Athlete Investment Advice | Sloan Stevens and Blake Griffith are two athletes who were profiled in a recent article. Both detailed their investment philosophy.
In this episode Bridget Sullivan Mermel and John Scherer dissect the athlete's advice. Is it worth taking?
We talk about being influenced by people, investing in the stocks of your favorite products, and fear of going broke.
Here's a video we made about Socially Responsible Investing: https://youtu.be/bcZlJQmsuso
Here's the article Quoting Sloan Stevens and Blake Griffin: https://www.foxbusiness.com/sports/rich-sports-starts-change-money-game-athlete-investor-patricof
John's firm website: https://www.trinfin.com
For advisors around the US: https://www.acplanners.org/home
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TRANSCRIPT:
Bridget: Some of our favorite professional athletes have been quoted recently about how they invest their money, and so we want to react. Hi, I'm Bridget Sullivan Mermel, and I own a fee-only financial planning practice in Chicago, Illinois.
John: And I'm John Scherer. I run a fee-only financial planning practice in Middleton, Wisconsin. And before we get into our pro athlete investment discussion, I want to remind everybody to hit that subscribe button. It helps other people find this information on YouTube. So with that, let's jump in.
Bridget: All right, so here's our first athlete: Blake Griffin. He's a Boston Celtic, and this is what he talks about in terms of allocating capital: “Do you like the product? Do you actually believe in the product? It's hard to get excited about something, get behind something, and add value to something you don't really care about.”
John: That's interesting. What you described in this article was sort of talking about, hey, here's how these people invest, and though they didn't say it out loud, there’s a sort of implicit prescription on how you should invest.
Bridget: I think there's an implication.
John: Yeah. And so, as you read, “Is it a product you like?” that really jumped out at me in hearing what Blake Griffin had to say. It makes sense. I get what the concept is, but it's such a dissonant thing when you understand how the investments work and how that goes. Just because you like something does not mean that it's a good investment. And there're so many examples of this. I use it all the time with clients, and I imagine you do, too, but back in the 90s Netscape was hugely popular. I thought it was a great web browser, but that doesn't mean it was a great investment.
Bridget: Right.
John: And think about cars. They changed the world. Everybody's using cars. Back in the 1930s or 40s, when that became a thing, there were 200 + car manufacturers in the United States, and now we can count them on one hand.
Bridget: Right.
John: Just because it's a great product, does not necessarily mean that it's a great investment, but it's counterintuitive because it feels like it should be. Oh, there's all these people lined up to go to whatever restaurant or to buy this product or everybody's using this. That must be a great place to invest. And those things just don't match up all the time.
Bridget: Yeah. And I think that's a really interesting point, and I actually think that his quote is better for if you're looking for a job…
John: Interesting…
Bridget: …than if you are investing. So if you're looking for a job, it is hard to add value if you don't believe in what the company is doing.
John: Yeah.
Bridget: And when you're looking for a job, you're trying to add value, and a company is trying to add value, so I kind of like the quote for a different topic.
John: Right.
Bridget: Anyway, he goes on: “You hear the horror stories of guys spending all their money. There was a documentary about all the guys who had gone broke three years after they were done playing, and those were terrifying to me.”
John: Well, that's interesting. My reaction to that is that that's a great approach to take. You shouldn't follow in their paths.
Bridget: Right.
John: But what does that have to do with investing in companies whose products you like? That’s sort of dissonant. And in fairness, when you have interviews, that might not be exactly what he said, or the journalist said, “Hey, I got all these things. I got to put some things in a limited space.”
Bridget: Right.
John: So not to knock either the author or the athlete in this case. So maybe what we're reading is not exactly what was said.
Bridget: I give him credit. He's actually trying to be careful. He knows what he doesn't want to have happen, which is actually a part of investing and handling your money. It's like, “Okay, I know what I don't want.”
John: Right. It reminds me of an article I read a long time ago about a star athlete, who had some of these money problems. And what he had done was invest in a local business. He knew someone who owned a restaurant. And when you first think about it, it sounds great. Here's a great restaurant. A lot of people go there. I believe in it. I support it. But it ended up going belly up. I don't know the details on why, but it was probably for various things. That's a tough business to be in.
Bridget: Yeah, exactly.
John: But here's something where I believe in the product. There're honest people running it. I want to promote this business. I want to be invested. It’s not a dumb decision to put money into things that you believe in. But then the question is: “Hey, how are we making money on this deal?” At the end of the day, an investment is about how you get return on your money.
Bridget: Right.
John: And maybe that speaks to separating the emotions from the facts. Emotions play a big part in our behaviors and how we act. This makes sense from a financial planning standpoint. From the investment standpoint, however, the more we can get some distance from that and say, “Listen, I don't want to be emotionally attached to this particular investment or this particular strategy,” and instead go, “I want to reach my goals and not be tied to that.” Maybe that speaks to those things that are little bit under the surface on the article, but nevertheless something that might be useful for folks.
Bridget: All right. Blake Griffin also said, “My mom has always been fiscally responsible and even joined in on my early financial meetings and negotiations as an NBA player. Eventually I said, ‘Okay, Mom, I got it from here.’ But I appreciate that about my mom because she was always looking out for me.”
John: Yeah.
Bridget: That's kind of sweet.
John: It is. And it made me think. We work with a number of folks in our business that are single, and we encourage somebody else sit in on the conversation, whether it's another family member or somebody else, because it just can be difficult.
