Plus: more bad TikTok advice November 11, 2024 Sign Up | View online IN THIS ISSUE 7 min read 🇺🇸 Trumponomics 2.0 🥖 A fabulously wealthy French guy 💸 Terrible TikTok money tips American markets soared last week. Everyone else felt a little carplike in its talons. | Getty Images THE WEEK IN MARKETS He’s back Whatever your feelings might be about the outcome of last week’s U.S. presidential election, we can all agree on this much: the markets were psyched about Donald Trump’s improbable political comeback. All-time highs, all around the world. U.S. stocks were up more than 5% — the biggest post-election bounce since 1928 — and Canadian stocks rose 2%. But before Trump lets this go to his head (too late), it’s worth remembering that what investors really wanted on Election Day was certainty, and now they’ve got it. One index that notably plunged last week was the VIX, aka Wall Street’s fear index, which fell 40%. Traders know (or think they know) what to expect from Trump — see below for particulars — which is why Trump-adjacent companies (Tesla and Trump Media) and Trump-preferred industries (finance and energy) rocketed up. Will the market excitement last? Republicans seem poised to control Congress, so Trump won’t have many political obstacles. Whether his policies work is another matter. Trump also has a habit of changing his mind and souring on allies. Bromance is in the air now, but how long before he and Elon have their inevitable falling out? U.S. ELECTION SPECIAL 2024 WHAT CAN WE EXPECT FROM TRUMP 47? As we said up top, it’s impossible to know exactly how everything will shake out with Trump. But, based on what’s known, here’s a quick breakdown of how a second Trump term stands to upturn the status quo: Canada’s economy: Trump has made it very clear that he believes North American free-trade deals hurt the U.S. by allowing companies to manufacture goods more cheaply north or south of the border. Hence in 2018 he imposed a 25% tariff, or import tax, on Canadian steel. Ottawa responded with its own tariffs on everything from American ketchup to scented candles. Now Trump is threatening to impose 10–20% tariffs on all imports into the U.S., which could cost our economy $30 billion a year and drag on our GDP. Worse, if we again retaliate with our own tariffs, Canadian consumers could wind up footing the bill, since tariffs raise the cost of imports; inflation might even creep up again. Canadian officials are crossing their fingers that, with some savvy negotiation, our country will be excluded from at least some of the tariffs. America’s economy: Economists agree that Trump’s proposed tariffs could sap growth, reignite inflation, and generally cost Americans a lot of money, at least in the short term. But investors clearly think that higher tariffs will benefit some heavy industries, like steel and aluminum, and perhaps strengthen the U.S.’s manufacturing sector (which is already on the up and up). Then there’s the matter of taxes: Trump pledged to cut income taxes, corporate taxes, taxes on overtime pay, and nearly every other tax in sight. Such sweeping tax cuts would surely drive up the U.S. deficit, which could cause all sorts of problems. But tax cuts, along with deregulation, would likely benefit big businesses and high-income individuals. What could hurt them is if Trump goes through with deporting millions of immigrants, which would surely tighten the labour market and spike inflation. Further restrictions on reproductive health care could also tighten the labour market by driving women from the workforce. Everyone else: Mexico and China are Trump’s favourite countries to rage at, and he’s already threatening to slap both with tariffs in the 60–100% range. But everyone is bracing for a storm. Emerging-markets indexes — which track companies in developing economies — slumped by 2.5% late last week. That said, Cambodia, Vietnam, and other countries might benefit if companies shift more manufacturing out of China to avoid sky-high tariffs. Crypto: The crypto industry spent something like US$133 million on getting Trump and more than 260 other pro-crypto politicians elected. Trump, in return, has promised to fire U.S. SEC Chair Gary Gensler, who has led a crackdown on shady crypto companies. No wonder Bitcoin rallied to a new all-time high on election night, surpassing US$75,000 for the first time. —Sarah Rieger THE FOMO INDEX by Stacey Woods IMPORTANT 🍎 Apple admits future products might not be as profitable as the iPhone. Denny’s has same realization about the Grand Slam. Source 📉 Intel Outside: Legacy chipmaker is getting kicked out of the Dow Jones Industrial Average in favour of its rival, Nvidia. Source 🚗 Canadian auto sales are nearly back to pre-pandemic