You learn a lot about someone's way of thinking by how they predict the future. Many, if not most, people make all sorts of strong conclusions and predictions with little-to-no evidence and never realize how big of a deal that is when their predictions inevitably don't happen.
Nearly everybody claims, "I knew it!" about major social events that they absolutely, without question, did not know. Nearly every middle-aged dad in the world claims they "knew" they should have invested in Google, Bitcoin, and all sorts of other things they absolutely never saw coming. To see examples of delusional people who don't realize how comically ignorant their predictions are, just find anybody - usually a man - who is "thinking about day trading" for a living. Foolishness.
Below, I'll lay out the 7 fundamental principles for predicting the future, touching on similar concepts as I've written about in my article about how to predict the future. I'll then lay out the predictions at the bottom of the article, along with the dates of the predictions and the dates of any modifications.
2010 - SEO:
Early in my career, I built websites that generated revenue by having traffic from Google searches. This is called "SEO" or "Search Engine Optimization." I was involved in several internet marketing forums and became an outspoken advocate for the idea that Google would soon be cracking down on nearly every "tactic" that worked. I was banned from two forums because I was scaring people. I decided to sell my biggest website before the big algorithm changed. Google eventually did change everything in 2011 - wiping out countless thousands of people, as I predicted.
I was still impacted, but much less than most people were because of my interest in forecasting major trends. To me, the lesson was to double down on accurate forecasts so that I could completely avoid at least some massive surprises.
2011 - Social Media News:
I invested very early into Bitcoin but ended up liquidating my position because I believed that political news on social media was a massive opportunity. I threw my entire net worth into building what I believe was the first political news company that was 100% focused on social media traffic. I began in 2011, and in 2013 threw every penny I had into it and launched a website that became one of the most popular websites in the world with millions of visitors per day.
I then surprised nearly everyone who knew me in the industry by selling and completely getting out of the social-media news market. I decided to sell in 2014 and finalized the sale in 2015. It seemed stupid at the time, but I'll explain why below.
2013 - Bitcoin:
I've always found it exciting to try to be early to markets and predictions while still being cautious and nuanced. For example, in 2013, I wrote that:
"[Bitcoin is a] massive possible opportunity [and] the possible payoff for the cryptocurrencies is simply staggering. If anything, the off-chance that the currencies become even medium-sized alternatives to fiat currencies is reason enough to put some money in the coins as a speculation."
2014 - Big Tech Censorship.
Before "fake news" was being used to describe any media report that someone disagreed with, I was extremely aware of the future of censorship by major tech companies. It's weird to talk about now, but nobody was discussing censorship by big tech as a real thing in 2014 or 2015. It was an afterthought. To me, however, it was the biggest risk that existed. So I sold the business.
The website I sold? It doesn't exist anymore. It effectively shut down and was merged with another website because censorship wiped it out, just as I was concerned.
In 2019, a Pulitzer-prize-winning NY Times journalist reached out to interview me about why I was able to see that coming years before it was in any news cycle.
2020 - Covid.
When Covid first began spreading, I was the first person I knew who went into quarantine. I also shifted my entire retirement accounts into Treasury bonds because I believed that the dollar and related assets would skyrocket as people fled to financial safety. I was right. Then a few months later, stocks had imploded and I rolled my money back into stocks because it was clear that the money printing was going to create a massive stock-market boom. That also worked out.
I dabbled in options for the first time and made several hundred thousand from a tiny starting amount.
2021 - Interest Rates.
In late 2021, as in December, I scrambled to do a cash-out refinance of all of my real estate holdings, both personal and investment, in order to lock in long-term interest rates and pull cash out before interest rates went up. This ended up being perfect timing. Within a couple of months, rates had skyrocketed. This move allowed me access to nearly a million dollars more than I would have had and saved millions and millions of dollars over the next ten years.
Monetary economics is an incredibly useful discipline to understand if you want to monetize any prediction. It allows you to understand the news financially better, even when the news isn't directly financial. It does, however, require leaving political ideology and populism at the door. But it's ok, you'll get paid handsomely if you have the guts to do it.
Predictions aren't just fun, they're also lucrative. The universe rewards people who can accurately forecast the future. If you can see a market early, move fast, and sell before troubles hit, you'll have an extremely financially rewarding life. All of the above predictions (other than 2020 and 2021) were made before I was 26, and they allowed me to retire at 26. Pretty crazy.
Anyway, enough talking about previous predictions. Let's look at the principles for developing a good prediction:
I've written a little bit about predicting the future before. It's endlessly fascinating.
Fundamentally, some of the predictions will be annoyingly vague, because they should be comprehended, and internalized, but are impossible to comprehend with perfect specificity.
NOTE: These aren't created for anyone other than myself. Most of them will be hard to prove. This is a personal project, so that's fine.
FIRST UPDATED: 5/6/2023. Any additions or edits will have the later date next to them below.
AI Predictions:
Political Populism
Inequality
Social Unrest
Mental Health
Material Prosperity
Prosperity Denial
Return to Tradition
As time goes on, I'll add to the above predictions.
After spending my entire life in Arkansas, in 2020 I finally made good on my life-long goal and moved to the great state of Texas. It’s abundantly clear to me that this was one of the best decisions I’ve ever made in terms of both my finances and my lifestyle, and I feel compelled to share what I’ve learned so far about Texas living 101.
I could go on and on about the best parts of being a Texan. From the low cost of living and rapidly appreciating housing market to the rich history and warm climate, it's no surprise to me that hundreds of thousands of people move here every year.
Of course, any place is going to have its downsides and there are definitely both pros and cons of living in Texas. If you're considering moving here, you'll want to have a clear sense of both what you'll be gaining and what you could be giving up, depending on where you're moving from.
So, without further ado, let's dive in and take a look at the best and worst things about living in Texas from my perspective.
With inflation rising out of control and many coastal cities outrageously expensive, the low cost of living in Texas is a major pro. When the cost of living in the US as a whole is considered a 100, Texas ranks at 93.9. If you’re moving to Texas from a high-cost of living state, you’ll be able to achieve the same standard of living for less.
With so many people moving to Texas, it’s no surprise that the housing market is booming in the state. In 2020, I bought my home for $640k. In just two years, its value has risen to more than $1 million. While skyrocketing home prices across the country are expected to slow with rising interest rates and inflation, Texas is still going strong. In fact, while national demand for housing has started to decline, demand in Texas has continued to accelerate.
If asset protection is important to you (as, frankly, it probably should be,) Texas is one of the best states to live in the entire country. Texas Homestead Law protects your home if creditors are coming after you, and there are a number of personal property exemptions in the state as well.
By exploring the rest of my blog, you'll find that I'm a big proponent of the stealth wealth lifestyle and taking asset protection seriously. You can learn about more wealth protection strategies here.
For people moving from highly-taxed states like California or New York, the fact that there’s no income tax in Texas is likely a huge relief. There are only nine states in the country that have absolutely no income tax.
That being said, the state has to collect its money somehow. You’ll find that property taxes and sales taxes are high in Texas. Regardless, the Lone Star State is still considered to be one of the ten U.S. states with the lowest overall state-local tax burdens.
Texas is so enormous that there really is a wide range of lifestyles that the state supports. Want to live in a big, bustling city? No problem. Looking for a more laidback, small-town vibe? We’ve got that too.
