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How and Why Athletes Go Broke (2009)

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Re: How and Why Athletes Go Broke (2009)

#131

Post by nikanj »

vostok wrote: post #117
nikanj wrote: post #98

Earlier quoted context omitted.

I wonder how much shady side-betting these financial advisors do. It's easy to make a few hundred thousand, if you get to decide where your client invests a few million. Reminds me of the good old Goldman Sachs, who made a killing betting _against_ their clients. https://www.theguardian.com/world/2010/apr/25/goldman-sachs-...

I've never understood this perspective. If I buy something from Goldman then they think the price is too high and I think the price is too low. If I sell something to Goldman then they think the price is too low and I think it's too high. If they're not willing to bet against me then they'll say something like "sorry trader was off the desk". Or if they're just less willing to bet against me then they'll say "sorry m…

Except in this case it was Honest Goldman's Sound Financial Advice Inc advising you to buy, and Goldman's Shady Shell Fund Ltd selling. I don't think most clients of financial advisors check who's the counterparty in their trades.

Legally, there's very little preventing your advisor from telling you to perform trades that make you poor and the advisor's buddies rich. A lot of the aftermath of the 2008 crisis boiled down to "It might not have been moral, but it sure as heck wasn't illegal".

Re: How and Why Athletes Go Broke (2009)

#132

Post by harscoat »

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

you just explained that the most important thing is knowledge not money

Re: How and Why Athletes Go Broke (2009)

#133

Post by beambot »

harscoat wrote: post #132
pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

you just explained that the most important thing is knowledge not money

No... Knowledge of money

Re: How and Why Athletes Go Broke (2009)

#135

Post by ChuckMcM »

kpil wrote: post #121
WalterBright wrote: post #105

Earlier quoted context omitted.

The best thing a person can do in such a situation is to put the money in a savings account, and then set about learning what to do. Nobody is going to have their best interests at heart but themselves. If you want to have money, you have to learn to manage it yourself. There's not really a choice about it. Also, hire a properly licensed CPA. Make sure to listen to his advice on taxes. Don't give him a financial ince…

If you put that kind of money in a savings account, the bank will call you twice a day until they have made you move the money into something more profitable (for them.)

I would be surprised if the bank complained. They are only on the hook for $250K per the FDIC and could cover it with a low interest interbank loan from the FED. Since their mandatory reserve is only a fraction of the cash on deposit they will happily leverage it for greater returns paying you your paltry .7% while collecting much more than that.

Re: How and Why Athletes Go Broke (2009)

#136

Post by vostok »

baddox wrote: post #129
vostok wrote: post #117

Earlier quoted context omitted.

I've never understood this perspective. If I buy something from Goldman then they think the price is too high and I think the price is too low. If I sell something to Goldman then they think the price is too low and I think it's too high. If they're not willing to bet against me then they'll say something like "sorry trader was off the desk". Or if they're just less willing to bet against me then they'll say "sorry m…

I don’t think your perspective is very useful, because you seem to be assuming that all commercial transactions are zero-sum, since you describe both parties believing they are the only ones benefitting from the transaction. If I buy a $5 sandwich at a deli, it’s not the case that I think they’re suckers for valuing $5 more than the sandwich, and I doubt they think I’m a sucker for the inverse. Clearly, what’s really…

I'm more relying on my experience in trading with Goldman and other banks than I am assuming anything. I also don't see where I said anything about zero sum games.

Re: How and Why Athletes Go Broke (2009)

#137

Post by DoreenMichele »

A couple of things:

I can't manage to copy and paste it from the article, but one section talks about these guys hiring friends and family, not for their expertise, but as a favor. This inevitably goes bad places.

The old boys club is about knowing you well enough to vet you on two things: 1. How trustworthy you are generally and 2. What you are good at.

Having connections matters and if you can't establish those connections, you will go nowhere fast. But when it is at all healthy, establishing those connections is about vetting you. These athletes never got the memo. They haven't learned that the reason you hire someone you know is because you can literally trust them with your life, not because they need charity. If they need charity, give them charity. Don't entrust your millions with them.

Second, I really appreciate the section where they talk about divorce and that it often happens after retirement in part because these guys can no longer avoid the hard conversations. A lot of marriages seem to only work in X circumstances and to fall apart if circumstances drastically change. The two people are compatible as cogs in X machine, but the personal relationship isn't really that strong. They don't adapt well when that situation goes away.

Re: How and Why Athletes Go Broke (2009)

#138

Post by hinkley »

ChuckMcM wrote: post #55
southphillyman wrote: post #50

The stereotype is that many of these athletes go broke because they are foolhardy with money. I appreciate that this article highlighted that a lot of these guys go broke because of scamming financial advisors. The athlete attempts to do the responsible thing and hires someone they are led to trust with managing their assets only to be ripped off. I'm not sure how financial literacy prevents this from happening when…

Agreed, look at it from their perspective. They haven't been around a lot of money before, they don't have a lot of friends who have been around a lot of money either, so they don't really know even what questions to ask to understand the people who are arguing to be their financial advisors. Perhaps major league sports would do well to help train their athletes in the basics of financial management in order to help…

It is sobering math to figure out that a million dollars is only about $25k a year for the rest of your life.

A million bucks will make the rest of your life easier as long as you don't 1) spend it all and 2) don't make yourself unemployable (injury, bad PR, etc)

Re: How and Why Athletes Go Broke (2009)

#139

Post by djellybeans »

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

IMO the financial industry tries to make it seem so much more technical and complex than it is. Even for how an average person can invest money. A lot of people are perceiving it as such.

Re: How and Why Athletes Go Broke (2009)

#140

Post by Baeocystin »

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

Do you have any book recommendations? I have some younger relatives graduating from college soon, and although they are bright, I worry about their financial sense. I talk to them regularly, but something more concrete would likely also help.
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