levels. Desire to go anywhere lagging somewhat behind. Source 🧸 Care Bears company emerges from bankruptcy in time for holidays. Now hoping a bunch of kids emerge from the ’80s. Source CRASH & BURN TO THE MOON 🚨 “That’s right, the S-Class comes standard with a half-full Fiji Water.” Toronto car dealership accused of selling stolen cars. Source 💉 Man prescribed Ozempic for weight loss actually had 60-pound stomach tumour. So apparently Ozempic doesn’t cure everything. Source 🧀 Man arrested in $539,000 artisan-cheese heist. He’s asking for a phone call and a dry Pinot Noir. Source 🥖 Hackers demand France’s Schneider Electric pay a US$125,000 ransom in baguettes. “I’ll take some of those,” says cheese thief. Source WHO CARES THE BIG IMPORTANT STORY DOOM SCROLL Three More Truly Terrible (or At Least Really Suspect) TikTok Money Tips Back in September, we dived deep into some of the worst financial advice on TikTok. And you, dear reader, told us you very much enjoyed our debunking of the extremely dubious tips we found. Since we aim to please here at TLDR (and since some of you might benefit from some lighthearted reading amid all the very serious stuff happening in the world), we decided to dredge up and interrogate more suspect advice. Let’s get to it: 1. Skip school and start a business to get rich AF Some TikTok creators go on and on about how the only way to get rich quick is to forgo higher education and jump right into starting your own business in your early 20s. The trouble is this advice needs a lot more context than what’s usually offered. First, TikTok creators are right in that successful entrepreneurs can earn far more money than regular ole employees. (And a lot of folks argue that Canada would benefit from more entrepreneurs.) But starting a business ain’t easy! Something like half of startups fail within six years, and fewer than 10% bring in more than $1 million in sales. As for skipping university, it’s no doubt true that higher education isn’t right for everyone, and there’s good money to be made in the trades. But a college or university degree tends to lead to higher lifetime earnings for workers. Also, if you do want to start a business one day, keep in mind that studies have found that entrepreneurs who are educated, have relevant job experience, and already have some wealth saved up tend to find more success than those who don’t. 2. Take out a home equity line of credit for investing One particularly suspect piece of advice we came across is to take out a home equity line of credit (HELOC) — aka a loan against the equity in your home — so that you have cash ready to take advantage of a wonderful, money-making investment opportunity at a moment’s notice. The hitch is that TikTok creators tend not to mention the fact that a HELOC is just debt, and debt can get you into a mess if you let it pile up. (The government notes that four in 10 HELOC holders do not make regular payments against it.) And the extra-fun thing (and by that we mean the potentially ruinous thing) about a HELOC is that if you default, you may lose your home! 3. Buy hot stocks in light of news events TikTok is lousy with stock tips. One popular subset of tips comes from creators who suggest buying specific securities in light of news events — like “4 Stocks I’m Buying if Trump Wins.” Well, fair warning: TikTok creators have been known to be misleading and engage in pump-and-dump schemes. That PSA aside, research has shown that diversified index funds tend to outperform stock pickers. That’s true in part because historically only a tiny number of stocks — about 5% — have been responsible for most of the markets’ gains over time. If you’re a long-term investor, diversifying your portfolio, rather than trading on the news, will almost certainly increase your odds of buying one of these rare winning stocks. Also, FT’s Alphaville pointed out last week that on wild trading days, like those late last week, investors often experience a rush of hormones that cause them to make extra-risky decisions. OK! That’s it for now. We might do another one of these TikTok stories in the future, so feel free to nominate bad money tips by sending us a note here: editorial[at]wealthsimple.com. —Claire Porter Robbins OTHER VERY GOOD READS 💰 Canada’s Richest People Meet the country’s mega moguls. | Macleans 💼 The Contingency Contingent The writer’s story of her “fake job” prepping for Y2K. | n+1 🥀 In Service Together For Remembrance Day: How Canada and the U.S. fought Hitler together. | Legion Magazine POSTS OF WISDOM We’ll unplug soon. We just need to read every last U.S. election take first… 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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