Financial Influencers
And the people who follow them
In the 1990s, we watched whatever came on the television.
There was no instant access to our favorite shows. No set-top box or digital menu guide. We drove to a place called Blockbuster Video, rented a copy of a movie, and drove back home to watch it. And when it came to watching regular television, our only choice was on or off.
In the middle of the night, watching television meant infomercials.
The infomercial was a long-format commercial. Usually about 30 minutes. But unlike regular commercials, it followed a reliable storyline.
The trick was, show the viewer a nagging problem faced by many people. From sticky kitchen utensils to a receding hairline, anything plaguing a big swath of society would do.
Once you have audience attention, present an almost instant fix…followed by example after example of people who seem very happy they found the magic solution. This format worked, generating massive sales for the promoters behind these overpriced gadgets and gizmos.
Take 8-Minute Abs. The promise of a washboard stomach…in just 8 minutes.
This pitch was a huge hit… yet few buyers found the 8 minutes needed to do the actual workout.
Fitness-minded people know the secret to a firm stomach. Avoid consuming more calories than needed to perform your daily activities. That’s especially the case with modern nutrient-deprived, low-cost food options. In either case, the actual workout portion of the being fit equation is secondary to diet.
But the sales geniuses behind 8 Minute Abs knew most viewers had more money than discipline. The promise of an 8-minute system, complete with a VHS cassette and simple instructions, gave them hope of a quick fix for years of bad choices.
Filmed on the edge of what looks like a retention pond in a Florida subdivision, actors demonstrate the not so complicated 8-minute workout.
All night long, insomniacs across the country had the chance to fix problems like this…fast.
Nothing New Under the Sun
These days, people under the age of 40 have a hard time imagining an analog living room television set.
Devices and delivery methods change rapidly, but the people watching them don’t.
The current crop of American investors makes late-night informercial watchers look smart.
Quick takes, short videos often less than 90 seconds, are the most popular format for what passes as learning today.
You might think everyone knows it’s merely entertainment… Not a source of real information. But surveys on the issue show people turn to online videos with life’s big questions.
Credit Karma reports 77% of Gen Z (born 1997-2012) and 61% of millennials (born 1981-1996) actively seek financial advice through social media platforms.
Further, the Z-ers cite YouTube (71%), Instagram (50%), and TikTok (49%) as their go-to sources.
It explains why restaurants, subway cars, planes, and family gatherings have people assuming the same posture, slumped over the telephone.
Just like the infomercials of the 1990s, the audience for modern quick videos has money to spend…and lacks the common sense and experience needed to resist.
False Humility
In the 1980s, it was cool to be rich. An air-cooled Porsche 911, playing leisure sports at a social club, or wearing sunglasses inside at night, was all cool. Even the movies validated a greed is good mentality during the decade.
These days, it’s the opposite. Credibility means telling viewers you grew up poor, and somehow became rich. It’s a combination of narratives. A double-bind. Both are totally bunk.
Growing up poor is some kind of online badge of honor. It seems like everyone grew up poor. Which is hard to understand considering the story usually deepens to reveal a house, car, education (even if public school), and other lifestyle accoutrements the average street-sleeping Calcuttan might say doesn’t sound all that poor...
The poor story is what we evidently want to hear. Horatio Alger meets the online world.
Even if what follows is massive, obnoxious success, lavish amenities, and of course, the pitch on how you too can catapult into this cushy life. The “I grew up poor” people are always trying to sell something, and today’s video watchers buy it.
Then there’s the issue of success, the newfound good life. Nobody asks these marketing stars if they have concern they’ll deprive their kids of the chance to grow up poor… Which seemed like a prerequisite for success in their case.
Either way, the pitch works. Take Vivian Tu as an example.
You might know her as your, “Favorite Wall Street Girly.” Or to her more ardent followers, their, “Rich B.F.F.”
Best Friend Forever is a big promise… especially from a digital friend.
Following the required path to stardom, Ms. Tu’s bio says she grew up in a struggling immigrant family. Struggling is a relative term… they did manage to get her into and through college with a bachelor’s in environmental studies. That led to a whole entire ~year working in a J.P. Morgan satellite office before moving on to sell advertising at BuzzFeed.
