The Derivative - Painting Corners to Protecting Portfolios: Former MLB pitcher Scott Karl on How Athletes Blow the Money, Alts, the Mental Side of Performance, and the NIL Era

Episode Date: May 14, 2026

In this episode, former Milwaukee Brewers left-hander Scott Karl traces his path from Carlsbad standout to big league starter to financial advisor. He swaps stories with Jeff about Bandon Dunes and his move from California to Lake Norman, then dives into his career, getting a last-minute shot after the ’94 strike, surviving as a finesse pitcher in a power era, facing legends like Randy Johnson, Greg Maddux, and Sammy Sosa, and taking the mound during the 1998 home run chase. Scott shares how he lost roughly 70% of his portfolio in the dot-com bust while still playing, what it taught him about risk and advisors, and how it pushed him into wealth management. He explains why many athletes blow through life-changing money, how he builds portfolios with buffered ETFs, structured notes, and private credit, and how he manages expectations around upside, downside, and liquidity. The conversation widens to NIL, parents effectively betting travel-ball costs on scholarships, and the risk of turning college sports into a money race. Scott also talks about raising two Division I volleyball players, the mental side of high performance, and how those lessons carry into investing, before closing with his favorite baseball cities and parks, from Wrigley day games to the old Jake in Cleveland and nostalgic nights at Dodger Stadium. SEND IT!Chapters:00:00-02:21=Intro02:22-09:59= Private Jets, Bandon Dunes, and the Road from Carlsbad to the Big Leagues10:00-24:09= Facing Maddux and the Big Unit: Velocity, Wiffle Balls, and the Rise of the 100-MPH Era24:10-34:12= From Million-Dollar Contracts to Going Broke: Why Pro Athletes Struggle with Money34:13-44:17= Making a Short Career Last a Lifetime: Contracts, Risk Math, and Smoother Portfolios44:18-56:31= Buffers, Structured Notes, and Private Credit: Building Smoother Rides Through Rough Markets56:32-01:05:47= First Responders vs. Second Responders: Buffers, Managed Futures, and Protecting the Downside01:05:48-01:14:25= NIL, Transfers, and Pandora’s Box: How College Sports Turned into a Money Game01:14:26-01:22:28= From Youth Sports to Life After the Game: Parenting, Perspective, and Baseball’s Best Cities01:22:28-01:27:57= Gibsons, Wrigley Day Games, and Why Petco Might Be Baseball’s Best ParkFrom the Episode: PIVOT PODCAST (Caleb Williams podcast episode)https://open.spotify.com/episode/4qO6oXmftTn8Jl4Ru3R4Mg?si=kzx-UJ_YTe25pDr8mNHfAQ&nd=1&dlsi=4cc9da8589d542a2Follow along with ⁠Scott⁠ and ⁠Silverleaf WM⁠ on LinkedIn and be sure to check out ⁠silverleafwealth.com⁠ for more information!Don't forget to subscribe to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Derivative⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, follow us on Twitter at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@rcmAlts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sign-up for our blog digest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.rcmalternatives.com/disclaimer⁠⁠⁠⁠

Welcome to the derivative by RCM Alternatives. Send it. Hello there. Welcome back, everybody, to the derivative, brought to you by RSM Alternatives, where we put up a new blog post this week, talking right after the tariff tantrum. And through the beginning of last year, we had the mega trade, as people started calling it, make Europe great again. And this year, the top-performing stock market is emerging markets.

and that's been driven a lot by Korea and Taiwan, who kind of have the short dollar trade plus the AI trade with all the semiconductors and whatnot out of there. So wrote a little post on that, showed the stats, some cool charts, go check it out. RCMaltz.com slash blog. On to this episode, we've been having a good season so far, baseball-wise, here in Chicago.

It's been fun. Cubs have one like 13 in row at Wrigley here, which is just down the street from my house. So kind of was catching the fever and wanted to talk some baseball. So I met Scott Carl a little over a year ago out at a conference, and it turns out he was a major league pitcher for a few different teams, predominantly with the Brewers for a long time. So he came on to talk baseball, and now he's a wealth advisor.

