At the end of my irregular Friday Finance posts, I always add the disclaimer:
- This article provides general information. It does not take into account your personal circumstances and is not intended to influence readers’ financial decisions. Get your own, professional advice.
I started doing this formally and consistently after the Old Country passed a law banning influencers from promoting any financial products and services.
I didn’t seriously think a tiny blog on the other side of the world spruiking the benefits of index funds would attract the Eye of Sauron, but why risk it?
You’ll see this sort of disclaimer all over the place and it is usually there as a legal fig leaf.
However, DO NOT DISREGARD IT.
You really must do your own research and get your own personal advice. Recent events should have driven that point home rather painfully for those who got caught out.
The collapse of FTX was so dramatic and absurd that within hours people were debating who ought to play the slovenly t-shirt guy when it becomes a Netflix series. I would watch it. Here’s a small taste of the madness (click through to see the full thread):
A lot of finance YouTubers have sponsorship deals with FTX. To be fair, they did mostly promote FTX US, which escaped the worst of the damage. They also warned their audiences to get their money out once there was trouble, though some would have received this message too late.
In any case, there are no doubt plenty of people out there who lost money in this stupid thing because of the confidence inspired by their YouTube heroes. Coffeezilla, who did not promote FTX, covers the basics:
And yes, you might recognize the fellow on the right as Graham Stephan, whose main channel I have previously recommended on Friday Finance.
Oh, dear. I rush back and check what I said:
The titles and thumbnails are always clickbait but the content itself is sensible. While he addresses fun stuff like crypto and meme stocks, the bulk of his information reminds the viewer to invest consistently over the long term.
If I had my time again, I would change that word ‘fun stuff’ to ‘speculative nonsense’.
These channels often say ‘for entertainment purposes only’. Take this at face value, not as a legal disclaimer to prevent them from being sued, though it may be both. If you’re getting your financial information from YouTube, consider sticking to index funds. This goes double for getting one’s information from CNBC et al.
Well that’s a bit better. I won’t link him henceforth, but. His channel has been getting worse. Which is a pity, because I stand by what I said: his early stuff is helpful for beginners in finance. While he slobbered over FTX on his other channel in order to rake in those sweet, sweet commissions, most of his content soberly suggested that viewers buy and hold low-cost index funds. If someone had fun by putting 2% in crypto and lost it, well, it’s 2%.
I still wouldn’t want to lose 2% though. Even if the stock market falls 50%, that’s a paper loss that can be eventually recovered if one’s investment horizon is long enough. Any money lost in FTX, in contrast, is ashes and dust.
Incidentally, FTX is far from the only dodgy outfit being shilled by the tubers. A lot of them seem to be getting kickbacks from Masterworks, too. No doubt there are other examples.
It’s all ads, kids. It’s not a complete breakfast. I’m hatin’ it. You’re not worth it. Just don’t do it.
Do not take advice from YouTube unsalted. Even some of their bicycle repair videos are fake.
Blogs are no better.
The warnings I put here are not only for legal reasons. For every perfectly sound suggestion that I make, I can think of a plausible case of someone who would be better off not doing that thing.
Let’s go through the Ten Steps and see:
1. Don’t get into (more) debt
Some people really need to take out a consumer loan, i.e. for a cheap car to get to work.
2. Make a frugal budget
I can’t think of anyone who would not benefit from doing this, much less who could be hurt by it. At worst it might not help some tight-arses who weren’t spending much money anyway.
3. Establish an emergency fund.
A desperate person might have to choose between paying a vital bill and setting up an emergency fund. You can only do what you can do.
4. Get out of debt.
Someone who lacks any buffer at all should probably set up a small emergency fund before doing this.
5. Increase your income.
There are some jurisdictions in which it might be of little or even negative benefit to increase one’s income in certain circumstances, due to taxes and welfare rules. I don’t know every situation in every country.
6. Protect what you’ve got.
It makes more sense for some people to save up money for emergencies or depend upon other sources of succor than to buy insurance for some things. Every situation is different.
7. Plan your life.
No harm in this I suppose, just don’t expect life to run on time or on the correct track.
8. Invest wisely.
Bonds – some young people don’t need any.
Index funds – some older people might choose to move to less volatile products.
Real estate – it’s not for everyone.
There’s no one-size-fits-all investment solution. The old, ‘save 15% every working year and put it in an index fund, diversifying to bonds gradually as you age’ approximately works for 80-90% of people. There can always be exceptions for reasons I cannot even guess at. I haven’t met everyone on the planet and don’t know all their circumstances.
9. Get advice.
Some advice is so bad that you’d be better off without it. Even official, personalized advice from certified planners.
10. Record and reevaluate.
Don’t know where you could go wrong with that but you never know how somebody might manage to stuff it up. I can only offer suggestions, not hold everyone’s hand as they figure it out for themselves.
As the crypto bros say every time there’s a new crypto scandal crushing prices and confidence, this will be good for the industry.
Check out the comments on Graham Stephan’s latest video. Many people are calling him out and demanding that he more fully account for his actions. I hope a lot of viewers realize just how venal creators can be when someone unscrupulous starts waving hundreds of thousands of dollars in their face.
Shit, I’d sell sell out. The only reason I’m so pure is because I’m never tempted.
It’s fine to seek information about finance online, but you need to mediate this with good professional advice and, more than anything, the liberal use of your own noggin. Diversify. Never put it all on red. Treat YouTubers etc. as entertainment.
And most importantly, never take advice from blog called ‘Soviet Men’. Surely the name is a disclaimer in itself.
This is financial advice.
- This article provides general information. It does not take into account your personal circumstances and is not intended to influence readers’ financial decisions. Get your own, professional advice. Seriously.