There are a bunch of great options if you want to live outside of the biggest cities in Texas. A number of areas with a small-town feel that still have plenty of amenities have been growing quickly, including San Marcos, Wavo, and New Braunfels.
If cities are more your style, you’ll be happy in Texas, too. Four of the ten largest cities in the U.S. by population are right here in Texas (Houston, San Antonio, Dallas, and Austin), but there are also plenty of options when it comes to small- and mid-sized cities like El Paso and Arlington.
When it comes to state history, there’s no shortage of fascinating rabbit holes to dive into when you learn about Texas. The first European settlers in the state were Spanish missionaries, who founded San Antonio in 1718. It remained sparsely populated until after the Revolutionary War and the War of Mexican Independence due to hostility from the native population. Once the Mexican government was established, settlers from the U.S. began claiming land in the region.
There was a lot of friction in these early days due to the resulting population explosion and tension between American and Mexican residents. In 1836, the Texas Republic was formed after a number of small insurrections and finally the Texas Revolution.
The newly formed nation only lasted a few short years due to incursions by Mexican troops. In 1845, Texas negotiated with the United States to join the union.
The rest, as they say, is history. When you move to Texas, you’ll have no shortage of historical sites to explore. Some of the best spots any history buff will want to check out are:
Texas is so huge that there is an enormous diversity of ecosystems all within its borders. Even if you’re living in a dense urban area, you’re never terribly far from some incredible natural environments. Home to two national parks and 89 state parks, natural areas, and historic sites, the Lone Star State also has five state forests and two state arboretums.
It’s worth noting, though, that Texas has a lot less BLM land than other neighboring, western states. For people that love to head out to the desert to camp on the weekends, Texas isn’t as great as places like Arizona, New Mexico, and Utah.
After moving from the incredible scenery of the Ozarks, I have definitely had to adjust to the environment of Texas. Eastern Texas is greener and lusher than western Texas (which is dry and, in many places, a desert.) If living in a treed environment is important to you, you'll want to stick to the east side of the state.
If you’re moving from a place with cold, seemingly endless winters, you’ll love the year-round warm climate of Texas. While snow does occasionally fall in the state, and freak cold spells do occur, you can usually bank on the weather being pleasantly warm.
Pleasant, that is, until the summers. When we get into the downsides of living in Texas we’ll talk about the sweltering summers. In general, though, the statewide annual temperature average in the state is 65 degrees. Since the state is so enormous and there are a lot of different types of environments in Texas, you’ll definitely want to check out the local averages and climate before moving.
For example, Austin, Dallas, San Antonio, and Houston all frequently rank on lists of the hottest cities in the US. While the Texas Panhandle doesn’t really register as “cold” on any lists, it certainly has the coolest summers, on average, out of the entire state.
If you're moving from a place with harsh winters and you're sick of waking up at 5 am to shovel out your car, the mild winters of Texas will definitely be a pleasant change of pace.
Texas is the second most diverse state in the US, according to a study from WalletHub. This study analyzed all fifty states in terms of the ethnic, racial, economic, and cultural diversity of their residents.
The Lone Star State ranked second in linguistic diversity, fourth in racial and ethnic diversity, and third in industry diversity.
If you move here, you'll also find that there's a lot of diversity when it comes to culture and politics. Though Texas has a reputation as a conservative state, there are definitely some areas that are much more liberal. This helps create a healthy balance where there is something for everyone, and you don't have to worry about falling into a self-perpetuating echo chamber.
Whether you want to further your education or your career, Texas offers tons of opportunities.
With the second-largest economy in the US by GDP, Texas is home to six of the largest 50 companies in the Fortune 500. Though Texas comes in second place to California when analyzed by GDP, it actually grossed more money than both California and New York combined in exports in 2017.
There are a lot of different industries that are booming in Texas, including:
With a large and diverse economy, thanks to our large population, thriving cities, and abundance of natural resources, Texas is a great place to start your career, further your career, or benefit from the many leading centers of higher education in the state.
Are you more of an entrepreneur that a careerist? Not a problem at all, in fact, you'll love it here. With fewer government regulations than many other states, Texas is decidedly pro-business. With more than 50 billionaires calling Texas home, anyone who wants to make their own way will appreciate the business-friendly environment of the state.
I could write a whole book about the pros of living in Texas, but for now, I'll just add a few additional reasons why I absolutely love living here.
One huge pro is that there are a number of major international airports in the state. This makes it super easy to get anywhere in the world without the trip to the airport itself being a huge hassle.
Another great thing about Texas is that it's a major hub for sports and there are tons of entertainment options when you're within a reasonable distance from one of the cities.
Lastly, a cherry on top of living in Texas is that it has some of the lowest electricity costs in the U.S. Natural gas prices are also on the low end at the national level, and Texas has the fourth-best gasoline prices in the states.
I seriously love living in Texas, but any place is going to have some downsides. Moving to Texas has been a lifelong dream of mine, and I have no regrets. There’s no reason to have rose-colored glasses, though. Here are some of the disadvantages I've noticed while living in Texas.
There’s really no getting around it: Texas is hot in the summer. Since the state is so big, you can experience dry, desert-like summers in west Texas and extremely humid summers on the east side. In fact, there is a distinct line that separates the state known as the dry line or Marfa front.
Regardless of the type of heat, one of the definite downsides of living in Texas are the sweltering summers.
Another thing that people considering moving to Texas will want to know about is the traffic. This doesn’t just mean that getting from point A to point B in the populated cities can be a headache, it also means that there are more car accidents here than less traffic-ridden places.
Though the overall tax burden is really pretty good for Texas, and the lack of income tax is a huge win, the high property taxes and sales tax rate are worth mentioning. The property taxes are assessed by local county assessors on 100% of the appraised value, and the average effective property tax rate is about 1.8%. This makes it the state with the seventh-highest property taxes in the entire country.
The sales tax in Texas is also fairly steep at 6.25%. That being said, there are a lot of states where the sales tax is higher, tying Illinois and Massachusetts for thirteenth place when it comes to U.S. states with the highest property taxes.
One report that was published in 2019 from The Commonwealth Fund found that Texas ranked 49th when it comes to health care access and affordability. One of the primary reasons that it received such a poor ranking was that Texas hasn't expanded Medicaid eligibility.
Depending on which area of Texas you're considering moving to, some of the types of severe weather that impact the state might not need to be at the top of your "things to worry about" list. For example, Texas is exposed to hurricanes every year, but by far the most vulnerable region is the eastern section along the Gulf.
Other types of severe weather conditions that can occur in Texas include flooding, tornadoes, extreme thunderstorms, and wildfires. When you've zeroed in on a region you're interested in, you'll want to look more closely at the types of severe weather you might experience.
It would be hard to write an article about the pros and cons of living in Texas without mentioning the power grid failure in 2021 that made international news. While issues with the grid are rare, the event definitely made it clear what it means to be the only state in the continental U.S. with our own power grid.
Another thing worth mentioning is crime. As with pretty much anywhere else in America, how safe Texas is has everything to do with precisely where you are. As is common in the U.S, the most dangerous areas in Texas are typically neighborhoods inside larger cities where there is high unemployment, low income, and lack of quality housing.
The two most populous states in the country are California and Texas. While California has long been hailed as “The Land of Milk and Honey,” people have been leaving California in droves for other states in recent years. In fact, more people have left California than have moved to the state since the 1990s.
