MONEY THOUGHT:

Why TikTok Should Die

The big political news last week was the House passing a bill essentially proposing to ban the TikTok platform in the US. (If you thought I was going to say the big political news was a certain former Packer quarterback possibly becoming a VP candidate just because I’m from Wisconsin, we need to talk)

TikTok is the app with the highest rate of impulse spending.

All social media platforms are bad for this, but TikTok has really set itself up to make it even easier for viewers to scoop up what they see. TikTok Shop takes all the friction out of purchasing. And the non-stop loop of videos one right after the other wears down our resistance faster than the manual finger scroll required on other sites. 

It’s estimated that the average American spends $750 a year just on social media impulse buying, with Millennials and Gen Z spending twice as much as Boomers and Gen X. I am all for a lil bit of fun spending, but 60% of impulse buys end up feeling less like a treat and more like you yeeted money out the window. Regret is not fun and I will stand against the forces that try to bring it into your life. (Yes, I am very noble.)

My second beef with TikTok is that it, more than any other platform I see, is a hotbed of absolute garbage, often legally sketchy financial “advice”

  • Yes, you do have to pay taxes.
  • No, you cannot create a company out of thin air, pay your kids to clean the house, and then deduct their “pay” from your income.
  • Nope, you cannot write off your lap dog as a business expense or emotional support animal. 

And yet it’s the top place Gen Zers are turning to learn about money. The advice of “finfluencers” found on #FinTok is alluring because we all want more money and we want it the easiest way possible. I get it, I want that too. I want that for you! But these people rarely have financial credentials and they definitely don’t have any responsibility to give accurate advice. It’s almost impossible to cram the complexities of personal finance suggestions into a 60 second video anyways.

Only 0.8% of TikTokers offering stock ideas had relevant qualifications. Which goes a long way to explaining why two-thirds of those videos are straight-up misleading and why 95% don’t come with any disclaimers, much less those required by FINRA and the SEC.

Taking stock tips from any rando on the internet is just a terrible idea.

And before you go off thinking I’m jealous because they’re out there making bank, an academic analysis of X/Twitter/whatever-Elon-decides-to-call-it finfluencers found that 28% of the posters created positive returns. 16% didn’t make any difference at all. Oh, but that remaining 56%! They had consistently negative returns. By a statistically significant average of -2.3% abnormal return.

And yet these money-losing accounts had more followers and more influence on the stock price than the posters who managed to make money.

Lastly – and this may seem downright anti-American First Amendment of me – a reason I’m for this bill is because of it’s intention: having an adversarial nation potentially putting dictating what content millions of mostly young Americans are seeing is dangerous for democracy. (Again, I am so noble.)

For what it’s worth, I also believe the American apps have a ton of work to do in this arena. Disinformation is rampant on all these platforms.

But TikTok is a Chinese-owned company, based in Beijing.

It would not be a new move for the CCP to exert influence over a company in their country. TikTok wouldn’t even have to make up content to cause social discord and discourage voters. They just have to instruct the algorithm to elevate or squash existing content.

There have already been patterns of the app suppressing anti-China content. When so much of the under-40 crowd is getting their news from these apps, source is important. 

The threat of TikTok pulling data is already very clear. Twelve nation-states, including the United States, already have bans of the app on government devices. This addresses the security threat to government employees, but what about future government employees?

Yes, yes, all apps track our whereabouts and preferences.

This data is constantly used to persuade our buying decisions. But imagine what would happen if an entity decided to turn that personal information against a future lawmaker after they’ve risen in influence. Political blackmail becomes very real.

TikTok is banned in mainland China. Doesn’t that tell you all you need to know?

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Wisconsin CERTIFIED FINANCIAL PLANNER™ professional and educator Sarah Paulson

THE AUTHOR

Meet Sarah Paulson, your
CERTIFIED FINANCIAL PLANNER

Although I’m a born-and-raised Wisconsinite – living in Appleton, Wisconsin –

I consider myself more of a world citizen.

True story: once when going through international customs in Amsterdam, the officers asked why they couldn’t find a Dutch residency permit in my American passport.

I bring a big world picture to my money management advice so you can view the wider world, too.

All written content on this site is for information purposes only.
Opinions expressed herein are solely those of Valkyrie Financial, unless otherwise specifically cited.

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