So kind of wanted to ask him, do the pros really lose all their money? So that's it. And I have good talk with Scott. Send it. All right, everybody. We're here with Scott Carl. Scott, how are you? Excuse me. I'm doing well, thanks. You choked me up right from the beginning. So we got to start. I see your band in Dune shirt there. I'm going out in September. I've been a couple times. Love it out there. Any good stories or just been there twice, many? Just went once, but was very lucky to fly in private. So we got to fly right there into Cus Bay and hit the ground running. We played that day that we flew in. And the following day, we played 36 on like a picture perfect hallmark day.

And then, of course, the last day was 40 mile an hour sideways rain. But that was on Sheep's Ranch. So that's kind of the best course to play if the weather stinks. But great experience. I just love the captiveness of it. You're just with your buddies. There's nothing else to do, no other trouble to get into. And it's just really fun, difficult golf.

Yeah. The Kaiser's got a great model there, right? They've got one in Wisconsin here, Sand Valley. And I think they just built a new one outside Denver. But just find a piece of land, make it all about the Gulf, and people will come. I think they've got one in the middle of Washington, too, called Gamble Sands. Oh, of Washington State? Yeah, Washington State.

A buddy of mine's been to it. He really raves about it. In fact, I had a reservation for Sand Valley this year, which was coming up in three weeks, and I had to give it away. because too many things popped up on the calendar. So I had a client who is from Wisconsin and a big golfer. And so I was like, you just take over my reservation. So he's going in three weeks. I'm very, very jealous.

Well, now that we're doing the podcast together next time, I need to be your first call. I can jump right up there from Chicago here. We'll do. Let me write that down. Yeah. Done. So we met back Future Proof, I think, a year and a half ago, whatever,

in California. And then I, you used to live in California, but you've since changed your stripes. Yeah, correct. I was born in the San Diego. Well, I was born in Riverside area, kind of inland empire. And then lived down in San Diego from high school on in a town called Carlsbad, kind of golf capital of the world. That's where Taylor Made, Cobra, Callaway. They're all headquartered here.

But yeah, just recently within the last six months, relocated just north of Charlotte on a lake called Lake Norman. Lots of just really lots of different reasons for making the relocation, but truly enjoying it and joined a golf course out there, Trump National. It's kicking my rear end, but, you know, golf always seems to do that. But yeah, just enjoying the relocation, but I actually am out on the, I'm back in Carlsbad right now at the moment. I'm here for a conference. And then, like I said, my daughter's graduating from USC here later this week. So we're going to celebrate that.

Love it. That's on my son's a junior in high school. That's on his short list. But all these places are so hard to get into. Boy, great. So was it a tax play to get out of California? And or do you have thoughts on California? I mean, one of ten things.

Yeah. I mean, look, I'm born and raised here. I love the weather. I've got family here, lots of friends, good chunk of clients. But let me see if I can go down the list correctly. So tax play was definitely in the top three, but not the main reason. And I have a daughter that's an adult now living in Chicago, working in Chicago. She wasn't coming back to California knowing she couldn't afford it.

So we'll be closer to her. We're closer to my wife's family. My wife and I enjoy visiting Europe, so we're closer to Europe. There's the traffic situation. I would say just in general, the niceness of the people and the pace of the lifestyle is a little bit more to my, my taste. And then, you know, frankly, the fiscal irresponsibility that's gone on in California for far too long is just, it's hard to stomach when you're paying that much in taxes, that much in cost of living, and it's all going to God knows where, but certainly not anywhere that seems

to be getting any better. So it just kind of made sense for us. And we know that playbook in Chicago. But that's kind of my, right, everyone in Chicago fears, like, I'm going to be the last one here paying the $6 billion in pension liabilities. Well, my daughter's with you now. So she lives down in Streaterville. So yeah, you got two of you now. Perfect. All right.

