Athlete CEO

Last week, we discussed the Federal Reserve’s recent meetings where they signaled a willingness to allow a rise in inflation over the next 10-20 years. We received a lot of good feedback and follow up questions, and as a result are following up in a part two this week where we can address a few of the implications for investors.

Our managing partner, Brandon Averill, is joined again by our Chief Investment Officer, Justin Dyer to discuss:

• With the Fed signaling that they would likely allow inflation to rise over the next 10-20 years, are we as investors happy about that?

• Would a higher than normal rise in inflation impact our investment strategies for our clients? Would it dictate a change in our portfolios?

• Could inflation change investment performance over time? Are there ways to protect or adjust for that?

• Are there any adjustments that are needed to allow for inflation?

• What are Treasury Inflation-Protected Securities (TIPS)?

Athlete CEO Podcast 

Advice All Pro Athletes Need 

Former NFL TE and Super Bowl Champion Zach Miller knows firsthand how unprepared athletes are for money management and even more unprepared to enter the workforce after their playing careers. That’s why he’s decided to pursue wealth management as a career after the NFL. His goal is to help equip athletes with the same knowledge he wished he had when he played. Many in the financial business have given up on pro athletes, that’s why Zach Miller has not.

Guest: Zach Miller

Twitter: twitter.com/ZachMiller86

1:52

What you can’t google about Zach Miller when it comes to his deciding on Arizona State for college, and his path to the NFL and becoming a Super Bowl champion

4:59

The depression he experienced after retiring from the NFL and how he figured out what he was going to do next. 

Zach Miller: “You need to change your identity. Every NFL player will experience this because you can’t play forever, the sooner you can transition into your next career, the better.”

7:35

Every athlete goes through it, but when did Zach first realize football was a business? 

Zach Miller: “After I had outplayed my rookie contract with the Raiders, they kept telling me to be patient: ‘you’ll be rewarded, you’ll be rewarded,’ and then free agency hits and the Raiders weren’t there with the offer.”

10:45

One thing many players don’t realize is all of the resources and benefits they have at their disposal through the NFL Player’s Association.

14:20

The system is really set up to fail professional athletes, especially when they’re young and first coming into the league, whether it be the NFL, NBA or MLB.

Zach Miller: “When you come into the NFL you are 21-22 years old, it’s unrealistic to think that these guys, and I’m including myself, I was financially illiterate. You haven’t experienced or worked long enough to know the differences between the right people to hire and evaluating an advisor or agent.” 

20:30

The main issue when it comes to pro athletes and good investment and financial advice is that once you reach a certain amount of wealth there are certain professionals you need to speak with because the point of entry for financial advisors is so low.

Zach Miller: “You need an expert that specializes in you and in what you do.”

22:30

Zach interviewed with many other financial advising firms or RIAs and he asked them point blank why they didn’t represent or help professional athletes.

Zach Miller: NFL guys will just spend all their money. You’ll do all this work and they won’t have any money left. I just reject that opinion. I don’t think that’s true. If you are doing good work and giving the best advice you can actually help a ton of NFL guys. I want to give the kind of advice I wish I had as a young player.” 

25:26

Professional athletes in NFL, MLB, NHL and NBA need their financial advisors to do so much more than investment. There are so many components to the financial side for professional athletes beyond investment.

Listen and Subscribe to the Athlete CEO podcast with Brandon and Erik Averill from AWM Capital on iTunes, Spotify, Stitcher or wherever else you listen to podcasts.

For more information visit: https://awmcap.com/

You might be familiar with the terms “inflation” and “deflation,” but do you know how they positively and negatively impact us as investors? About 2 weeks ago, the Federal Reserve held a virtual conference where they said they would be willing to let inflation run higher over a certain period of time to make up for lower inflation we’ve experienced in the recent past. So, over the next 10 years they could target a higher inflation rate than has previously been seen.