People are leaving the state for a lot of reasons, including:
The exodus from California has meant that other states have been receiving Golden State residents. The states that have been receiving the most California residents in recent years are:
There are a lot of reasons that Texas wins out in the competition with California. Some of the most compelling arguments in favor of the Lone Star State, in my mind, include:
For anyone that’s interested in building wealth over time, it’s pretty much a no-brainer when you compare Texas and California.
When you’ve started looking at moving to Texas, it can get pretty overwhelming to decide where to begin. Texas is really made up of seven distinct regions, each of which has its own geographical features, attractions, culture, and more.
In far west Texas, you’ll find Big Bend Country. This is the only spot in all of Texas where you’ll find real mountains, and it’s also home to one of the most well-known national parks in the US– Big Bend National Park.
The largest city in this region is El Paso, and otherwise, you’ll mostly find smaller cities and towns that are pretty spread out. Arguably the most remote part of the state and perhaps also the most beautiful. If you’re looking for big-city living, this probably isn’t the spot for you.
Up in the northwestern part of Texas are the Panhandle Plains. The second-largest canyon in the U.S. is found here (Palo Duro Canyon), and the best-known cities in the region are Amarillo and Lubbock.
Other than some deep canyons carved by rivers and tributaries, the Panhandle-Plains are mostly flat grasslands and plains without many trees.
South of the Panhandle-Plains and east of Big Bend Country, Hill Country is pretty much in the center of the Lone Star State. With hilly terrain, steep canyons, springs, and underground caves and lakes, this is a much greener part of the state than the two regions we’ve discussed so far.
Home to Austin, the state’s capital, and a number of other small cities and towns, this is a bustling and thriving region.
South of Hill Country and bordering the Rio Grande River, a big chunk of this area is dry and covered in thorny brush and grasses. San Antonio is the biggest city in the area which is home to plenty of attractions including theme parks, sporting events, historical landmarks, and more.
Within this region, you can find the Lower Rio Grande Valley, which is home to subtropical woodlands, palm trees, and a lot of beautiful tropical birds.
Including the Dallas/Fort Worth Metroplex, Waco, College Station, and a lot of other cities and towns, the Prairies and Lakes region is located in north-central and central Texas.
If you’re interested in living in a diverse region that offers the ability to spend time in a major American city and also hop out to small-town America to go antiquing, this might be a good choice for you.
Piney Woods is the easternmost region of Texas. This is a more remote area, with the “big” cities being Huntsville, Conroe, and Tyler. There are also a number of small towns that have plenty of charm and fascinating histories.
The landscape here is made up of lush meadows, forests, streams, and quaint historic towns. Home to four national forests, this is a popular place for visitors that want to experience the great outdoors.
Stretching along the Gulf of Mexico, the Gulf Coast region reaches all the way from the Mexican border to Louisiana. The cities found in this area include Houston, Corpus Christi, Galveston, and South Padre Island.
In addition to the cities, there are a number of charming smaller towns in the region.
So now that you’re convinced that you want to live in Texas, where the heck are you going to live? There really is something for everyone here, but you’ll want to consider what you want to prioritize to help narrow down the options.
There’s no shortage of small towns in the state of Texas. Some of the best small towns to live in include:
When you're in your 20s, you're probably looking for a different type of living environment than you will be when you're married with kids. Unless you're specifically hoping to move to a small town in Texas for some solitude and space, you'll probably want to look into Austin, Houston, and San Antonio. If you're looking to tap into some of the cowboy vibe of Texas, check out the Dallas/Fort Worth area.
When you're moving with kids to Texas, you want to make sure that your new home suits everyone in the family. Some of the most family-friendly places in the state I'd recommend checking out include:
Houston is the biggest city in Texas and the fourth-largest city in the US by population. It’s also impressively large by area, ranking at number nine for the whole nation. This means that you have a whole lot of options when you’re looking for neighborhoods in Space City.
Some of my suggestions for Houston areas to live in are:
The third-biggest city in Texas by both population and area, the Dallas-Fort Worth metroplex experienced the largest population growth of all metro areas in the U.S. between July 2020 and July 2021, according to the Census Bureau.
Between 2021 and 2022, more people moved to San Antonio than anywhere else in the country. Some of the best neighborhoods in the Alamo City include:
Another fast-growing city in Texas, the numeric population growth in Austin ranks fourth in the U.S. between July 2020 and July 2021. A word of warning to people considering moving to the capital city: Austin has long been famous for its beloved weirdness. There is a lot of local concern that this has been diluted by the rapid growth of the city, and anyone that wants to move to the Austin they visited in the 90s will likely find it be radically different than it once was.
That being said, let's check out some of the best areas to live in Austin:
There is something truly unique about Texas, and I am so glad that I finally made the move to this incredible state after dreaming of being a Texan my whole life. Everyone is different, though, so it's important to identify what is and isn't important to you when considering making the move.
If you're desperate to be in a warm climate, a business-friendly atmosphere, and a state with no income taxes, Texas should definitely be on the top of your list. If you're the type of person that starts to get uncomfortable when the temperature sneaks above 65, on the other hand, and you prefer condensed metro areas to sprawling ones, you might find Texas to require compromises you aren't willing to make.
Moving to Texas has been so beneficial to me that I feel driven to share what I've learned so far to help others make the right decision for them. If you're wondering who the heck I am, be sure to check out my projects and more about me here.
According to a number of recent studies, an increase in income can actually lead to more stress and less happiness. Winning the lottery doesn’t appear to create the perfect life any more predictably than earning a higher salary, either. In fact, getting rich quick can leave people suffering from something called sudden wealth syndrome.
Before you start playing the world’s smallest violin for people out of feigned sympathy, you might want to consider the negative ways that a windfall could impact your life.
Why would someone who won a $315 million lottery have been quoted as saying “I wish that we had torn the ticket up”? The reason is that, for all the problems that money can solve, it is also very capable of creating a lot of new ones that are hard to even imagine before it happens to you.
Sudden wealth syndrome is a psychological condition (though not technically a psychological diagnosis) that can happen when someone comes into a large sum of money in a short period of time.
While many of us assume that having a surprise windfall would be the best thing that could ever happen, there are a number of potentially negative side effects that you should be aware of. A big influx of cash or assets can be shocking even when you’ve been expecting it, but it can really shake up your world if you had no idea that the wealth was heading your way.
When you have access to wealth all of a sudden, it can create a bunch of overwhelming pressures in your life. Even the most level-headed person can start making decisions they normally wouldn’t when their bank account blooms overnight, and it’s hard to anticipate how you would act if your net worth suddenly puts you in the “rich” category.
You might think that a ton of money is the answer to all of your problems. In reality, though, it can lead to extreme psychological outcomes like:
Understanding sudden wealth syndrome is essential for anyone who is working to build wealth. While some people might have a hard time feeling sympathy for someone that has money to burn, you never know with certainty how you would react to a windfall unless it happened to you.
A quick trip on the rags-to-riches roller-coaster can leave you experiencing a tremendous amount of stress and other negative psychological symptoms. It’s one thing to steadily and systematically build wealth over many decades, where you have time to adjust to your increasing net worth in small bites. Of course, people who get rich slowly can certainly fall prey to the same side effects as people who receive a windfall, but it’s particularly notable when a fortune is received in a short period of time.
Whether you know an inheritance is on its way, you expect that your side hustle might blow up and make you rich, or you have no expectation of experiencing sudden wealth, it’s a good idea to familiarize yourself with the potential symptoms of sudden wealth syndrome.