Bridget: Right.
John: And you think about what he's describing here as a young person who’s making all kinds of money. Having mom be able to help is awesome, because it's a lot, especially when you're thinking through your money. If you're making a financial decision, if you're talking with an advisor, having somebody else that can hear what goes on and you can talk about it afterwards can be really helpful.
How many times do you watch a movie, and then watch it again and pick up things you didn't pick up the first time? Those exact same things were in the movie the first time you watched it, but you didn't catch it. Having somebody else sit in on things with you could be a good takeaway from this.
Bridget: Yeah. And I would say it depends on the parent. By the time you are negotiating with the NBA, you know your parents well.
John: Yeah.
Bridget: And so most parents, they'd at least know their limits and be helpful. But there's the occasional parent who might not be so great. But the thing is, again, you would know it. By the time you're that age, you have an accurate assessment of your parents.
John: You can also have somebody else sit in on your meetings but have somebody who you think would add value to it.
Bridget: Exactly.
John: There was another athlete quoted in this article, and I want to get your reaction to this. It was Sloane Stephens, the tennis professional.
Bridget: Yeah, I'm familiar with her.
John: And it was interesting that one thing in the article, not a quote from her, is that her fiancé, gave her a group of stocks for her most recent birthday, and she said it fostered a deeper interest in investing in the company she aligns with. And I'm just interested in your reaction to that because you do a lot of work on gifting and happiness. Gifting stocks to your partner for a birthday?
Bridget: First of all, you got to ask, “Is it about you or is it about them?” So in this case, the way that they're presenting it (again, back to your cautions about how these things are written) she wasn't that interested and he gave her some stocks and then she became more interested. Okay, so that's about him. Maybe he thinks she's interested. If you're doing a this-is-about-me type of gift, you want to maybe give her something else, too. Something that's about her.
John: Interesting.
Bridget: It's a fine gift. As a gift, that's one thing, but then as an investment strategy, again, we talked about how people say, “These are my favorite companies.” Now, I am actually not as opposed to investing in your favorite companies as you are, because I tell people that you can have a fun money account and put 10% of your investments in that account. And you can just go and buy whatever your favorite companies are with that and watch them.
And if that helps you get engaged and have fun with this, that's great. But that's not going to be most of your portfolio. That's going to be the fun part. Just like you don't eat only dessert, you try to have fun with all the protein, etc. And I would imagine Sloane's pretty careful about her diet. So it's a similar situation.
John: Thanks for bringing that up. And we have similar metrics on it. It's not wrong to have a fun account. It's not like you can't make money in individual stocks, but it's a slice. It's the dessert and not the meal. I love that.
Bridget: Right.
John: Talking about Sloane Stephens’ diet, she said of this gift from her fiancé: “It was all my favorite companies. Just a random number of companies. My favorite place to eat is Pot Belly, a sandwich shop. So it was Pot Belly and Starbucks and McDonald's. And why not invest in something that I believe in?” These are some restaurants that I would not necessarily associate with a high-level athlete, but what about that? Investing in something I believe in?
Bridget: We've done an entire episode, which I'll link in the notes, about investing in what you believe in and my take on it. For some people, that's what they want to do. Usually, it's not about things the brands I like to purchase but more about the values that I hold dear. So I think about people who are interested in things like environmentalism or companies that are giving back or that type of thing. That could actually be the case with the brands that she's talking about, but usually when people are thinking about investing in the things they believe in, it's not about the sandwich, it's about more.
John: The cause, the mission, those sorts of things.
Bridget: Right. McDonald's is actually an interesting example with a pro athlete talking about investing because they believe in it. Some people might think, “Well, what's there to believe in?” Actually, it's got the highest diversity. They promote more women. And it's a global company that does…
John: More than a hamburger and fries.
Bridget: Exactly. And so, there could be things that she believes in more than just the fries.
John: Yeah. So it's interesting taking a look at what these pro athletes are talking about. And there're some things under the surface that could be some really good takeaways. One of the things I thought about in having this conversation is just because somebody is a good athlete, a good movie actor, those sorts of things, that tends to lend credibility to saying things like, “Hey, here's this article that you should follow.”
Bridget: Right.
John: And it's one of those things that require us to be mindful of what you're watching and how it influences you. One of the takeaways I have from this is if one of these folks is talking about how to be a better athlete or how to be healthier or more physically fit, that's probably worth paying attention to. The idea of investment advice and other things, however, may be a little bit less meaningful.
Bridget: Yeah. Or I'd really like her help with my serve.
John: Yeah, right. That's a perfect thing. Investment advice, however, not necessarily. Not to say it's not good advice, but you can go, “Okay, wait a minute. Where's the expertise?”
Bridget: Yeah. And where is this coming from? I wonder about that.
John: That’s a useful way to think about it. That's a great place to wrap things up. Here again, I'm John Scherer. I run a fee-only financial planning practice in Middleton, Wisconsin.
Bridget: And I'm Bridget Sullivan Murmel, and I've got a fee-only financial planning practice in Chicago, Illinois. John and I are both members of ACP, or the Alliance of Comprehensive Planners, and we've got advisors all over the country, who think like we do. John and I are both taking clients but if you're in another area of the country and you'd like to meet somebody face to face, you can check out acplanners.org.
John: And don't forget to hit that subscribe button.
At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.
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