To understand how this might impact us as investors, Brandon Averill, managing partner of AWM Capital, is joined again by Justin Dyer, AWM’s Chief Investment Officer, to discuss inflation and the implications it has on investments.

Key Topics:

• What exactly is inflation?
• What does a quart of milk have to do with how inflation is measured?
• Why is inflation important to investors?
• What happens with slow inflation?
• What is typically considered the ideal inflation rate for the U.S. economy?
• What is the Consumer Price Index (CPI) and what does it impact?
• What is the Personal Consumption Expenditure (PCE) and what does it impact?
• Why has inflation been in the news recently?

Resources:

• Investopedia has some great resources on Price Level, Basket of Goods, and Purchasing Power
• Also, be sure to read Dimensional Fund Advisors great article on Inflation’s Impact on Investors

Recent headlines are reporting massive drops in tech industry giants like Apple, which dropped last week by a little over 9% - roughly $150 billion of market value, and Tesla is down again this week after a similar fall last week. Have they reached the bottom? As we have said before – there is no crystal ball to determine that.

However, there are investing concepts that are critical to understand to better weather volatile seasons like 2020 has turned out to be that will help you shore up unnecessary risk and capture the gains you deserve. AWM’s Chief Investment Officer Justin Dyer returns this week to discuss this concept with Managing Partner Brandon Averill. 

Key Topics:

• What is concentration risk?
• Putting your eggs in one basket
• Thoughts on the recent tech stock volatility
• One of the most important tools in an investor’s toolbox
• Should I hold these companies that experience big run ups? (For more info, see our recent episode: Tech Stocks Are The Highest Performers – Should You Get In?)
• Relying on the data to inform investment decisions
• The top 10 largest stocks since 1994
  
  Download the resource Brandon referenced from Dimensional Fund Advisors, “Large and In Charge? Giant Firms atop Market Is Nothing New.”

Athlete CEO Podcast 

How to Coach and How to Be Coached

What makes Derek Jeter who he is? What made him great? Coach Dana Cavalea is the former Director of Strength & Conditioning and Performance for the New York Yankees. He joins Brandon and Erik Averill on Athlete CEO to discuss what goes into a “Championship Mindset” and why mental balance is a key for success regardless of business or profession.

Guest: Dana Cavalea

“Habits of a Champion”

Twitter

https://danacavalea.com/

2:12

Define what is performance and how Dana would define being a champion.

Dana Cavalea “You need to be better tomorrow than you are today.”

3:01

There is no one size fits all. You have to know what works for you. You don’t enhance performance by taking a pill or vitamin once, you get better over time by doing the right things. 

4:40

“Performance Coach” or “Life Coach” seem to be modern buzzwords. Dana describes his journey and what led him to becoming a life coach, which starts with interning for free with the New York Yankees while in college at the University of Southern Florida.

6:26

After Dana figured out he wasn’t going to be a professional ballplayer, he followed his passion of training and getting ready for the season, and investigated ways he could make that into a profession.

9:25

When Dana learned how you can literally go from one side of the fence to the other side of the fence in 24 hours. He had to make some significant sacrifices at the age of 19 that many others that age wouldn’t be willing to make, in order to fulfill his dream of being involved with the New York Yankees.

11:17

How did Dana end up becoming the Yankees head performance coach at just 23 years old.

12:45

Dana says he didn’t really know anything about the job he had, that he was just getting started, but he did recognize the importance of truly knowing people and caring about people. 

Dana Cavalea “Life is bar it’s your job to tend it.”

14:18

Dana saw an opportunity after starting off as a trainer to become an asset manager of human capital and he came up with a “Player Profile” that became a screening process to identify risk

16:19

The idea of the growth mindset or a “Champions’ Mindset” and how Cavalea incorporates that into his training and evaluation. 

Dana Cavalea: “It requires you to do things that the average person doesn't do. It encourages you and forces you to be somebody that's different than everybody else, because champions are different than everybody else. You have to act different, be different, present yourself different, and when you do those things, you get different results than everybody else, which is what champions do, which is what high performers do.”