Guilt is often described as a self-conscious emotion because it involves self-reflection. In its healthiest iteration, guilt can help us learn to not repeat mistakes we’ve made. However, it’s all too common for people to feel guilty in ways that are out of proportion to the supposed error or are even completely disconnected from any actual harm to themselves or others.
This is the case with the guilt that comes along with sudden wealth syndrome.
There are a lot of reasons why you might feel guilty after a windfall. One familiar example is if you received an inheritance after the death of a loved one. This can create mixed emotions, such as feeling like you can’t be happy to have the money because that would imply that you’re glad your relative passed away.
People who come into wealth suddenly can also feel guilty because they don’t believe they deserve the money. They look around and see other people that seem to be working harder or that appear to need the money more. Why did you get rich all of a sudden, while these other people that are seemingly more worthy of a windfall have to keep struggling? This is particularly common for people who grew up poor, but it can happen to people of all tax brackets.
There’s also a pervasive cultural concept that money is bad and so are people who have it. Someone who was wandering around complaining about the 1% just a few months ago might be overcome with incredible guilt when they find themselves a lot closer to that category.
What would you do if you found out you were about to receive an inheritance of $100k? How about $500k? What about $5 million?
Your first instinct might be to celebrate. After all, why wouldn’t you call your buddies, your parents, and your girlfriend of six months to tell them the good news? Heck, you’re rich now– it’s time to party!
Unfortunately, money can complicate even the strongest relationships, and the actual emotions you experience might be a lot different if you experienced a windfall than you think they would be.
Coming into a lot of money all of a sudden can compel people to isolate themselves from the people they know. Because getting a bunch of money can trigger a lot of self-critical emotions, you might separate yourself from others due to depressive moods or other unpleasant mental states.
If the people in your social circle aren’t well off, you might feel uncomfortable being around them with your new wealth and lifestyle. Similarly, your friends and family might create separation through envy, resentment, or jealousy.
Sudden wealth can, in short, leave you feeling really alone.
If isolation as a symptom of sudden wealth syndrome doesn’t make you nervous, perhaps this one will. Becoming rich all of a sudden can lead to paranoia in its own right, but paranoia can also result from social isolation.
People who suffer from SWS might worry, for example, that their fortune will disappear as quickly as it showed up. They also might become paranoid in regard to their relationships. The changing dynamic of their social world can create paranoia– whether their fears are real or imagined, the newly rich person might feel that their friends and family members are always trying to get a piece of the action.
Both paranoia and isolation can lead to a number of other health issues, such as insomnia, depression, or anxiety disorders.
Receiving a windfall can also leave you in a state of shock. Even if the money can seriously change your life for the better– allowing you to get out of debt, start saving for retirement, invest in new business ideas, and follow your dreams, the experience of getting a bunch of money can be shocking on just about every level.
Becoming suddenly rich can leave you feeling paralyzed. You might not have the slightest idea what to do with the money. Even the smallest spending decisions can become completely overwhelming.
Feeling numb from sudden wealth often results, at least in part, from being emotionally unprepared for all the changes that money can create. Things like the new lifestyle you can afford, increased responsibility, and the ways money changes your relationship can leave you feel shocked and dissociated.
You could also find yourself ridden with feelings of confusion and uncertainty. Regardless of how good your new wealth could be for you and your family, it’s can be downright impossible to wrap your mind around.
How you respond to a sudden fortune can depend on your background. If you grew up in a wealthy family but didn’t have access to much money until your recent windfall, you might have a place to put the experience in your mind. However, if you grew up in a family that was always living paycheck-to-paycheck, the realities of wealth might be so new and unknown that you end up resorting to self-destructive coping mechanisms.
People afflicted with SWS might start spending money excessively, make financial promises to their friends and family, or make risky investments. This, of course, can happen to people who grew up in wealthy families as well. Regardless of background, and influx of charities and other organizations giving you their attention can leave you feeling suspicious and paralyzed.
As you might imagine from all of the symptoms we’ve discussed so far, increased anxiety or even panic attacks can result from the sudden change of becoming wealthy. All of these potential psychological consequences of an overnight fortune are deeply interconnected and interrelated. For example, anxiety about the money vanishing could lead to social isolation and paranoia, or the shock of being rich can start making even the most level-headed person anxious.
Panic attacks occur when a person is overcome with unreasonable feelings of anxiety and fear that manifest themselves in physical symptoms like fast breathing, a racing heart, and excessive sweating. If you’re truly overwhelmed by your new wealth and don’t know what to do, you can also find yourself experiencing these intense waves of fear.
A play on the phrase sticker shock, ticker shock refers to a state where a person watches the stock market obsessively and experiences cycles of anxiety and depression in response to market volatility. If you invested your windfall in the stock market (or made your money that way,) it’s a little too easy to be constantly checking in on your investments.
No matter how much money you have, it’s important to never exceed your risk tolerance when investing. If you invest money that you can’t afford to lose, you’ll find yourself flinching every time there’s a slight dip in the market.
All of these other symptoms can leave you suffering from insomnia or other sleep problems. You’d think that being rich would mean you can sleep like a baby every night, but all of the new responsibilities and other related issues can leave you staring at the ceiling until the wee hours of the morning.
One of the most drastic symptoms of sudden wealth syndrome is the potential it creates for an identity crisis.
I dealt with this myself when I went from being broke and in debt to a multi-millionaire over the course of eighteen months. Even though I’d been putting my all into the projects I was working on, I was left in a state of deep confusion about who I was when one of them actually panned out in a big way.
While we might not realize it, we tend to factor our financial situation into our sense of identity. On top of that, humans typically settle into a comfort zone where they can feel in control and everything is familiar.
When you get rich quickly, it can make you question who you are and what matters to you. If it was a part of your identity that you’re working class, for example, what does it mean about who you are when your bank account says otherwise?
Even though everyone thinks they want more money than they have, having your net worth skyrocket can put you way out of your comfort zone. This can be incredibly stressful, confusing, and overwhelming.
You might think that you’d be clicking your heels and shouting from the rooftops if you got news of a $10 million inheritance, but it’s actually not that uncommon for sudden wealth to leave people with feelings of depression.
This might appear on its own or it can result from guilt, isolation, paranoia, anxiety, or any of the other symptoms of SWS.
We’ll talk about why rich people can get depressed a little later in the article. But, in short, receiving a ton of money can actually leave people feeling empty and low energy. This might be for a number of reasons, including the realization that money simply can’t fix all your problems or provide meaning in life on its own.
Money can make people start acting strange. Even if you manage to keep your cool after striking it rich, unfortunately, your friends, family, and coworkers might not be as emotionally mature.
Sudden wealth can make you isolate yourself from others, make others isolate themselves from you, or both. You might find your best friend is all of a sudden so envious of you that your relationship falls apart. Your mother might demand that you give her a chunk of your winnings. Childhood friends can start coming out of the woodwork with sob stories about medical bills and sick kids.
It really is sad but true. The reality is that an experience like this can teach you who your true friends are. That can be a pretty hard pill to swallow if you come to find that you have a lot fewer friends than you used to think.
Similarly, it can make you suspect of every new person you meet. This is particularly the case if your wealth is known to the general public.