In her “best-selling” book titled Rich AF, the recently 30-year-old Tu describes how a formative yet incredibly brief tenure at the country’s largest bank shaped her now prosperous mindset. Mostly through jargon and poor syntax she makes clear a “them” class of undoubtedly white but certainly male office mates tried its best to hold her back, but she prevailed.
As for the book, there’s an unusual amount of swearing and colloquial jargon. In private conversation, swearing can be loads of fun. It can add immense color and passion to a conversation, making it informal, and more personal. However, it often cheapens a literary work. Especially non-fiction.
As for the title, “AF” is crass parlance for a great degree of something, an exceptional amount. I’m surprised the publisher allowed it on the cover. This “bestseller” demonstrates the low intellectual bar for entry into the Forbes 30 under 30 club, which counts her as a member.
Marketing Disguised as Information
The book is credibility, it’s the videos, the quick takes, that garner true fame. People love them.
With 1.12 million followers, close to ~1,200 videos, and a presence on every platform, our favorite Wall St Girly leads an army of viewers, hungry for answers, and plagued by financial woes. Few realize they’re merely modern-day infomercial customers.
And while Vivian Tu is a voice for our time, she’s not alone.
Take this guy, Tyler. He walks around a wooded area recording quick take videos. Not just one; all of his videos seem to take place in a remote and secluded forest.
A quick visit to any of these content sites shows there are mobs of useless financial influencers, faux gurus, collecting followers. The followers watch videos to “learn” about finance the way 8-Minute Abs infomercial viewers watched to learn about fitness.
The difference today is, viewers dial up the content themselves, and watch it almost constantly.
Emarketer reports U.S. adults spend a stunning 4 entire hours per day watching online videos.
Put The Phone Down
Watching videos is easy. Anyone can do it.
It’s too often a distraction, from self-induced problems. It’s also hope, that a solution might arise watching one of these self-established gurus.
But gurus don’t make quick-take videos in the forest, or while eating avocado toast. Those are marketing stunts. Real gurus share stories, it’s on you to learn from them.
The other big danger plaguing the masses today is an “Us Vs Them” mentality. It’s an intellectual cop out. Ms. Tu’s book has an undertone of resentment for a finance culture largely portrayed as entitled, and entrenched. She turned this not-so-subtle name-calling into a lucrative marketing career. It’s impressive, but won’t do much to help the struggling video watchers.
More video watching means less learning, in the true sense. The decline in critical thinking ability makes navigating life even more challenging.
Yet people persist… in droves.
It gets worse… Video watchers develop trust as the video plays. They feel comfortable clicking the referral links presented. Once glued to a video, it’s a credible source in their mind. The results are often messy.
It feels good to run with the herd. To stay up on all the latest 45-second musings from the videosphere.
The message from financial influencers is one of hope. It’s not your fault, this situation happened because of some other lucky group of people…and you deserve better.
None of this is true. Good or bad, nobody deserves anything in life.
The difference between winners and losers is simple. Winners decide what they want, and what’s required to get it. Losers watch videos, and blame their condition on external factors.
These Video Watchers Gamble on Stocks
In the infomercial days, buying a back scratcher on late-night television didn’t do much damage outside the family home. These days, the way people lunge for success contorts stock prices.
What the Wall Street Girly and all the other financial influences can’t or won’t tell you is, a share of stock represents ownership in a company, and a proportional amount of its profits.
Unlike debt, or any money loaned to a company, the share price can swing from zero to unlimited. Loans have a best-case scenario of repayment with interest. That makes a company’s share price totally subjective.
NVIDIA (NVDA), for instance. It was once a leading maker of chips for video gaming consoles. It did well, but as the market saturated, it shifted to produce chips used in Bitcoin (XBT) mining, then again later to chips used in AI computing. It might shift again, to quantum computing, or the next big thing.
That’s human leadership…decisions made by management. Stock owners are the ones who choose management.
Through elections, held at least annually, shareholders have the chance to vote. By majority, they elect a board of directors tasked with staffing the executive ranks and plotting company strategy.
Most modern shareholders, especially the gambling type, have no idea when or how to vote their shares. If prompted, they’ll say it’s beyond their ability, clicking buttons and reading bios and such.
Maybe there’s a quick take video idea in here…that could sway board elections. Activist hedge fund managers on this list take note…
And worst of all, the absolutely terrible response to the notion they might want to behave like an owner is, “It’s just play money…”
No Such Thing as Play Money
I’ve never had any play money. Never knew where to get any.
