Matt Sperling used to run a monthly blog called like this and I loved it. It sounds harsher than it is, probably I should have called this post things that popped onto my radar, as Niels from TopTradersUnplugged would put it, but well…this is what you get.
Who Are You Helping? The Problem with AI Slop in Personal Finance
The title links to a short post on how to use AI without becoming dumber in the process. It resonated with me because I see a bad phenomenon happening in the corner of personal finance. The typical story goes like this: someone mentions “trend following” on a forum, and someone else asks ChatGPT what trend following is, then simply copy-pastes the chat as a reply.
There are so many mistakes here I can’t even start. First, who the fuck do you think you are helping with that? I guess today everyone knows about the existence of ChatGPT; anyone is able to go there and type, “Hey, what’s trend following?” The person isn’t even providing a clever prompt: it’s just a sloppy question, and that’s it.
The issue is that the conversation between the person and the AI basically stops there. There is no follow-up, such as “Let me understand the consequences of employing this strategy,” “What are the pros and cons?” or, more relevantly, “How does it fit into a portfolio?”
There is never the request to “give me the best resources so I can understand more about this.” Instead, everything is treated like, “Hey, tonight I fancy cooking a risotto; can you please give me a recipe since it has been a while and I forgot how to do it?”
This usage is making everyone dumber for sure.
One thing AI is great at is explaining single bits of a greater puzzle. Asking “What’s implied volatility?” can lead you to understand the pros and cons of covered call strategies. But you need to put the pieces together; you need to follow the crumbs. You cannot ask Claude to give you the full picture because:
- It will never happen unless you write a very, very good prompt.
- You will never keep it in your mind because you didn’t put any effort into getting to the solution.
There is no lesson on my side. I think the lads who post copy-paste AI slop do it because they do not understand the point, and I don’t think they will ever stop.
Ben Carlson on cash on the sideline
I think Ben Carlson is like one of those Marvel superheroes: they have a superpower but also a disability. Ben is great at explaining mid-level concepts simply, but I think he’s also unable to grasp anything that has a higher level of complexity. Or maybe he plays his part perfectly. Anyway…
The strategy described in the post linked in the title is basically how someone with zero professional experience in financial markets would approach the issue of sequence of return risk.
If I hold some cash, when stocks go down I can use that to pay my bills instead of selling stocks at a discount.
This thinking is intuitive, which is why many fall for it. The ‘bucket’ strategy is a variation on the same logic, and you can find many prominent writers promoting it, like Christine Benz at Morningstar. The issue is that there is plenty, I mean (plenty), of research showing it doesn’t work. Or at least, it doesn’t improve the results even when compared to other simple strategies.
The guy in Ben’s post basically had huge luck because he implemented a glide path strategy before retiring, without realizing he was doing it. He then sort of continued to rebalance an “X% stocks, Y% cash” portfolio without calling it that way.
I have no beef with this person. I don’t know how much research on retirement strategies was available in the 90s. He was probably really smart because he figured it out by himself. I don’t think I would if I were left alone in the same situation.
But the point is not whether John was smart or lucky. The point is that Ben is not adding important bits to the story. Sure, this plan is simple. But isn’t your role to add depth to that simplicity? You should provide context: how does the research demonstrate that simplicity doesn’t work in this case? And maybe point out that John’s use of market data was utter shit.
“His strategy really worked because of his experience”: No, John, it doesn’t work like this. You don’t use a case-of-one to judge if something works. That’s a fundamentally bad process.
His assumptions are naive at best. When it comes to YOUR retirement—your one life, one opportunity—you don’t care about averages; you care about the worst possible outcomes. You should apply an additional buffer to make sure you’re protected if the future is uglier than the past.
“We continued selling shares… until it became clear that the market was going to continue to fall for a long time to come.” Great insight, John. You should have sold some futures at that point, if it was so clear the market was going to fall for a long time…
It’s a nice story, but if I were Ben, I would have completed it with more useful insights for the reader, not just conclude: “Hey, simple strategies work!” For that same simple logic, just stay 100% stocks: the odds are you will have more money in your graveyard than when you retired. Ain’t no story better than that to tell, Ben! Simple and successful…
GS bought Innovator ETF
For $2bn, they bought the most successful “candy for boomers” (as Eric Balchunas calls them) producer in the world. Innovator (most likely) invented the buffer, or, as they call it, the “defined outcome”, ETF. And they had a great success, managing $28bn in AUM.
As a very part-time content creator, this drives me nuts because I receive inquiries from similar guys (hello, Granite Shares) to push their stuff. The crazy part isn’t the free money; it’s the boost in readership and followers. Blokes want that shit.
I don’t want to beat a dead horse, but let’s go back to Ben Carlson and his gang. A guy from Innovator went on their podcasts at least six times, and that’s only in the period I was still listening. The result? Innovator got traction, they got paid while still running an “evidence-based” shop according to their boss Barry, and more importantly, according to the industry and their clients. It’s a win-win-win for everyone: Innovator, the financial advisor and the clients.
If everyone is happy, why don’t I do it? Because I have a spine that is still attached to my brain?
The real kicker in this story – well, in all stories similar to this one – is that you get punished if you call them out. Three times.
- You do not get the money from the sponsorship. Also, no one sees that you said ‘no thank you’. I put my money where my spine is, but no one knows.
- Not only do you lose an audience, they get mad at you. How dare you say dividend investing is stupid?!?
- If you call other creators out, you break a code: I don’t know who put it there, but you shouldn’t have touched it. You can do yours, but never call others out. Friends before Facts is the creators’ mafia oath. It’s like a D&D game where characters have different statuses but they are all halflings.
What I am reading now:
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