Even if you don’t know about the sport of ice hockey, odds are that you’ve heard of the great Number 4, Bobby Orr, who played most of his career for for the Boston Bruins of the National Hockey League (NHL). You can watch this video to learn a bit about him. He is arguably the best player to have ever played the game – even better than Gordie Howe or Wayne Gretzky – because he was the most complete player, the best two-way player the game has ever seen and will probably ever see, a master both on defence (his assigned position) AND offence. At the very least, pundits who disagree with the above would consider him the best defenceman who ever played.
But despite the tremendous, all-out work ethic that made him the best – combined with his giftings and outright passion for the game – he has openly stated that he couldn’t have cared less about managing his financial affairs. He left these entirely to his agent, a man of such absence of good ethical character that I don’t even care to mention his name. Never asking questions, Orr was shocked at the end of his short yet illustrious NHL career in 1978 to learn that his agent had cheated him not just out of a whole lot of money, but also one of the best offers in hockey history: an 18.5-percent ownership stake in the Boston Bruins. His agent simply never told Orr about this offer and Orr simply didn’t care to ask about his financial affairs. His agent stood to get more out of sending Orr to the Chicago Blackhawks than Orr getting the better deal by staying in Boston, so Orr simply wasn’t told about the Boston offer.
What does this have to do with a stock investing blog? What does this even have to do with you or I, everyday people who don’t make millions of dollars per year like your typical superstar athlete?
It has everything to do with both.
Most people who decide to invest their money leave this in the hands of “professionals” – a financial or investment advisor, or a stock broker – and then make the colossal mistake of never asking questions!!
- “So, how’s my portfolio been doing lately?”
- “How come you’ve decided that this particular investment is better than that one?”
- “So you want to buy this stock for my portfolio, huh? How’s it been doing for you?”
- “How much of a cut do you get paid whenever you buy or sell a stock/mutual fund/ETF for me?”
- “Where do you learn about which companies are the best to invest in? Are you subscribed to certain recommendation services like The Motley Fool?”
- “Can you show me the holdings in your own personal investment portfolio – not the dollars and cents, of course – but the percentage of returns and how long you’ve held each holding for? Also, what do you like about these particular investments?”
Investing clients don’t often ask questions like these for a few reasons. First, they don’t want to potentially insult their advisor. Second, they don’t care to ask; it’s all boring or gibberish and that’s why they’re paying a professional. Third, and most importantly, they’re ignorant; due to reason #2, they haven’t made any sort of time or effort to learn about what the different types of investments are (stocks vs. mutual funds vs. ETF’s, etc.) or about certain facts, like how owning stocks in quality companies, especially after a 10-year period, will begin to far out-pace all other types of investments.
I just discussed Bobby Orr’s story in relation to stock investing, but suppose you’re not even interested in investing? How can lessons from his story relate to your general finances?
At the very least, you need to learn to identify all sources of your income and then identify all the ways that income is being spent. Where’s the money going? This helps you to identify the “black holes” in your financial situation, those places where your money is going that are straining or draining your finances.
The simplest way to keep track of these is by creating a budget which, in its simplest form, involves drawing a line down the center of a piece of paper and listing all of your “Income” sources on the left side and your “Expenses” on the right side. Then, you look at how to increase your income or, more easy to accomplish right away, get rid of some of your unnecessary expenses.
This is such a simple act, yet so few people do it and wonder why they’re essentially financially screwed. It’s often not somebody (their boss) or something else (their income) causing their misery, but the simple fact that they haven’t learned how to control – to identify then manage – where their money is going. As the saying goes, ‘It’s not what you make, but what you do with what you make.’
Sadly, Bobby Orr is not the only sports or entertainment superstar whose disinterest in or disdain of financial matters caused them to be taken advantage of. Read up on what happened to The Beatles, for example.
You and I, ordinary people, don’t need to be concerned about what a sports agent will do to us, but we make deals with other types of agents all the time. What does the fine print read in that mortgage contract we’re about to sign? That loan document? That lease document? What’s in it for them? What’s in it for us?
Most importantly, if you’re a current or aspiring investor, what’s the history and track record of that person who says they’ll take good care of investing your hard-earned money so that you’ll have more than just a little to show for it when you’re older? Can you really trust this person unless you ask the hard questions about his/her track record as a “professional?” Are they willing to be transparent about this? Did you find this person because their ad looked or sounded nice, or did you ask people you know to see documents and statements about how their investment advisor/broker has tangibly helped them?
The bottom line is that, like it or not, you need to learn to become interested in and handle most of your own financial affairs. If you don’t, then you have no choice but to trust people who likely have only their own best interests in mind.
One last thing: be sure to click the Follow button near the top of this page. Also, if you’re a brand-new stock investor – or still thinking about it – then I highly recommend starting with my 5-part Stock Starter Series. To new beginnings!