Let’s say, for example, that you made a killing trading crypto. You didn’t think to hide this about yourself, and you jumped at the opportunity to be interviewed about your new fortune for stories that appear in the Wall Street Journal, Buzzfeed, and on NPR. In your hometown, news travels fast and everyone from your high school drama teacher to your middle school girlfriend now knows that you’re a multi-millionaire.
Maybe the attention feels good for a while, but chances are you’ll start wondering whether your popularity is resulting from the fact that everyone is hoping for a handout. You might get tangled up in the dangerous gray area between reasonable and unreasonable paranoia.
As you can see, there are a lot of ways that getting wealthy can mess up the relationships you already have in life and jeopardize your ability to make new relationships in the future.
So, now that we know what can happen to people who become suddenly wealthy, let’s take a look at some of the most common ways that a regular Joe can find themselves with deep pockets practically overnight. Remember, there are many types of wealth, but the type we're talking about here is purely financial wealth.
Even if you know that an inheritance is coming down the road, it can still be hard to grasp how it’s going to change your life if you don’t consider it carefully ahead of time. Sometimes, individuals might receive news of an inheritance that they had no idea about, which makes them ripe candidates for the symptoms of SWS.
People talk about winning the lottery as if it would solve all of their problems and change their lives for the better. However, the actual experience can be so shocking for a person that is unprepared for wealth that it can lead to a number of horrible consequences.
There are a lot of examples of lottery winners whose lives seemed to take a turn for the worse as soon as they became rich.
Take Billy Bob Harrell Jr., for example. He won $31 million dollars from the Texas Jackpot after unsuccessfully attempting to become a minister. With his winnings, he helped out his family, his church, and his parishioners. No matter how much money he gave, though, people always seemed to be asking for more.
His family life fell apart as well, with the constant demands plus some bad investments eventually leading to divorce and general family turmoil.
“Winning the lottery was the worst thing that ever happened to me.” – Billy Bob Harrell Jr.
Sadly, less than two years after Harrell had become a multi-millionaire, he committed suicide.
You can spend hours going down the rabbit hole of the sometimes tragic lives of lottery winners. If you’re interested in learning more about how destructive sudden wealth syndrome can be, there are, unfortunately, countless extreme examples out there.
The median salary for all NFL players is $860,000, which is a pretty healthy income if you ask me. For the biggest names in the game, players can receive contracts that include yearly salaries in the tens of millions of dollars.
You’d expect that, from these numbers, NFL players would be set for life.
However, statistics suggest that, within just two years of retirement, 78% of NFL players fall into severe financial distress or go bankrupt.
You can find examples of this same type of situation in the world of celebrity as a whole. People as rich and successful as Michael Jackson, Nicolas Cage, Mike Tyson, and Kim Basinger have had to file for bankruptcy.
When people start making huge amounts of money every year, it can leave them with the expectation that their bank account is bottomless. They can lose site of smart money management and fall into self-destructive (and sometimes very expensive) habits.
Other types of gambling beyond playing the lottery can also leave people with more money than they know what to do with. This is also a particularly dangerous way to become suddenly wealthy, because people can end up putting their money back into games where the odds are against them.
Sometimes people can end up with a big chunk of cash if they’ve sued someone for medical malpractice, wrongful death, or some other legal proceeding. Unfortunately, a lot of people aren’t aware of the necessary steps that should be taken to manage and protect wealth, and suffer from the symptoms of sudden wealth syndrome when they get a big payout from a lawsuit.
Whether you take investing very seriously or you engage in r/wallstreetbets style gambling, having a big win in the stock market or crypto can change your life incredibly fast. Take a look at this story from the New York Post, for example, about people who’re rich thanks to crypto. While I hope everything works out for these new millionaires, getting rich from crypto or stocks doesn’t always go well in the long run.
Of course, the symptoms of sudden wealth syndrome shouldn’t be enough to keep you from trying to systematically build wealth. However, you should learn how to avoid SWS so you don’t become another tragic story recounted on a blog.
If you come into a bunch of money, the first thing you should do is nothing.
Before you buy a new house, pay off your parents debt, or put it all into a risky investment, slow down. I mean way down.
The most important thing is to avoid making quick decisions. All those zeroes can do weird things to your brain, and even the most level-headed person can start acting erratically with new-found wealth. Put the money somewhere safe (like an insured savings account, for example) and don’t touch it until you’ve created a solid plan.
I get it. You’ve struck it rich and you want to tell everyone you know. It’s essential that you resist this urge and keep it to yourself as much as possible.
If you don’t, your friends, family, and colleagues might start acting differently when they learn you’re rich. Whether they’re giving you investing tips, asking for money, or just acting strange, letting people know about your wealth can cause a lot of problems. If you do tell the people in your inner circle about your windfall, make sure you can trust them and be sure to set clear boundaries.
Instead of telling your coworkers about your major gains, talk to an experienced financial planner. They’ll help you make a plan that protects your wealth.
To learn more about how to keep your wealth a secret, check out this article on stealth wealth.
Sometimes you can’t plan ahead for sudden wealth, but in other instances, (like an inheritance you know about,) you can. Regardless of whether or not you were able to prepare for your fortune, if you slow down and keep it quiet, you can make a plan with the help of a financial advisor.
Make sure you are keeping the big picture in mind when you make a long-term plan. Your windfall could change your life for the better if you’re smart about it, but it could also vanish if you have too narrow of a focus on how the money changes your life right now.
Discipline is key for navigating the obstacles of sudden wealth. Work on being self-aware (i.e. keep an eye on ideas that crop up about impulsive purchases or risky investments) and don’t do anything until you make a solid plan.
Once you create a plan, trust it. Don’t stray from it unless you have a very good reason to and it supports your long-term purposes.
This one is simple. If you get a windfall and you don’t have any experience as an investor, now isn’t the time to learn just how risky it can be. Don’t let your coworker talk you into putting your money into the latest meme stock– while it could work out, it could also leave you right back where you started.
Depending on how you made your money, you’re likely going to need to give some of it to Uncle Sam. You’ll want to learn about how your new fortune will be taxed so you can make sure you can foot the bill when it comes time to pay.
Regardless of whether or not you ever strike it rich overnight, educating yourself about personal finance is never a bad idea. The more you know about managing money, the more prepared you’ll be if you end up with a ton of it.
When you don’t have any money, it can feel like being rich would make all your troubles go away. If that was really the case, though, why are some rich people depressed?
There are a lot of different reasons for this, but a big one is that money is just a means and not an end in itself. While it can seriously expand your options in life, money alone won’t make life meaningful.
Having money can also lead you to:
Being rich can also leave people struggling with boredom and purposelessness. A regular person doesn’t have to question why they get out of bed and go to work in the morning– they have to in order to support themselves. For multi-millionaires or billionaires, though, motivation and purpose is necessary beyond putting food on the table.
Even though being short on cash can create a lot of tension in the family, having a high net worth isn’t necessarily a walk in the park either. Building generational wealth can be a blessing or a curse depending on how you navigate the situation, and the family turmoil it can lead to can certainly contribute to depression and other mood issues.
Then there’s also the treadmill effect to consider. Some people get caught in a cycle where the more the make, the more they spend. They are victims of lifestyle creep and rather than money being the solution to all their problems, it actually leaves them with a more complicated life.
