Bad Social Media Advice

If you struggle with a social media addiction (guilty) or just a phone addiction in general, you should look into the Brick. This little device locks whatever apps you want. The only way to unlock the apps is by tapping your phone to the brick (a little 3D printed square). I will “brick up” before leaving for work and then can’t check any social media apps until I am back home. Or, if I am home, I will give Jules the brick so I don’t procrastinate writing next week’s letter. I have recommended it to multiple people and still don’t receive a dime from them, rude.

People 18-24 prefer TikTok and Instagram over Google when searching the internet for answers. That is lunacy. Ask Jeeves never got the credit it deserved and now look what's happened. In light of this, we are going to review some horrid financial advice you can stumble upon if social media is your Google. 

Bad: Stop investing. The market will crash in 2025. 

Good: Stay the course. Keep investing every month in index ETFs/Mutual Funds.

The bear market fear mongers have been calling for a correction every quarter since the beginning of time. Ignore them all and keep investing. In the simplest of terms (my preferred manner), you have two options with four possible outcomes. 

Option 1: You keep investing every month.

• Outcome 1A: The market goes up; you are happy and keep investing.

• Outcome 1B: The market goes down; you are sad and keep investing. You know that as long as you don’t sell at a loss, the value of your investments will recover!

Option 2: You stop investing out of fear.

• Outcome 2A: The market goes up; you are sad and restart investing. 

• Outcome 2B: The market goes down; you are happy. Now, you have to figure out when to start investing again. Good luck, nobody times the market correctly. 

For me, option 1 is always better. The worst case scenario of a market downturn isn’t bad because history tells me it will recover. I would prefer a temporary depreciation of my stocks over missing out on a bull run. 

Yes, there might be a market correction in 2025, but there might not be! The point is, nobody knows for sure. Anyone who claims they do is trying to sell you something.

The best predictor of your retirement wealth is total time in the market. Keep investing. Stay the course. 

Bad: Buy all the Bitcoins.

Good: Buy Bitcoin if you want but keep it below 10% of your portfolio.

Cryptocurrency is all the rage. With Donald Trump and Elon Musk briefly pushing bitcoin over 100K, the “diamond hands” investors are louder than ever. I don’t own any cryptocurrency. If crypto is an investment, then I don’t want it. It’s too volatile. If crypto is a legitimate currency, then I don’t want it for the same reason I don’t trade euros and yen.

I could see some cryptocurrencies becoming more commonplace in the future. I don’t think it will be Bitcoin. The energy consumption of all Bitcoin operations (mining and transactions) exceeds the energy demands of Finland (the country, not some other cryptocurrency). The energy per transaction with Bitcoin is 12,301,714.3 times more demanding than VISA credit card transactions. This is from Crypto.com not some VISA funded, green energy think tank. 

If crypto really wants to replace national currencies, the energy demands must be addressed. 

This is just a long winded way of saying, don’t put more into any cryptocurrency than you are comfortable losing. You never know when GreenCoin© will come out and make all others obsolete. 

Bad: Set up an LLC regardless of what you do, spend money, and write it all off as a “business expense.”

Good: Don’t commit tax fraud, use an LLC if you have a business, and consult with a tax professional for guidance on what qualifies as a business expense. 

In late 2019, I established an LLC to purchase a multifamily property with my dad. This structure allowed us to share ownership in the property while limiting any liability associated with renters. 

Guess what I can write off? Management fees, maintenance expenses, and asset depreciation. Trust me, I asked my accountant about everything. What if I bought a car and charged it to the LLC? I would have to use it for business over 50% of the time, record every mile and its purpose, and provide the documentation for proof if audited.

The risk of calling a date with your spouse a “business expense” is too high to justify the tiny benefit. In North Carolina, the business income tax is a flat 2.5%. If you write off a lavish $1,000 dinner because you “talked about business,” you save $25 in state taxes. That is not worth the headache of an audit and having to lie about a “client dinner” that just happened to be on Valentine's Day. 

All that to say, you should document and write off valid business expenses including dinners. Over time, the benefit will add up. Just don’t listen to the advice of social media lawyers saying you can write off anything and everything if you “talk about business.” 

The IRS rules are, unsurprisingly, very specific. 

There are a few diamonds in the rough on social media, and a tax attorney, Jasmine DiLucci, embarrasses a lot of the finance bros pushing illegal and dumb schemes.

Bad: Buying a Rolex with debt

Good: Buying a Rolex authorized retailer with debt and taking advantage of schmucks like Steven.

I am joking. Don’t buy a Rolex or a retail store with debt. I know Steven was largely engagement farming with this post, but he continued to talk about how a Rolex conveys status and importance. There couldn’t be a more ironic status symbol than wearing a financed Rolex thinking it will help you in business. Reading this tweet made me think “maybe Dave Ramsey is right.” Don’t worry, Steven was promptly ridiculed in thousands of replies. 

If you want a Rolex, I hope the investments you make because of this letter help you buy one in cash. 

There is so much hilariously bad advice on social media all to encourage engagement. TikTok, YouTube, and Instagram pay users by the amount of interactions their posts get. Truthful, boring information goes nowhere. False, inflammatory posts get all the attention from people wanting to feel smart and correct it (like every conversation I have with my brothers). 

Be careful what you believe. Question everything! Even us! 

Debrief on Deck

Next week, we jump back into answering questions with “What is a Stock Split?” In 2024, there were some notable stock splits including NVIDIA, Chipotle, and several Schwab ETFs. Other than making the stock cheaper, what benefits are there? Why haven’t other companies with a high stock price (like Costco) done so?

As always, please reach out to us with any questions or comments you have. You can reply directly to this email or find us on Instagram.

Until then, stay the course.

Disclaimer