Saints QB Drew Brees, a future Hall-of-Famer, made headlines this off-season by filing suit against a jeweler in San Diego, claiming he had overpaid by millions of dollars for some pieces of jewelry. Brees recently had the jewelry appraised for roughly $9 mil. less than what he paid. Maybe I’ve been reading Brees all wrong, but I didn’t have him pegged as a big jewelry guy. At least not someone rocking an $8 million-dollar diamond ring, which was the biggest piece in his collect (turns out its only worth $3.75 mil.). According to Brees’ camp, he purchased these diamonds in order to “diversify his portfolio.” Ah, OK, he’s not wearing it, he’s just investing in it. Wait… WHAT?
I’m throwing a flag here for unsportsmanlike conduct. There are about 8 million better ways to diversify your investments than to get into the diamond game. Over the past several hundred years, mankind has done a lot of work to create things like money, the stock market, and the internet; all of which make hoarding piles of shiny rocks a thing of the past. Leave the valuable rocks and metals to the people at Fort Knox, Drew. Buying diamonds as an investment is no different than buying classic cars, paintings, or fancy watches. All do have some resale value, but you better get enjoyment out of the hobby and not rely on it as an investment. There are much easier ways to preserve money and invest your savings.
An athlete with as much money as Brees (or at least he should have, based on career earnings) doesn’t need to take a bunch of risks to be financially wealthy and set generations of future Brees offspring up for the same. If it’s diversification he’s worried about, he could achieve that through a few ETFs (exchange traded funds), a couple mutual funds, and bonds. Even easier for Brees, he could hire a competent financial planner to take care of this for him. Most high-earning Americans dream of someday accumulating what Brees makes each year in salary and endorsements. He’s in a position of great leverage and could make a ton of money with relatively conservative investments. If Brees doesn’t want to just have stocks and bonds, and wants to invest in things he can see and touch, real estate wouldn’t be a bad move, either. At least with Real Estate, you can go on Zillow and see what millions of people value the home or land at. With the jewelry collection, he’s taking the word of the salesman who’s looking at it under a microscope. The market value of a price is easy to know and find. Depending on where it’s located, it’s pretty stable. In many markets, it will increase over time. The market value of a diamond…. not so much.
In Football terms, most upper-class Americans Brees’ age (39) are on their own forty yard-line with two minutes left. Tie game. One timeout remaining. They will need to run, pass and take a couple smart, calculated risks if they want to score a touchdown. At the very least, they should be able to play it safe, kick a field goal, and win the game. By comparison, Drew Brees’ career earnings have put him up by 28 with two minutes left and he’s on the opponents 20 yard line. It’s hard to screw this up. He could kneel, he could run it up the middle, or he could even throw a screen pass just for fun. But investing in jewelry is like calling a flea-flicker and just chucking it up for grabs. It could work, yes. But it’s not needed and best-case will provide the same touchdown that could have been achieved with a few runs and short passes. And that’s the best case!
Brees is far from the first extremely wealthy person to blow a huge chunk of money on some risky investment strategy they were talked into. Unfortunately, athletes (and 50 Cent) are often the ones making headlines for this sort of thing. They’re competitive, want to win big, and are accustomed to taking risks in their careers to achieve their dream. All awesome qualities, just not when it comes to preserving the wealth they’ve worked so hard to gain. It’s important to remember that for every story about a guy who made millions on Bitcoin, there are two people that squandered the same amount on a risky investment they didn’t know enough about. They just aren’t telling everyone about it.
If you can afford it, there’s nothing wrong with having a diamond collection, fancy cars, rare bottles of wine, pieces of art, or other collectibles. These things can bring people great joy, but shouldn’t be treated as an investment or expected to increase in value. The good news for Brees is that his team is still up by 21 points after throwing this pick-six. It will take a few more flea-flickers before he’s in danger of losing the game. Let’s hope he’s got a coach that can keep that from happening!
MoneyStuff 