A few of the other reasons that rich people can be depressed include:
Wealth guilt can come in a number of different forms. These include:
If you receive a windfall, you don’t have to fall prey to Sudden Wealth Syndrome. Here are some tips to help stay stable, sane, happy, and healthy in the face of sudden wealth:
Getting rich quickly can be really overwhelming, and I know that from first hand experience. If your net worth has dramatically increased and you’re feeling like you’re in over your head, feel free to reach out and I’d be happy to give you some pointers. Don’t worry, I don’t have an angle here and I’m not trying to sell you anything. I’m just all too aware of how isolating it can feel to jump up a few tax brackets practically overnight.
Simply understanding the potential pitfalls of sudden wealth can go a long way in avoiding the risks associated with a windfall. I feel motivated to share what I’ve learned over the years in the hopes that others will be able to avoid the mistakes that I made along the way.
Who am I to be telling you how to deal with a big influx of cash, anyway? You can learn more about me and my projects here.
A bill banning catalog and internet sales of tobacco - including premium cigars - just passed subcommittee in the House of Representatives. The bill also raises the smoking age to 21 for everyone, including military members.
That this even passed the subcommittee shows just how deranged and pathetic the do-gooder, nanny-state weaklings in congress really are.
We've become a nation of whining children, incapable of dealing with the fact that liberty means having the option to splurge on ourselves when we decide.
Sometimes that means fried foods, sometimes that means desserts, sometimes that means a large sugary drink at the theater, and sometimes that means some premium tobacco.
That premium cigars are included in this anti-smoking garbage means it's NOT about health.
Premium cigars are created from 100% tobacco leaves, hand-crafted following centuries of tradition, and are generally used to mark moments of celebration, to bond with friends, or just to live the good life.
Unlike cigarettes, premium cigars aren't inhaled, aren't chain smoked, and in moderation have little-to-no negative impact on one's health.
In fact, most life insurance companies explicitly protect the right of the insured to smoke an occasional cigar - some even allow multiple smokes per month.
Again, it's not about health. But even if it was, we still shouldn't care because we're adults and should have the right to make adult decisions - like how much we eat, how much we drink, and how we live our lives in general.
That this bill also raises the smoking age for MILITARY MEMBERS to the age of 21 is beyond asinine. If you're old enough to die in Afghanistan, then you're old enough to smoke a Davidoff with me before you're shipped out.
This is just another step in the never-ending march of a decaying society towards permanent adolescence. I don't want any part.
Garry Kasparov, the most successful chess player in history, is a fierce opponent of Vladimir Putin. After a failed run for president of Russia in 2008, Kasparov is often seen as the lead opposition voice against Putin in the West.
In this short video for The Economist, Kasparov explains that Putin doesn't behave like a chess player, so the often-overused chess bromide doesn't quite work here. Instead, Kasparov suggests Putin's style is more similar to another popular game.
Here's the full video:
It's tempting to see a major drop in the stock market and believe that you have enough information to make a fast profit.
Right before I started writing this article, the stock market dropped well over 4%, leading to social media exploding with small-time investors saying things like, "Buy the dip!"
It sounds like sound advice. If anything, it almost sounds obvious.
After all, if you buy when stocks dip, that should, if you're guesstimating things correctly, mean that you're getting stocks just like normal over time - but at a slightly better deal.
This makes you more money, right? If stocks were a good investment yesterday, and today they're 4% cheaper, then you're just grabbing a 4% better deal, right?
Not quite.
In fact, this tempting approach is statistically more likely to cost you than earn extra. In fact, since investors started saying "buy the dip", stocks are down another 4% - and we could be on the verge of a substantial correction.
Fundamentally, "buy the dip" is a bad strategy based on an economic illusion.
As they say, "If it's too good to be true..."
"Buy the dip" has a lot of built-in assumptions that you can't statistically assume over time without getting seriously burned.
Let's break them down:
The ideas discussed immediately above are the basic assumptions of the "buy the dip" strategy. They might seem innocent but they can literally wipe out decades of savings because of several extremely important economic principles.
Let's look at the main principle that shatters these bad assumptions: the efficient market hypothesis.
Even if you find this to be mind-numbingly boring (most people would agree that it is), if you have any desire to save for retirement or find almost any level of financial independence, it's an idea you need to understand as much as possible.
This is the kind of financial and economic concept that every high-school student and college student should be deeply familiar with before they graduate. As I've written before, teaching financial concepts like this would change society completely. Unfortunately, the ideas are largely ignored.
Think of articles like this as the broccoli of self-help content. They're not fun to consume but you'll be better off if you do.
So grab a cup of coffee or tea, read the article, and feel free to contact me to discuss it further - or browse around the Internet to read some more. It's important and about way more than just "buy the dip" analysis.
Let's back up a bit.
To understand why you can't beat the market with tactics like the ones discussed above, we need to understand a concept called the "efficient market hypothesis (EMH)."
Effectively, the efficient market hypothesis (EMH) is the idea that asset prices fully "account" for all "known" information.
Without getting lost in the weeds, the hypothesis claims that, roughly, the market is already accounting for everything we know about the market.
In other words, if you think a downturn is coming, the market is already priced for what it believes is the likelihood of one - so gambling on a future bear market will probably not make money, because the market has already accounted for that prediction as well.
There's a reason Google is priced higher than a failing grocery store chain. The market is already pricing in the gamble that Google has better long-term growth likelihood than the failing grocery chain, to put it simply.
This notion of the market already pricing predictions is confusing to people.
Most tend to think that investing is about picking winners more often than picking losers. This isn't remotely true.
In fact, this isn't true any more than the idea that sports gambling is about just picking winners - if you pick winners of football matches 75% of the time, you will probably still lose money because a bunch of other gamblers made those same predictions - meaning the odds aren't always going to be 50-50. If anything, after fees, you're effectively going to almost always lose money gambling over time.
The same thing goes for stocks. You think Coca-Cola is a good bet? So do billions and billions of investor dollars. You think Google is a good bet? So do billions and billions of investor dollars.
Market prices reflect market predictions, effectively. So whenever you are gambling on the basis of a prediction you are making, so are all of the other people buying, selling, holding - or considering those things - that asset.
It's not enough to get a prediction right. There's a lot more going on. That simplistic "good prediction" understanding of investing is tempting and destructive.
No one person or organization decides what something is priced in the market. The stock market, in particular, is just a large collection of people buying and selling identical assets to other investors via bidding.
This means that prices simply reflect whatever supply and demand for the priced asset reflect at the time - if people suddenly stop selling, prices might go up - assuming there's the same number of people trying to buy with the same intensity as before.
This means that prices go up and down for individual assets on the basis of the investors trying to buy, hold, or sell the assets. So the prices reflect the desires being acted upon by the investors - market prices respond to what all of the investors think they are worth.
This understanding that markets reflect the beliefs of huge number of investors is important. Markets don't reflect random people or the average investor - they reflect the applied beliefs of investors with the most money being gambled on the asset, as well. The more exposure to the asset one has, the more one's acted-upon beliefs impact its price.
Market prices reflect what investors know about the market. Information being released impacts prices. Prices reflect known information - not just information, but known information. Or, more technically (and philosophically accurate, for lack of better word), prices reflect believed information.
This makes markets brutal, powerful, and very fast responders to events, analysis, and the learned experience of the most powerful investors. In other words, markets are elaborate social pricing machines based on known information about the assets in question.
Put simply, prices are the market's reflection of the known information about the asset at that particular time. This is important. If anything, understanding this is key to understanding everything else discussed on this page.
As information continues to spread faster and faster with innovations like the Internet, being able to have an "information edge" becomes increasingly difficult to the point of being impossible.