19:20

The championship mentality is not just effective for athletes either, it plays big in the business and investment world as well. So many of the people Dana works with in the business world have a life changing event, like a heart attack, or something, that forces them to work on the mental and physical side of their health.

26:40

The idea of work/life balance from the lens of Dana’s work. Dana believes it’s important to compartmentalize your day and own their schedules.

Dana Cavalea: “Own your schedule, own your day, own your life.” 

 29:40

What made Derek Jeter, Jorge Posada, Mariano Rivera and the Yankees legends that Cavalea was working with different? Amazingly, it’s that they weren’t “overworking.”

38:00 

The identity crisis all professional athletes go through when they’re no longer professional athletes. What are Dana’s tips on trying to figure out the next stage of your life?

39:10

Don’t identify with a title, identify with a process. If you subscribe to that belief you are going to be defied by the processes you undergo everyday.

41:28

Dana Cavalea on the importance of values and processes.

Dana: “When you get too attached or the title of what you do, it becomes really dangerous, because you lose the rest of you and without the rest of you, you lose your edge.”

44:02

As a coach you have to meet people where they are, because every person is different.

48:09

Dana has also written children’s books about raising championship families and how we have to understand that we are constantly growing as people. 

50:02

One of the most important lessons Dana learned about parenting and how to be a champion parent.

Dana Cavalea: “You can override their difficulty through your own surrender. Don’t try to control and dominate. Release and surrender.”

52:31

A great story from Dana about his relationship with Mariano Rivera and what made him special in terms of elite performance in the biggest moments.

Listen and Subscribe to the Athlete CEO podcast with Brandon and Erik Averill from Athlete Wealth Management on iTunes, Spotify, Stitcher or wherever else you listen to podcasts.

With an estimated $44 billion worth of startups like Snowflake, Unity Software, JFrog, Sumo Logic and Amwell going from private to public right now, is it time to try and strike it rich by investing in the next unicorn company during its initial public investment (IPO) phase? If you only got your investment advice from the mainstream media, you might assume that this is the best way to create massive wealth, but  as you might have guessed, it’s not quite that simple.

The private to public or - IPO - step in the lifecycle of a business is incredibly important. And when companies go public, they often garner massive media coverage. However, is this the best time to invest in a company across the board? The data might surprise you.

In this week’s episode of AWM Insights, Brandon Averill, Managing Partner at AWM Capital, is joined by Justin Dyer, our Chief Investment Officer, to discuss how and when companies typically create the most value. Topics and questions covered include:

• Do IPOs favor the investor? Are they a good investment on their own?
• Why do companies decide to go public?
• What exactly is a unicorn company, and what stage in a company’s lifecycle is generally considered to be the ideal time to invest?
• When does most of the value creation for a company occur?
• What is a direct listing and how is it different from a traditional IPO?
• Are direct listings similar to SPACs? (For more on SPACs see our previous episode HERE)

Resources

Brandon mentioned a Bill Gurley article on going public in 2020, which you can find HERE

Last Tuesday, the S&P 500 hit a record high after a sudden and unprecedented decline in the earlier months of the year. Much of the growth has been attributed to 5 big tech stocks, which we covered on a recent episode. As we’ve seen these 5 big tech stocks diverge, it’s made many investors ask if valuations even matter anymore?

While these companies are enjoying their highest valuations ever, we see examples like Apple where their stock price has roughly tripled since early 2019, but so too has its Price to Earnings (PE) ratio. In this week’s episode, Erik and Brandon discuss this recent rise and more, including:

• What’s behind the recent all-time high of the S&P 500?
• What is a Price to Earnings (PE) ratio and why does it matter?
• What are the implications of Apple’s stock price and PE ratio rise?
• Do valuations even matter anymore?
• Can valuations be used as a tool for market timing?
• What is recency bias?
• The importance of understanding what kind of investor you are and your goals for wealth creation

For more information on this topic, here’s a great podcast episode that Brandon referenced from The Prof G Show with Scott Galloway.

