.
But the end-of-days feeling to this story makes it all seem like another class of fear mongering from the media (and social media figurines who in most cases copy and paste tactics employed by the traditional media to keep people engaged and subscribed).
Here are two good articles that debunk this hyperinflation narrative if you want to dive deeper, because that's not what this article is for.
This article is about questioning the incentives behind content you see online.
So why would people want to talk about hyperinflation so much?
In short, many inflation “truthers” have a stake in hyping the story.
- Many are in the crypto community, which tends to thrive on the story that the existing monetary system is broken, that normal people are being lied to, and that cryptocurrencies are the silver bullet for all of our financial ills (Bitcoin fixes this).
- The more people that believe this, the more people buy crypto, the more number go up.
- Equally you have finance pages, blogs, even fully fledged news institutions whose whole business model is to catch eyeballs by doom and glooming, so they can power their big advertising machine.
Overall, the point here is that anything could happen. But you should beware anyone who tells you what will happen!
Okay then, you might be asking, well how are we supposed to wade through all this disinformative radioactive gunge?
Here are three options:
- Know how little you know
- Question the incentives
- Limit your exposure to radiation
Firstly, you can just adopt a stance of uncertainty. And be okay with knowing you might not know much about the big complex issues in our big, weird, scaled up world.
People don’t seem to like doing this. People don’t like saying “I don’t know”. People like a narrative.
They like to be the one creating it, but if they can’t do that then following a nice strong one someone else created is the next best thing. That’s why cults are a thing.
If you adopt the mentality that no simple narrative can explain complex events, and that no one is particularly good at making predictions about the future, you strengthen yourself against the unknown, and protect yourself against unserious people who claim to know what price Bitcoin will be at in 256 days.
There’s a previous post about steps we can take to make ourselves more robust against shocks and unknowable things (like a sudden health complication, or being dumped). But surely you should really have picked up The Money University’s way by now.
Secondly, question the incentive driving content you see. This goes for the forex scammer as well as the Washington Post, Business Insider or BBC. (See, I'd agree with the truthers there).
Ask yourself: what is the intention behind this content, what does the person who created this want me to do, why, and what is the aim of the people who are employed by that company...
Finally, limit your exposure to radiation by getting out of the nuclear core.
I'm going outside now, without my phone. It's a nice morning.
A final quote to leave you with:
"Giving someone the wrong map is worse than giving them no map at all." - Taleb