It would have been easier to outperform the stock market in 1940 than it is in 2018. Information simply spreads too fast and is too widely available to beat everyone else. Having an information advantage is difficult when insider trading is illegal and Indonesian street vendors have more information than the Library of Alexandria in their pocket computers.
Even Benjamin Graham, the father of value investing, (which Warren Buffet based his life work on), eventually came to concede to the efficiency of public markets. He wrote in 1976, literally 42 years ago and well before the Internet made things worse:
“I am no longer an advocate of elaborate techniques of security analysis in order to find superior value opportunities. This was a rewarding activity, say, 40 years ago, when our textbook "Graham and Dodd" was first published; but the situation has changed a great deal since then. In the old days any well-trained security analyst could do a good professional job of selecting undervalued issues through detailed studies; but in the light of the enormous amount of research now being carried on, I doubt whether in most cases such extensive efforts will generate sufficiently superior selections to justify their cost. To that very limited extent I'm on the side of the "efficient market" school of thought now generally accepted by the professors.”
If Graham thought it was tough then, he would have been a vigorous supporter of the efficient market hypothesis now. As everyone should be.
Understanding markets as nothing more than an incredibly massive, incredibly comprehensive series of pricing mechanisms is the first step towards financial humility.
People who misunderstand the EMH almost always misunderstand the first step: the market is just a big pricing machine accounting for nearly all known information. So unless you have some massive, massive information advantage (like insider trading, or some kind of elaborate expertise in a particular industry mixed with the ability to understand utterly in-depth financial valuations), you won't outperform the market. Period.
So you won't do better if you buy the dip than if you don't. You won't do better if you refuse to invest during a dip. You won't do better no matter what you do - not risk-adjusted.
This doesn't mean you're helpless. Make sure to read the end of this article if you'd like to skip to the more optimistic interpretation of these concepts.
You and I aren't nearly as smart as we'd like to be. Our comically tiny ability to comprehend the Universe pales in comparison to countless investors using countless unique angles coming together in the total capital markets - with almost everyone looking for the slightest advantage.
You can't beat the stock market, risk-adjusted.
Even if you predict all kinds of things correctly, that's not the point - you'll eventually get a couple wrong and those will ruin your numbers - putting you back where you started, or worse. If you do get lucky, you didn't get lucky on a risk-adjusted level - meaning, well, you were lucky, not better informed than the market at large.
And getting lucky isn't the same thing as having a superior strategy.
Studies repeatedly confirm this EMH framework. So do surveys. So does, well, almost all known evidence. And, it's even getting worse.
This bleak conclusion makes sense - after all, the market is nothing more than a pricing machine, so the more efficient (ie, the more informed the market is - which during the Information Age is going to be pretty damned informed) the market, the less likely you are to beat it.
For anyone keeping score on how well information spreads these days, you have effectively no chance of beating the market, risk-adjusted. Period. Sorry. End of story.
'Buy the dip' sounds good, but like I wrote earlier, it's based on some assumptions that don't make risk-adjusted sense. The biggest one is that you're assuming the dip isn't the beginning of a crash. Imagine if instead of "buy the dip" we said, "buy the stocks right before the bear market wipes you out for about 10 years." Doesn't sounds as clever, does it?
Of course, almost never will the dip end up a bear market. Nine times out of ten, you'll avoid that. But it's that one out of ten that wipes out your statistical advantage. That's the part that confuses people. You're not trying to usually beat the market - you're trying to beat the market on a risk-adjusted level - which is economically impossible.
The same concept applies to the other assumption: the notion that if you can "buy the dip" then you're buying it with resources that supposedly you had access to beforehand, otherwise you would just say "buy" and not "buy the dip." The reference to taking advantage of a specific opportunity in the market and not just buying consistently suggests you've been sitting on the money.
If you sit on money you want to invest in public markets at some point because you want to outperform it, you're missing the economic point - you're never going to perform better sitting on the sides. Think about how many people thought the market was "too" expensive a couple of years ago - they've lost an incredible amount of wealth because of that view.
I spent a lot of time writing about these concepts, but i want to make sure what I'm saying isn't misunderstood as another set of arguments. Here's a quick clarification. I'm not saying anything bolded in the section below:
Avoiding mistakes is 99% of investing. But enough about the bad news. Let's look at some interesting applications of these ideas that will make you money.
Now here's the cool part. You can invest better than almost every financial genius on earth in a couple of surprisingly simple steps.
You can invest better than the billionaires, the stock-market gurus, the bankers, the college endowment investment managers, the financial planners - you can outperform almost all of them over time.
The way is simple. They're all trying to outperform the market. This, on average, causes nearly every last blasted one of them to dramatically underperform the market for the reasons explained above.
So if you just hook up your portfolio to track the market as cheaply and as consistently as possible, you'll outperform the experts - by default.
All you have to do:
Do this and you'll outperform almost every mutual fund on earth over time. You'll outperform almost every equity hedge fund. You'll outperform almost every individual investor.
And you'll do it because of your humility.
Vanguard is an organization that exists so that any 'profits' get passed back to the funds themselves, meaning they are as low fee as is legally and economically possible - in general. Their index funds just try to not beat the market - they're based on the assumption that the market is essentially always priced the best possible way based on all known info.
And it works. Vanguard slaughters the competition easily. It's almost embarrassing for the experts. I'll be writing about this more down the road. Make sure to sign up for my newsletter if you'd like to read more. It's boring, but it's powerful because it's true.
Don't try to buy the dip. Don't try to make financial gambles on the basis of your market predictions. Build a simple portfolio like the one described above. Don't fight the market - let it carry you itself.
Buy the market regularly regardless of the news. Sometimes, you'll buy while the market is rising. Sometimes, you'll buy while the market is falling. Sometimes, you'll buy while the market is flat. Regardless, over time, your portfolio will get better, and your returns stronger.
Most importantly, perhaps: use economic literacy to avoid big mistakes that you'll regret for the rest of your life.
Mark Zuckerberg has announced that he wants to shift Facebook away from "passive" content to more active, "engaging" content. In other words, your Facebook newsfeed will soon replace the content that you might merely click on with content that you and your friends are more likely to engage with.
In other words, the pages that post 30 times per day hoping they can monopolize the newsfeeds of their "readers" will be penalized. Facebook traffic is going to shift heavily to brands that are dramatically more engaging.
Of course, this transformation has led to instant backlash from a wide variety of internet publishers -- probably because they don't really understand what Mark was saying, why he said it, or what the consequences of Facebook's easy-to-manipulate passive content ecosystem have been so far.
I founded one of the most popular political websites in the world. It began with an important mission: speaking truth to power by giving a voice to the forgotten middle class.
In the past, I wrote headlines for articles that reached over 15,000,000 users on Facebook. From a single posting. On a single page.
I've written articles that have been read by millions and millions of people from Facebook. No, I don't mean "seen" by millions of people. I mean millions of people clicked on the actual link and read the message crafted to influence their political interpretation of the world.
My site's style focused on the sizzling elements of stories that the Wall Street Journal and even Fox News didn’t want to cover. It was a perfect marriage with Facebook's algorithm because it ignored branding and focused on whether users would click on stories.
It was good storytelling. It was fun. And it worked frighteningly well.
Realistically, my personal headlines and articles had drastically more reach than the entire "Russian interference" scandal covered by mainstream outlets like the New York Times. So when it comes to the algorithm change and the implications, I'm speaking from the position of someone who has utilized this algorithm more than almost anyone on earth.