On this episode of the Athlete CEO, Erik dives into the debt side of Venture Capital with Founder, Operator, & current Chief Investment Officer of Trinity Capital, Kyle Brown.

Trinity Capital provides smart debt for high growth venture-backed startups. Trinity’s portfolio is packed with successful companies including the likes of Impossible Foods, Fingerprint Digital, Birchbox and Untuckit.

In a candid conversation Kyle shares his experiences ranging from nearly losing everything in 2008 to to leading Trinity through a global pandemic. While sharing how his family, faith and athletic background keep him focused on what matters most. 

Key Topics covered include:

• How should founders be thinking about venture debt?
• Trinity’s due diligence uniquely built by Operators and how they choose who to partner with?
• How venture debt can be the most effective and cheap way to accelerate growth
• How founders can sidestep the risk of dilution in a world of reduced valuations
• How to take advantage of the opportunities the global pandemic has created
• What was it like going through the recession of 2008 as an operator and what lessons did you learn that could be applied to our current situation?
• What have been some of the hardest lessons you’ve learned in your career and how have you grown from them?
• How to avoid the biggest trap that could destroy a partnership
• What advice would you give about partnering in business and leading teams based on what you’ve learned throughout your career?
• How have you juggled working to be excellent and accomplishing great things in business while also being present at home and working to be a great husband and father?
• How Trinity thought through a recent big shift in their business model
• Can you talk about how you think about making an impact and what that means to you?
• How does Kyle approach leading a team? What characteristics does a good leader display?
• Go to resources, habits, and advice for high performance leaders
• How Kyle defines success

Are certain presidential candidates better for the stock market? If so, is there a “correct” party to vote for to improve the chances of stronger returns? We often hear political pundits offering advice or predictions around presidential election season, and suggest that the answer to both of these questions is unequivocally “yes.” There are certainly many ways political candidates impact our country, and because of that, it is extremely important we exercise our right to vote. However, as we wade through to the real issues – should a candidate’s impact on the stock market be one of them? 

In this week’s episode of AWM Insights, Brandon & Erik, armed with more than 80 years of data, break down this question – and the answer might surprise you. Discussed questions and topics include:

• How do presidential elections impact investment returns?
• Which 2 presidents have seen the best S&P returns while in office?
• Which presidents experienced negative S&P returns during their terms?
• Is it true my political party is better for the stock market?
• What drives the stock market?
• How is the stock market different than the economy?
• How might the two candidates’ tax proposals impact my finances?
• Are there any ways to curb those impacts?
• Do tax rates matter to stock markets?

RESOURCES

To see the data discussed during this episode, CLICK HERE

Recently in the headlines, we’ve seen a lot of attention around SPACs (special purpose acquisition company) due to some big names in the investing world doubling down on them this year. So far in 2020, 60 of the 95 IPOs in the US have come from these SPACs and they’ve raised $24 billion further cementing them as the preferred method for going public this year. 

So what exactly are SPACs and should you be investing in them? Brandon and Erik discuss this and more including: : 

• What is a SPAC?
• How do they work? What are some of their unique characteristics?
• What are their advantages and disadvantages? Are they considered a good investment?
• What is behind their recent surge in popularity?
• What should you consider before investing in a SPAC?
• Should you expect similar returns with SPACs that you’d see in the private markets?

Ultimately, we would say ignorance is not bliss in investing, but a danger. Like any other single entity investing, we recommend our clients do their research and discuss with their financial professional about how it might fit in their investment portfolio.

Resources

• As Erik mentions in the episode, HERE is a link to a fantastic research article on SPACs from Harvard Law. 
• If you’d like to discuss your specific financial situation, you can reach out to us HERE.