By Dan & Aidan Niles
I wanted to take a moment to break down the surgeon general's warning and give some perspective on why I believe we might be missing the wider problem when we discuss social media issues.
The primary argument made on the dangers of social media is that frequent use can lead adolescents and children, particularly between the ages of 10-19, to be more susceptible to "social pressures, peer opinions, and peer validation," increases their sensitivity to "social rewards and punishments, and results in decreased life satisfaction, especially for girls 11-13 and boys 14-15 (Page 5). Furthermore, the warning associates frequent or excessive social media use with increased depression, anxiety, body dysmorphia, poor attention span, and general life dissatisfaction, citing how the design of social media platforms "to maximize user engagement" causes them to "have the potential to encourage excessive use and behavioral dysregulation" (Page 9).
There are several things I want to address when we look at these points. Firstly is the general issue of social pressure and human interaction. Most of us learn to be aware of public perception and social expectations just from interacting with friends, family, teachers, and coworkers. We're herd animals by nature, so understanding what the herd thinks and how they perceive us is essential. What social media has done is shifted the scale of socialization to include hundreds and maybe thousands of people in that process.
This introduction of so many people is where I think the second issue of increased anxiety and general life dissatisfaction comes into play. What we see on social media is often a curated version of the best highlights of peoples' lives. It can be rough if that's all we see, especially when we compare these curated snapshots to our lives full of challenges and struggles. But like I often told my kids growing up, sometimes your life seems particularly hard because you have to live it. Other people may have their struggles, but you might never know because you aren't in their heads and walking in their shoes.
When we look at how these platforms maximize engagement, we need to take a step back and reframe how we discuss social media. The surgeon general's warning discusses how "nearly a third (31%) of social media use may be attributable to self-control challenges magnified by habit formation" and that excessive use can "overstimulate the reward center" and "trigger pathways comparable to addiction" in some individuals (Page 9). While these risks are certainly present, this statement still doesn't encapsulate the larger problem.
For most of us, social media is a form of entertainment, and we often miss that it is also a tool. Like any other tool, it comes with risks. Take your average kitchen knife, for example. If you aren't carefully using it, you risk cutting yourself or losing a finger. On the flip side, it's a powerful everyday tool that we use to prepare our food and makes cooking easier. The trick to safely using any tool is understanding how to use it properly to maximize its benefits while minimizing its risks.
Social media and the broader Internet will become more critical to understand and master as time passes. Businesses use social media for marketing and securing customers. The Internet makes reaching more people with products and ideas easier than ever before. Attention has become one of the most valuable currencies anyone can own. An ad in the Super Bowl was costly because of how many people it could reach simultaneously. With the Internet and the advent of social media, individuals can do the same thing, and we call them influencers. Platforms like Instagram, Twitch, and Youtube have become major hubs for companies to curate data and market their products to target audiences.
As a father of two boys who just graduated college and are heading into the workforce, I see just how vital social media and technology are. My eldest is working on a tech startup, and the other, who just graduated, speaks four languages. Even my son, who just graduated, is still getting his Google IT Certification. Looking at jobs online, we noticed growing technology requirements for jobs across the board, regardless of industry. Moreover, many jobs include managing social media presence and developing promotional and marketing materials as part of the job description.
Whether we like it or not, the world is becoming more technologically integrated and digitized. Social media has become a key player in securing and conducting business over the Internet and building networks of contacts and clients. The prevalent use of technology in everyday life means there is a growing digital divide between people who know how to use social media and internet technologies as tools and those who don't. If we don't equip our kids to handle technology to keep them safe, we put them at a disadvantage when it comes time to build careers and enter the workforce. Therefore, our focus should be on teaching our kids how to use social media as a tool to improve their lives as opposed to a venue to consume content mindlessly.
Whether you agree or disagree with my views or the surgeon general’s, as an investor I have to evaluate current events based on how they will impact my investments. The Surgeon General and medical science have warned consumers about tobacco product dangers for decades. However, these warnings have had minimal impact on the returns of tobacco product companies. For example, over ~43 yrs including dividends, Philip Morris ($MO), now known as Altria Group, is up 88,761% vs 10,071% for S&P, despite tobacco being a known cancer causing agent. Therefore, while the warning makes for an interesting conversation, I do not believe it will substantially impact the investment returns of social media companies.
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Note: The views, opinions, and facts presented above based solely on research by both Dan and Aidan Niles. They are presented for your information and are not an offer or solicitation for investment in the Satori Funds nor are these views directly affiliated with STP Investment Partners, the Registered Advisor to the Satori Funds. For more information on STP Investment Partners please visit
https://adviserinfo.sec.gov/firm/summary/306086, for more information on our Satori Funds, which are private offerings, please click on the “Learn More” button on http://www.danniles.com/.
Dan Niles is founder and portfolio manager for the Satori Fund, a tech-focused hedge fund.