Invest Like A Cowboy, Not A Goat

TruePoint Capital

Widely considered the GOAT (Greatest of All Time) football player, recently-retired Tom Brady has been in the news for all the wrong reasons. Besides being in the middle of a painful divorce from supermodel Giselle Bundchen and a lackluster – by Brady standards – final season with the Tampa Bay Buccaneers, Brady’s been in the news lately for his investment disasters.

In 2021, like everyone else, Brady jumped on the crypto and NFT (non-fungible token) bandwagon. Enter crypto exchange FTX. The new darling of the crypto world, FTX, was started and led by 30-year-old wunderkind Sam Bankman-Fried. Touted for its accessibility, publicly-traded FTX was marketed as a simple and convenient way for the average investor to dive into the world of crypto trading.

​​Brady was hooked. Hoping to cash in on a potential IPO, Brady and Bundchen each invested $40M into FTX in 2021. Besides investing his money into FTX, Brady also became its spokesman – appearing in commercials to build up the brand. Fast forward to November 2022, and the FTX dreams of riches have come crashing down.

The crypto crash of 2022 was not kind to FTX. The collapse of crypto (Bitcoin was down more than 70% from its record high in November 2021) exposed the fraud behind FTX. FTX is accused of using customer funds to prop up Alameda Research, a trading firm owned by Bankman-Fried.

The signaling of alarms that raised red flags of fraud caused a run on deposits in November – leaving the company with an $8 billion shortfall. FTX was forced to file for bankruptcy on November 11, 2022. Bankman-Fried is currently under house arrest and faces several federal criminal charges. As for Brady’s $40M investment? Like for every other FTX investor, it is worth zero.

Fueled by a flood of stimulus money, the public went crazy for crypto in 2021. Another shiny object that came to prominence in 2021 were NFTs. An NFT is unique data stored on a blockchain that can be sold and traded. Types of NFT data units may be associated with digital files such as photos, videos, and audio. NFTs allow visual, audio, and performance artists to digitize their artwork and sell it to the public. Because each token is uniquely identifiable, no two are the same – assuring buyers and investors of the uniqueness of their purchases. Brady got on the NFT wagon as well.

Hoping to cash in on the NFT hype, Brady invested in the popular Bored Ape Yacht Club NFT collection. This digital art NFT features a six-trait dark brown fur ape with a World War II pilot helmet. He wears a sleeveless logo t-shirt and a bored, unshaven look while smoking. As with all things blockchain, NFTs have come crashing down along with cryptocurrencies. A winner on the football field, Tom Brady is on a crypto losing streak – having suffered a loss of nearly 68% in his investment in the Bored Ape Yacht Club NFT.

The GOAT is not an example of who you should mirror your investing habits after. For a shining example of how to invest, invest like a Cowboy, not a GOAT.

The Cowboy you should follow is Hall of Fame quarterback Roger Staubach. Instead of chasing the next big thing, Staubach stuck to tried and true boring investments that he had a reputation and history of reliably building wealth.

Staubach never made a ton of money during his playing days, but he was smart enough to know that his career could be cut short any day because of injury or poor play or whatever. He knew he needed another source of income. Compared to modern top-paid quarterbacks who make $40M- $50M a year, throughout his 11-year career, Staubach made at most $500,000 a year despite winning two Super Bowls for the Dallas Cowboys.

Staubach knew his NFL career would not last forever, so he integrated himself with contacts he had made who were into commercial real estate development. In the offseason, he learned all he could about commercial real estate development and even started investing his money into projects.

In 1977, he formed his own commercial real estate investment and development company, Staubach Company, while still a player for the Cowboys.

Staubach recognized early on that unless he found another source of income, he and his family could be in dire financial straits if he ever stopped playing. He knew that relying on his player income would not be enough to provide for his family long-term. When asked why he got into real estate early in his playing career, Staubach said, “I was 27, and we had three children. If I got hurt, I knew I had a family to provide for, and it was not crazy money in the NFL then.”

With his family in mind, Staubach set aside a portion of his earnings for his real estate investments. After the Cowboys won Super Bowl VI for the 1971 season, beating the Dolphins 24–3, he collected a $15,000 bonus from the team.

While his teammates blew their money on clubs, booze, and cars, Staubach invested his bonus in his real estate company. He grew Staubach Company to a multimillion-dollar commercial real estate, which he sold for $680M in 2008, making him the wealthiest NFL player ever, past or present. He currently invests in private equity and contributes substantially to charitable causes.

Staubach is a reliable template for building and maintaining wealth. He followed the examples of ultra-high-net-worth individuals (UHNWIs) before him and stuck to tried and true wealth-building assets like commercial real estate and investments in private businesses (private equity) to achieve financial independence.

Look, Tom Brady has deep pockets and is never going to go broke, but for the average investor, following his example of jumping on the latest fads can result in financial ruin that they can’t recover. So, to achieve financial independence, invest like a Cowboy, not a GOAT.