From an early age, money represented freedom to me. Intellectual freedom. For reasons covered thoroughly in Not For Sale.
It wasn’t due to growing up poor… we were somewhere in the middle of the pack, the better side of average. Statistically, this is where most people grow up. It’s why they call it average.
My first paid job was in a warehouse, moving carboard boxes of furniture. They had sku numbers written in permanent marker. We used “hand carts” like you see strapped to the front of a Pepsi delivery truck.
The warehouse was hot enough to qualify as a steam room in mid-summer far-eastern North Carolina. There were about six people including me, plus Ray, the manager, who had a horrendous addiction to long-leaf chewing tobacco requiring spittoons placed at the end of every isle cap.
My grandfather liked my enthusiasm for warehouse work. He’d take me to lunch and indulge in my account of this serious job. Then delicately explain someone owned that warehouse, the company, etc. I got a picture of how things worked.
And not at all the Us versus Them way, which prevails today. He explained the goods flowing through the warehouse, bought for $1 and sold for $1.25. The owner wanted things humming, from the showroom floor to the customer’s living room. The better that system worked, the higher the earning potential, and in turn, the value of the company.
I never ended up owning that warehouse, or any other. But the experience gave me context. There were no quick take videos back then.
My friends from middle school spent the summer at the beach, or away at camp. I was the only one who regaled work life. The only part they found interesting was the meager earnings I accumulated.
However, the basis of how the warehouse functioned led to more discussion. How other companies worked, my teacher assured me the bigger companies were the same as the warehouse, with more people and structure. But not to worry… getting a grip on the basics is all that mattered.
In time came the concept that some of these big companies had stock trading on the New York exchange, and quoted in the back of the newspaper, meaning you could buy a tiny slice of the company, and maybe I’d like to have a small handful of shares so I could track the price and learn about the business…
It’s a Process…Not an Event
Nowhere in that discussion was play money, immediate gains, or the prospect of life-changing results. Instead, it felt like work, keeping tabs on the stock. Work I was eager to do.
Stocks traded in fractions back then. In 1/8ths. Sometimes I miss talking about them that way…
And the small amount of stock, trivial at best, taught lessons needed to handle larger amounts later in life.
People these days always want to know what to do with extra money… It’s a loaded question. They deny it, but what they really want is to gamble. There’s no intention of doing the work needed to protect and grow savings. It’s why I tell them to spend it doing something memorable…which they think is a terrible idea.
Rich and wealthy are not the same thing. Rich people make flashy videos, wealthy people mange money.
$1,000, $100,000, and $10,000,000 all require the same management approach… and few accept it.
Today’s hopeless cohort of video watchers is still too involved in the stock market… and that’s a problem.
When They Finally Tap Out
This is a one-year chart of the S&P 500 Index (SPX).
Notice the pink and yellow lines in the chart… They plot the average price over the last 50 days, and 200 days.
At the most rudimentary level, these lines show the trajectory. They tend to track the current trend in progress.
If you’ve been around for a while you know, when the pink line crosses under yellow, things tend to head lower.
But not forever… And it’s a deceptive process.
The S&P 500 looks ready for a relief rally. Back up closer towards that yellow line. But it doesn’t look like it’ll last… likely moving back up then falling lower again.
This painful and confusing process bamboozles the gambling class. They stand ready, smartphone in hand, to buy the dip…like people on TikTok videos told them to. But they can’t discern between dip and trapdoor.
When this group finally gives up, these buyers of single-day call options, the video watchers, the plumbers who have no business buying triple-leveraged NVDA exchange-traded-notes… when they tap out for good, that’s the bottom.
And not before…
Stocks go up when there are more buyers than sellers. With memories fixated on the last rally, the just-ended bull market, and the hope for one more chance to sell at higher prices, every rally sees support.
Not to mention the headlines. We’ll talk about gold shortly, and how it spotlights a likely behind the scenes war between U.S. and Chinese interests.
Giant daily swings and swoons in the stock market, as much as 5% in a day, confuse people glued to the phone screen hoping for a miracle. The people who ask, “What should I do with this extra play money…” when the answer is, spend it, but they won’t.
People watch flashy videos hoping for instant riches, but throw away hard-earned money in a market they don’t understand.
Buy What You Know
Before we get into gold, I’m excited to introduce an unusual stock to the Trustee Portfolio.