Plus: TikTok’s worst finance tips September 9, 2024 Sign Up | View online IN THIS ISSUE 7 min read 👔 Masterful micromanagers 🛣️ Horrible highways 👩‍🏫 Terrible finance tips Is trying to motivate your employees with highly regrettable skits “manager mode” or “founder mode”? We explain below. | NBC THE WEEK IN MARKETS Say goodbye to summer, folks All the major indexes experienced a pre-autumn cold snap last week, with the TSX down 2%, the S&P 500 down 4%, and the Nasdaq down 6%, leaving the financial press to theorize about what, exactly, gives. The leading theories: AI overhype, Nvidia in lukewarm water with the Feds (see below), soft job numbers out of the U.S. and Canada. So does all this mean we’re at a turning point? Will stocks retreat big? It’s hard to know, because there’s still plenty to feel positive about. Earnings remain strong for all of the big AI players, Nvidia included. Hiring is still net positive. Rate cuts are coming. And sometimes, to paraphrase the classic Peter Lynch line, stocks just go down. And, as this JP Morgan article reminds us, weekly fluctuations in stock prices are often wilder than what we’re feeling now — even during the good years. THE WEEK IN ONE CHART Marriage rates are declining owing to many factors — high personal-debt loads, diminished societal pressure, etc. — but one of the biggest seems to be wage equity. Every 10% increase in women’s average salary leads to a 7% decline in marriages, according to a paper from the University of California. WHAT HAPPENED LAST WEEK IMPORTANT The Libs are losing confidence. Politics isn’t our beat here at TLDR, so we usually don’t cover it (which saves us a lot of time sifting through hate tweets), but the new rift between Jagmeet Singh’s New Democratic Party and Prime Minister Justin Trudeau’s Liberal government could have some economic fallout. In short, to avoid a snap election and keep his job, Trudeau might need to placate the NDP by addressing some of its wish-list items, like pharmacare — which, as The Logic reported, could lead the Liberals to press pause on other bills affecting business and the economy, like rules to govern AI or modernize food-safety regulations. Basically, being in government is often about picking your battles, and minority governments sometimes have to suddenly switch which battles take priority. Nvidia (maybe?) gets subpoenaed. Last week, Bloomberg reported that the U.S. government subpoenaed AI bellwether Nvidia, demanding it turn over information as part of an investigation into whether it violated competition laws. The government apparently isn’t thrilled that Nvidia seems to have cornered the market on AI chips, and news of the subpoena triggered a sell-off of Nvidia shares that shrank its value by US$279 billion — the largest single-day fall by one company in market history. Interestingly, Nvidia says it never received the subpoena. Still, investors freaked out because the bigger companies get, the more they stand to lose from antitrust investigations. Nvidia ended the week down almost 15% but is still up more than 110% since January 1. INTERESTING Founder mode goes sicko mode. Paul Graham, the co-founder of startup accelerator Y Combinator, which birthed companies like Airbnb, stirred up debate (and inspired some pretty good tweets) with an essay in which he argued that business leaders should spend more time in “founder mode” — that is, sweating the small stuff and getting involved in every last little decision — and less time in “manager mode,” which he describes as delegating responsibility to “professional fakers” who “drive the company into the ground” by failing to innovate or make great stuff. Graham’s post was endorsed by dozens of CEOs, but it’s worth noting that many tech giants — e.g., Amazon, Apple, Microsoft — are currently run by former managers, not their founders, and they’re doing just fine. New roads might be an economic speed bump. A study by researchers at the University of Pennsylvania has sobering findings about pricey roadway projects — à la Calgary’s $615-million Deerfoot Trail: the cost of building roads is more than triple their economic benefit to U.S. cities and all the money and land they demand would be better used to build stuff like more offices, housing, or storefronts. (The study didn’t look at Canada, but many of the dynamics are similar here.) According to the study, U.S. cities already have more roads than they need and the economy could gain something like US$28 billion if urban roads were reduced by 10%. So, why do politicians keep building them? Well, guaranteeing that drivers will no longer have to deal with gridlock is a pretty obvious way to earn votes. —Sarah Rieger FROM OUR SPONSOR THE FOMO INDEX by Stacey Woods IMPORTANT 🇨🇳 China responds to Canada’s EV tariffs with a probe into Canadian canola oil. Should go pretty smoothly. Source 🏚️ Rentals are sitting empty in Canadian university towns. Landlords starting to regret installing all those beer-pong tables. Source 🤖 Most new Volkswagens will offer ChatGPT, so you and your VW can talk about why you should’ve bought an Audi. Source ♠️ Alberta to allow more online gambling platforms, giving residents new and exciting ways to lose money. Source CRASH & BURN TO THE MOON 🍽️ Solo dining on the rise in Canadian restaurants, spurred by sharp downturn in people capable of eye contact, conversation. Source 👾 Study finds crypto owners tend to have “dark” personality traits. ”And, what's the problem?” ask crypto owners from their underground lairs. Source 🍦 McDonald’s is redesigning the McFlurry cup to make it a more environmentally friendly way to deliver