The hashtags crypto and stocktalk rack up
billions of views. Creators battle
for eyeballs on their financial content.
This could be money they made that day,
investments they're excited about, or profit-making strategies.
Videos cover crypto, stocks, or really
anything that could increase in value.
This is a double edged sword, though, because
on the one hand, the more people
curious about finance, the better.
On the other hand, you need a base of knowledge
to be able to tell finance gold from garbage.
With existing knowledge, you can take content with
a grain of salt may be picking up
a good idea here and there.
The issue is, most young adults turn to
TikTok as a complete introduction to finance, and
this can be the fast track to going broke.
I spent the last week going down a
fintock rabbit hole, and I have one conclusion.
FOMO is the name of the game.
The bigger the promises, the more the views.
So I decided to try this out for myself.
I made two TikTok accounts, one to post pure hype.
The content would recommend certain cryptos
or stocks with very little context.
The other is only sound safe.
Investment information as many variables as possible
will be limited using the same hashtags,
time of posting, and even account photos.
I'm going to post ten videos on each account
and then report back after one week of results.
The fact that hype stands
out probably doesn't surprise you.
This is the case on every single platform.
But what if I told you the system
is literally built to give you poor advice?
See, TikTok videos range from a few seconds to
three minutes, and three minutes is enough time to
get some valuable points out, but not quite enough
to fully flesh out all the pros and cons.
But this isn't the issue in and of itself.
Short content can be great.
The issue is finance creators
are competing with everything else on TikTok.
How can a Delta neutral
stock strategy compete with this?
How can a deep dive on tokenomics compete against this?
This forces creators to adapt.
In finance, that means posting hype and fluff
because they're literally competing with the most entertaining
videos on the planet, according to your algorithm that is.
And let me tell you, creators hate this.
As a creator, you get into
this because you have a passion.
Then you quickly find out that your eight part
series on inflation hedges only gets twelve views, two
of which are from you letting the video loop
while you wipe your ass and eventually get sick
of it because no one cares.
But then you think, what if I put
2X in the title and it works?
But this is a vicious cycle.
Next thing you know, you're promising 1000X
returns and using music video footage
to sell the crypto billionaire lifestyle.
And the craziest part is this benefits no one, not
the viewer who's getting subpar information, not the platform for
being known for subpar information, and definitely not the creator
who started this to share his knowledge, but ended up
a hype slave against the algorithm.
To help better understand this, I decided to call my
friend Humphrey, who's seen a ton of success on TikTok.
- So what I found that does best on TikTok
is either some sort of content that shows you
how to make money, or some sort of content
that explains things in such a simple way that
every person could understand it, so very broad, appealing.
You have to make it so broad and appealing, or again,
hook them in a way and then sneak in information.
Or you can start the video off like these
people are making $20,000 a month off Cosmos.
Here's what Cosmos is.
So all of a sudden their interest is piqued because
they're learning about something that can make them money.
Tiktok pushes you content versus on YouTube,
it's highly searched for content, so those
are the biggest differences that I see.
It's pretty easy to become a content creator on TikTok.
In fact, it might be less than 30
videos where you get over 100,000 followers.
Building goodwill on YouTube and building a
reputation on YouTube is much harder.
This isn't to say there's no good creators on TikTok.
Humphrey is a perfect example.
Some of the best creators focus on realistic,
long term goals, and one of the most
common and least controversial topics is compound interest.
Basically, by putting your money into a well
diversified index fund, you accumulate more and more
capital over time, setting you up for a
nice, healthy retirement to present.
These creators run a hypothetical situation.
You invest a few hundred dollars per month.
This eventually nets you a stash between
$2 and $3 million at retirement age.
And that's pretty sound advice.
The issue is this kind of content
doesn't really jump out at you.
I mean, it's obvious that the potential to
profit a Lambo over the weekend is more
exciting than meticulously saving for 40 years.
I asked Humphrey if he had any advice on
how to stand out while talking about boring content.
- I would say most videos on
TikTok have to be entertaining.
Even if they're educational, they have to
be entertaining to even make it.
Obviously, you can make a full
on 'how to' video on TikTok.
It might be useful, but it
might be actually just pretty poor.
- And we should make it sound like
there's only two types of investing.
There are plenty of good options between
the extremes of hype and boring.
I mean, you can find solid story based
explanations of stocks and dividends, high level
descriptions of cryptos or realistic budgeting ideas.
But even this content isn't ideal for the viewer
or the creator as a slave to the algorithm.
Creators have to be as generous as possible as
to not be boring for even a second, otherwise
risk people scrolling on in the video performing poorly.
Well, TikTok allows for three minutes.
I found the most popular finance videos are 30
seconds or less, and it's extremely hard to give
the full picture before that timer runs out.
And this is a huge problem.
Finance is nuanced.
There are very few rules that apply 100% of the time.
Take this creator.
He introduces traders to technical analysis.
The video says if the chart is trending above
the short and long term indicators, you can confidently
say the price will increase, making you money.
Sure, this indicator can be useful, but
it's far from science, far from guaranteed,
and accounts for zero outside factors.
And I don't blame the creator at
all because he's just introducing the idea.
But someone could easily see this thinking that it's a
foolproof way to make money ending up like this.
But even videos like this are
far from the biggest problem.
One of the first stories that caught my
attention was about a guy named Curtis Ray.
He used TikTok to plug a
life insurance product disguised as an investment.
Over and over again, he would tell
new investors to open an account promising
four times the average retirement income while
racking up millions of views and followers.
The problem is, the TikTok algorithm promotes
videos with the highest engagement, not the
videos with the best information.
This is fine for entertainment, but
for finance, not so much.
People see a guy using math on a
whiteboard promising massive returns with this confusing investment
product, and they're excited engaging with the video.
And the algorithm thinks, oh, this video must be good.
People are watching the video then gets
pushed to more and more people making
it popular, pushing bad advice even further.
I would definitely check out how
many followers the person has.
Obviously that's not a proxy for good content,
but it is somewhat of a proxy.
And see how engaged those followers are,
because as I said before, there are
channels with a million plus followers.
But every video doesn't get that many comments.
They might get less than 100 or less than 50 comments.
And that's kind of an indicator that that
person might not have a high quality channel,
or that they got all their followers from
one video, which often happens sometimes.
You can have one video do
really well, get you 500,000 followers.
But those people were only there for
that one particular piece of content.
The most important takeaway is to
always verify what you're seeing.
Just because someone says something, even if they
have a following, doesn't mean it's gospel.
Always be willing to look up context and exceptions.
If it feels fishy, it probably is.
- Some of the bigger channels can be good too,
but you'll find that as you get bigger and
bigger channels, you'll get broader and broader content.
So it depends on how broad of content you want.
My content is arguably very broad, and so that might
not work for someone who's really into finance, but it
might work for someone who doesn't know anything about finance
I would look at the #personal finance or #finance
and see what the top few videos are.
That's usually something that I like to do if
I'm brainstorming, see what has worked in the past.
Oh, and what about my TikTok experiment?
I posted ten videos on two separate TikTok channels
one hype and one solid grounded advice to see
how it goes which becomes more popular.
Here are the results, although the numbers were
closer than expected in terms of followers, the
views for the hype account were 55% higher.
This is with worse information and far lower effort.
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