The Reason Athletes Aren't Great Investors
It is hard to be great at two things at once.
We are told we can be anything in life, which is largely true. We have a certain naivety as a young child to take this to heart. It is part of our childhood innocence. I mean let’s be real we can’t actually be ANYTHING we want. As badly as I wanted to be in the NBA as a young child, I probably had virtually no chance of making it. If I wanted to be a Prince of England that might be a little hard too. It is just the facts. Luckily, by the time I was in high school the dreams of the NBA had dissipated.
My parents never told me that I couldn’t make the NBA because telling a kid to chase his dreams and go after his curiosities is the right advice. However, it should come with an asterisk.
At a certain point, you have to stop chasing every single passion you have and focus on a singular objective.
It is like the person who you meet at college who wants to go to law school, get their CPA, and then maybe go to med school. Chase all these things and you will forever be average at all and great at none. There is a reason why the greatest athletes in sports never span across multiple sports, the best athletes largely never make the best investors, and the greatest actors are never the greatest comedians. To be great at something requires a certain level of devotion that few will match.
Tom Brady is considered the greatest quarterback of all time but he might be one of the worst investors we have seen, comparatively speaking. This is not a dunk on Brady either. He is the greatest to ever do it but with that other things had to be sacrificed.
In 2020, Brady won the Super Bowl with the Tampa Bay Buccaneers. In the following 2021 season, he was amidst leading the Buccaneers to a 13-4 season and the number two seed in the NFC playoffs when he decided it was time to make some investments.
He co-founded a sports-based NFT platform called Autograph. They received $170 million in funding and launched an agreement with DraftKings. Also in 2021, he became a paid spokesperson for FTX, a cryptocurrency exchange. He was not the only high-profile athlete and celebrity to do this. As one might expect, when you are busy trying to lead an NFL team to a championship, you might not be able to give your full attention to something you are trying to invest in.
Fast forward to today and Autograph has removed all cryptocurrency language from its website and has laid off almost half of its workforce. In a struggle to keep revenue from continually sinking, they have now pivoted to focusing on helping celebrities foster loyalty with their fans. A complete rebrand of the company. Cryptocurrency who? It only gets worse from here.
I am sure many of you have heard of the SBF and FTX debacle. FTX filed for bankruptcy after going through a liquidity crisis despite being the third-largest cryptocurrency exchange by volume in the world and having over 1 million users. Bankruptcy wiped out not only Brady’s funds but customers as well. Brady, and his then wife, lost a combined $45 million as a result.
The Tom Brady situation can be described well by Chris Williamson in a recent Modern Wisdom episode.
“There’s a level of narcissism, I think, that comes with believing you would be able to beat somebody else at them doing one thing while you’re doing two things.”
Tom Brady is an amazing NFL quarterback but he was simultaneously trying to be a great investor. Not only is being an NFL QB maybe the toughest position in all of sports but Tom Brady was also trying to dip into a market that is incredibly volatile and oversaturated, as we have seen recently with coins and tokens going to zero.
There is a level of research and analysis required in investing, one that deserves all your attention. Brady was undoubtedly living and breathing football and it would be hard to believe he gave the investment the necessary attention it deserved.
There is a reason why the tried and true method for investing is dollar cost averaging the S&P 500 into your 401k. It requires very little attention, detail, or time. It doesn’t force someone to be something they are not. Someone who is a mom and a lawyer doesn’t have to try and be an investor. They don’t have to try to be a lawyer and an investor when not only their career but their family consumes their time.
It is a level of naivety and narcissism to think we can do two things at once while beating someone who only does one. It is not just Tom Brady either, we all do it. Depending on our career, we might be able to truly only chase one passion outside of that.
Narcissism consumes us when we become too focused on what we want to be rather than what we want to do. This is when danger begins to froth at the top. Becoming too focused on the idea of what could be rather than loving the process is a recipe for disaster. I think it should be about having a process-driven ambition rather than an outcome-driven ambition. Tom Brady was too infatuated with the idea of the returns Crypto could bring, the outcome. He wasn’t focused on loving the utility of crypto and learning about the space, the process.
You can’t forever passively drift between careers, passions, curiosities, or interests. At a certain point, you can’t fake it till you make it or else you will be stuck in an endless loop of faking it your whole life. It is a false ideology where we become obsessed with what it could be but we don’t truly understand what it takes to get there.
The wealthiest former NFL player is not one of the greatest to ever do it like Tom Brady, Peyton Manning, or Lawrence Taylor. It is Jerry Richardson, a guy who played two seasons in the NFL and had 15 receptions in his career. His shortened career allowed him to rightly chase the outsized returns. It is fair to assume he realized at a certain point, that if he wanted to chase his business dreams, it might be time to hang up his football dreams.
The best athletes are focused on their efforts elsewhere, not investing. Even if they are successful with their investments, like Kevin Durant, who founded an investment company in which others help him, they don’t do it alone and it is not their top priority. It is incredibly hard to do two things at once. It is incredibly hard to be a top athlete and then a top investor. This largely applies to anything in life. It is part of the reason why the best coaches are not often the best players, it is a completely different dynamic and devotion.
Few would actually want to put in the work that Tom Brady did, to reach the level he did, just like few NFL players would want to hang up their careers and chase business endeavors like Jerry Richardson.
This isn’t sports-specific either. Steven Bartlett was on Modern Wisdom and talked about his desire to be a DJ. He DJs as a hobby but he saw Fred Again in front of 10,000 people and thought to himself, “I want to be him.” However, his better sense from interviewing a ton of smart people kicked in. The real question is would he be willing to put in 20 years of silent drudgery, obsession, and launching into a void to reach the level Fred is at? The answer was no.
It is a matter of separating the aspirations from the admiration. The process from the outcome. What we want to do from what we want to be.
Tom Brady learned this the hard way, the $45 million mistake way. Life is just a never-ending loop of compounding to get where you want to go. Compounding takes time and it can’t be rushed. There is no way to fast-track it. The fast way is the slow way because the slow way is the only way.
The only way to shrink the half-life to success is to focus on one thing, not two, three, four, or five. Less is better but less is also realizing the time, dedication, and sweat equity great work requires. Great work is built through focusing regularly on one thing you're genuinely interested in.
It is a bit narcissistic to think we can do great work on two things at once.
Athletes have reached the top of their profession because of their ability to focus on one thing for an unreasonable amount of time, not because of their investing skills. Not because of doing two things at once. Tom Brady admired great investors but I am sure he didn’t aspire to be one, football was the priority. Separate the aspirations from the admiration and the process from the outcome and you will be much better off. You will be much better off because that is how great work is done, consistent effort on one thing for an extended period of time.
Appreciate you reading.
-Scantron
Scantron’s Selections - A few things I loved this week.
The Diary of A CEO - Jimmy Carr - I have been a bit on a Jimmy Carr kick, not his comedic acts but his line of thinking. One of my favorite thoughts on his is putting in hard work is like buying lottery tickets for your business. Working hard ups your chances of hitting big.
Barbie, Tolstoy, and Irrepressible Thoughts of Death - Sherry Ning - “You don’t need anyone’s permission to start living; you can start tomorrow—or even right now.”