Still, the ecosystem that allowed what I was able to do is now mostly gone - and that's a good thing.
Visionless people look for consistency regardless of context. Some want the ecosystem that existed 4-5 years ago to be all that exists going forward. That's disturbingly short-sighted.
In the past, alternative media needed a huge boost to shake up the narrative. Now we're in a weird place where those same alternative media brands acquired too much power, and we need to change things again.
I now run the Conservative Institute, a very different project. It seeks to provide reliable, trustworthy news for conservatives in an era where dishonesty has become a fundamental pillar of the right-wing media ecosystem. The goal of CI content is not to "go viral" - it's to simply tell the truth. Accuracy is the primary goal, come what may.
We don't defend Trump when he's wrong. We don't attack liberals when they're right. We only report what we believe to be important stories that should circulate on the right wing - and everywhere. A typical article will link to sources like the New York Times, federal agencies, and PDFs of actual studies.
Now, Facebook seems to be responding to the same basic issues that CI was built to combat: a social media ecosystem that replaced high-quality, investigative journalism with shallow "passive" content mostly ripped quickly from other - often just as shallow - sources.
To better understand what's happening, let's look at the following basic concepts that provide context for the Facebook change.
Never in the history of the world was it so easy to reach so many people with a message.
I know people who had no experience in marketing, journalism, research, or much of anything else, reach thousands of people with low-quality stories mostly lifted from other sources.
In fact, ripping off my projects was a pretty easy way for someone with no talent or instincts to make a healthy six-figure income. It happened frequently.
That entire system was incredibly powerful for shaking things up. Now, we're in a different situation - the balance has shifted from the Associated Press, NBC, and local newspapers to an army of smaller sites that often spread misinformation, nasty accusations, or outright lies. Another way to describe it? Fake news.
The algorithms that decided how many people would see content didn't account for "accuracy" at all. Who cares if a fake story goes viral? It was getting the clicks and shares it needed to get more and more traffic on Facebook. That's a massive design flaw, especially when alternative media became so powerful.
This was a temporary hiccup in world history. "Alternative" and "mainstream" media aren't the future - quality media is, regardless of where on the political spectrum it may fall.
Everyone has an ignorant family member known for accidentally sharing fake news stories they didn't verify. The idea that a global media distribution system should give that person just as much power as someone who isn't as gullible is absurd.
I don't mean this in a condescending manner at all. I'm ignorant of many things just like you are. But many people simply don't have the time or expertise in media and geopolitics to know what source should be considered "trustworthy" and what source is taking them for a ride.
If anything, this system isn’t even fair to the person falling for the fake news - the distribution system should minimize the lies that show up in that person's newsfeed as well.
Some will huff and puff over what I just said, pretending they deeply care about ignorant people having the right to easy access to fake and misleading news. The problem is that this is mostly bad-faith virtue signaling.
Let me be blunt: passive-content farms/publishers don't respect their audiences. They often laugh at them. It’s easy to get rich off of people who don’t know any better.
Those market incentives are largely gone, and that's a wonderful thing.
"Passive" content is content that requires no investment from the reader. You don't have to have any kind of relationship with the brand or the content. It's content that happens to be in your feed, and you just may find it interesting enough to click on and read without comment - or not. Most of the content in your newsfeed is like this.
You probably have no emotional connection to the brand and if you click on the story, you may skim it or watch some video, and then exit out and never think about it again. No comments, no shares, no personal connection - nothing. It's passive content.
"Passive content" is where fake news comes from. It's the ecosystem that allows fake news to flourish. It's the system built on a series of economic incentives that allow bad faith publishers to make money manipulating you for fun and profit.
There are a few brands that manage to engage me with almost all of their content; Tim Ferris, Ryan Holiday, Bloomberg, The Art of Manliness, etc. I engage with their community, share their links to my personal page, and have a connection to the brands themselves. They don't just happen to show up on my feed and trick me into clicking.
I have a deep appreciation of the personalities behind the content. That's vital. That's good. And that's the future.
If your business model is based on easy traffic from one website, that's your problem, not Facebook's problem.
As the founder of Axios said to the Wall Street Journal:
"Facebook is a public company that controls its own decisions... Publishers should do the same damn thing."
This isn't new. Copyblogger, (a resource any content marketer should see as kind of like a regularly updated Bible), wrote years ago:
"If you're relying on Facebook or Google to bring in all of your new customers, you're sharecropping. You’re hoping the landlord will continue to like you and support your business, but the fact is, the landlord has no idea who you are and doesn’t actually care."
The future will still have plenty of content. The future will still have plenty of news. But it won't be low-quality content lifted from other sources without any attempt at providing extra value like additional context, additional sources, or additional facts.
The future belongs to quality publishers with strong brands and vibrant communities. This is the way it's been for centuries - and this is the way it will continue to be for centuries more.
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Facebook's "trending" news section currently includes a statement by Alibaba founder and CEO Jack Ma. The soundbite is going viral.
Ma suggested, much to the dismay of business leaders around the planet, that fake goods from China are actually better than the real products.
Most are laughing at Ma, but I think he's making a great point and it's part of a multi-trillion dollar disruption going on in manufacturing and physical product marketing.
What Jack Ma Actually Said
Jack Ma was being questioned about all of the endless fake and counterfeit and "knock off" products that are for sale in bulk on Alibaba.com, a website that is essentially an Amazon.com for people looking to buy products to sell through repackaging.
Here's what Ma actually said:
"The problem is that the fake products today, they make better quality, better prices than the real products, the real names. It's not the fake products that destroy them, it's the new business models."
This isn't nearly as bad as it's being made out to be. It's also not wrong, in many cases. Let's do a quick review of some facts most people don't understand.
2 Facts to Keep in Mind
Jack Ma has a front-seat view of some massive economic shifts going on right now. He understands two very important facts:
If you buy a knock off watch, there's a fairly good chance it's made at the same factory as the big name brands - it just doesn't have the same brand.
This is especially true for easy to make products. Private labeling as an industry is changing how people view products.
That's why some companies, like the app Wish, are based on getting cheap private labeled products into the hands of consumers - they can be just a fraction of the cost, but have the same qualities as the name brand.
The above point touches on something that is difficult to wrap one's mind around at first: branding is largely an illusion.
If a small firm makes a product with identical quality as Apple, most people will think the apple product is higher quality because they believe in the illusion of the brand.
This isn't necessarily a bad thing. It can make decision making simpler and more efficient. But if you're spending more for a same-quality brand, then you might be missing the point.
This illusion is starting to crumble. It probably won't fully go away, but people are deconstructing what "name brand" means in the first place. This is incredibly interesting, and a sign of things to come, especially in ecommerce.
The Future of Manufacturing and Branding
As things progress, we're going to see more and more "same quality" products that will rival top brands.
Amazon recently started launching more of their own "branded" products that just slap on the Amazon label to a high-quality no-brand (previously, at least) product. This is making huge changes for all sorts of industries, especially in fitness and tech.
This trend is only going to get stronger. If you sell a fairly benign product and make money from your brand value, you'll still have many options for huge profits - but you'll want to make sure you pick the right product.
Generic products like "lase mouse" or "keyboard" are going to run into problems. Specific products like "gaming mouse" and "programmer keyboard" will likely be more promising, but we'll see how it plays out.