corn syrup, emulsifiers, and stabilizers. Source 🚲 Philadelphia holds 15th annual Philly Naked Bike Ride, immediately followed by 15th annual Philly Bike Saddle Disinfecting After-party. Source WHO CARES THE BIG IMPORTANT STORY DOOM SCROLL TikTok Is Full of Awful Financial Advice. Here Are Three Tips You Should Really Not Follow Last week, something interesting happened on TikTok: a few viral videos exposed a “glitch” in some U.S. ATMs that let folks withdraw seemingly unlimited cash from their accounts. All customers had to do, these videos explained, was deposit large checks they’d written themselves into an ATM and then withdraw the cash before the bank had time to verify whether it was legit. Which — surprise! — turned out to be fraud. TikTok is full of similarly dubious financial advice, and more than 75% of Gen Z users say they have turned to the platform for money tips. So, in an act of public service, we have identified three popular tips that you absolutely should not follow unless you like feeling financial pain. 1. Turn $100 into $1 million in a year and a half by day-trading. TikTok creators offer up all sorts of advice about how to day-trade for a living and often claim they’ll share their best tips if you sign up (and pay) for their online course. Don’t believe it: picking individual stocks is tough sledding; 95% of pro stock pickers fail to beat the broader market over time. Day traders fare no better, which is why most people who try day-trading professionally quit within a year or two. And if the TikTokers were so great at choosing winners, they wouldn’t be trying to get you to pay for their courses; they’d be rich and sipping daiquiris on some remote island. Boring alternative? Because picking stocks is hard, people like Warren Buffett have long advised individual investors to buy and hold low-cost ETFs that track the broader stock market, which has marched steadily upward over the past century or so. A Wall Street Journal personal-finance columnist recently called buying such funds the closest thing to a sure thing that exists in the stock market. 2. Get ready for the impending recession by opening Airbnbs. Is a recession on the way? YES, according to some overly confident TikTokers. And when the recession comes, these creators say, a lot of cheap real estate will hit the market, which you should buy and convert into Airbnbs to quickly become a millionaire. All you have to do is sink your life savings into said properties or liquidate business credit cards to get money for a down payment. This strategy, as you can probably guess, has some flaws. First, it’s unclear whether there will be a recession. Whether there is or not, most personal-finance pros would agree that putting all your money into investment rental properties carries major risk. Why? For one, tourism tends to slow during recessions and times of unrest, which can leave you stuck with vacant rentals. And whatever money you have invested in real estate is illiquid, meaning you can’t easily get out your cash in a pinch. For these reasons, many advisors recommend having no more than 15% of your portfolio in real estate. 3. Mimic rich people’s investments. You can find tons of videos wherein creators claim they made a fortune buying stocks that rich folks had bought. You might be able to get lucky and make some money this way, but fair warning: this strategy doesn’t account for when the rich people bought shares of a given company. For instance, whenever Warren Buffett’s Berkshire Hathaway reveals that it has made a hefty investment in a company, it does so months after the fact. And the price of the company’s stock may have risen substantially in the interval, making it a far less savvy trade for any copycat investor. And if copycat investing was such an easy way to make money, everyone would be doing it and then it wouldn’t be possible to get a return. Disagree with our top three? Want to nominate more? Feel free to send us a note about the worst, most troublesome, most confounding finance on social media, and we might do another one of these types of stories in the near future: editorial[at]wealthsimple.com. —Claire Porter Robbins OTHER VERY GOOD READS 🤖 When AI Determines Your Rent A Canadian mega-landlord uses an algorithm to hike rents. | The Breach 🎾 Turf War at the Toronto Lawn Tennis Club Old money vs. new money. | Toronto Life 💸 How to Give Away a Fortune* Can 50 people agree on how to distribute €25 million? | The New Yorker *Article is paywalled, which, yeah, is kind of annoying. But we think good journalism is worth paying for. POSTS OF WISDOM Brace yourself: your boss is about to post some serious “founder mode” wisdom about B2B sales. THOUGHTS ON TODAY’S ISSUE? Love it Good So so This week’s newsletter contributors: Ben Mathis-Lilley (writer), Devin Gordon (writer), Stacey Woods (writer), Sarah Rieger (news writer), Ambrose Martos (fact checker), Ciara Rickard (copy editor), Clare Douglas (copy editor), Sara Black McCulloch (fact checker), Mohini Tailor (lifecycle marketing manager), Matthew Karasz (markets editor) Jared Sullivan (senior editor), Peter Martin (senior editor), Kat Angus (managing editor), and Devin Friedman (editor-in-chief). Wealthsimple Media Inc. 80 Spadina Ave Suite 400 Toronto, ON, M5V 2J4 VIEW IN BROWSER PRIVACY POLICY UNSUBSCRIBE TLDR is offered by Wealthsimple Media Inc. and is for informational purposes only. Any views expressed are those of the individual author and/or of Wealthsimple Media Inc., not of Wealthsimple Financial Corp or any of its other subsidiaries or affiliates. 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