As a father of a ‘pre’ and a real teenager, I am often subjected to the common but painful experience of seeing my kids absorbed by their phones. As someone who grew up during the early days of cable television and channel ‘surfing’, I know that I should be more patient. However, there are few things worse than watching my kids endlessly flip in the abyss, I mean, on the app, that is TikTok. Seeking out the next video that will make them laugh, cry, shock, or surprise them is simple – just flip the thumb.  For the uninitiated, TikTok is a mix of everything from silly dances to news to animal videos to politics to even yes,  questionable financial advice).  In my opinion, a problem with the app is that there is no reality - what you are watching may or may not be true…but who cares, because it’s over and the next video is already on – flip! It’s all a whirlwind to an old-fashioned TV-watcher like me.

 

Financial markets have been a whirlwind too. With volatility high in stocks, bonds experiencing stock-like volatility and assets like cryptocurrency and ‘meme’ stocks ascribed massive values . Some stocks look expensive by various measures while other companies trade up slowly without an identifiable reason. Historically used metrics such as ratios, earnings growth and sales do not seem to be the driving forces on price they once were, or at least not at this moment. An example of this is that while the S&P 500 is at close-to-record price/earnings ratios, it appears that many ‘value’ stocks have low P/E ratios  and are trading cheaper, relatively.

 

Time is literally money on TikTok. According to Tik Tok, more user time equals more advertising revenue. The app uses supposedly random algorithms to display videos to its users as they flip for something to watch. However, the element of surprise is programmed to keep the user on for as long as possible, not necessarily entertain them as much as possible. This strikes me as a raw deal for my kids, although they don’t seem to realize it. I believe this is also the case in the investment world - many products are constructed to make as much money for the firm that created them, not necessarily to deliver the best outcome for the client/user. Just as there is great variety in the quality of video on TikTok, there is also great variation in the quality of investment products.

 

Successful producers of content on TikTok are known as ‘influencers.’ There are experts, entertainers, jokesters, and hucksters galore. It’s quite hard to know who is or isn’t a real expert and if they’re telling the truth on TikTok. It can be just as hard in the investment world. Markets have always had ‘influencers’ too – think legendary investors like Warren Buffett and Bill Gross. There are also the infamous, like Jordan Belfort and Bernie Madoff. It is a critical part of our role as a fiduciary to act in  your best interests and work to protect them at all times.  What about those investment influencers on TikTok? They’re just the latest fad.  

 

I encourage you to contact us with any changes to your financial situation as soon as possible or to just say hello. We wish you a very enjoyable spring!

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Regards,

Scott Lasky, CFP™

 

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