We'll split $3 billion each. Do you fear for California that they're going to like gut it out of all the talent and the wealth? Well, I mean, yeah. I mean, look at all the companies that have left are thinking of leaving and the oil refinery companies already getting sick and tired of it. And, you know, you go to towns, like, I used to love going to the Bay Area, you know, specifically down into San Francisco. And now I don't think I have any inclination to visit that town whatsoever.

In L.A., every time I get up there either to see my daughter or for any other reason, it's just a hot mess. And, I mean, if they didn't have the weather going for, yeah, I don't really know what the appeal is any longer. Well, we'll hold out hope. So San Diego, born or like raised and grew up in San Diego, playing ball. Like is that, it feels like Carlsbad probably turns out quite a bit of college and pro athletes. Yeah. So baseball year round. You know, there have been more now.

And I'm sad to say, I haven't kept up with all of them. But kind of in my era, Brady Anderson outfielder for the Orioles was the first one to come out of Carlsbad high. He was an 82 grad. and then I made it to the big league as an 89 grad and then Troy Gloss the third baseman, Angels and a couple other teams came out as 93. So we were kind of the, I guess, the big three from the beginning. There have been some other professional athletes, some football players, some LPGA golfers, some professional surfers.

So there's been some other athletes that came out. And then since then, there's been a few other baseball players that have gotten up to the big leagues for a little bit of time and then. But yeah, good, good school. Yeah. And then, so give us the whole backstory there. So were you drafted right out of high school or how did you get into the bigs? No, I, you know, I was, I had a family friend who was a cross checker for the Cubs and he kind of gave me a heads up. Hey, look, this is where I think you're going to fall. What's a cross checker? I was all academia anyways. I was like, yeah, I want to go to school. And I had some scholarships to at the time, the Pact 10. But I also played soccer from.

my high school and unfortunately in my last soccer game I got cheap shot and had my ankle snapped at half and so lost all the scholarships and then by the time I got back out on the baseball field we happened to be playing a rival high school and one of the coaches there was a former University of Hawaii baseball alumni so he called the coaching staff over there and said hey you got to sign this kid he's been really good he had an injury but he's back he kicked our rear in today you got to do it. And lo and behold, they signed me full ride, side unseen, never seen me pitch, just kind of based on my stats in this guy's word.

And Hawaii turned out to be like, yeah, it turned out to be a blessing in disguise because I ended up playing as a freshman, got my rear end kicked, but great learning experience. And then, you know, slowly got better every year. I think I went three and six, then like 10 and 5. Then I ended up second team, All-American 14 and 3 as a junior and took the draft then. Nice. And you're what how you're big. I remember correctly six four six. I was six three. You know, now I'm probably six, two and a half, aren't we all shrinking? But yeah, yeah, I was six three like two, fifteen playing and, you know, you would think with a build like that I would be a flamethrower, but I wasn't. I was like a paint the corners change the speeds. Kind of like a poor man's Tom Glavin. Yeah, I like it. It's better than right. A rich man something else? Yeah, exactly. So then you're at Hawaii, you get drafted, your junior.

So you left, went straight in? Yep, left. Went to rookie ball. Actually negotiated in that like, hey, if I never make the big leagues, you guys got to pay for the scholarship I gave up. So they did that. Went to rookie ball, killed it that year, went back for a semester, then went on, skipped over two single A teams, went to double A, got pitcher of the year there. But that season lasted too long.

I couldn't get back for classes. So I just kind of worked out. Went to AAA the next season. Did good, not great, but good, good enough to get onto the 40-man roster. And that was 94. That was the year of the strike. And this is all Brewer's? Yeah, this is all Brewer's organization, yeah.

Yeah, yeah. And so I was locked out. So I couldn't go minor leagues. I couldn't go to big league camp. I was kind of, I was like two days away from getting a job at Dick Sporting Goods. And then the strike ended. And so I got to go to big league camp and I won't bore you with all the details, but I made it on the opening day roster at the very last second.

Nice. And we're mainly throughout your career, were a starter or rotation guy? I'd always been a starter, but that year the only opening was in the pen. So I started or actually got called out of the pin like two or three times. Then I got sent down. Then I got called back up for an emergency two times out of the pen. then I got sent down. Then I got called back up like 10 days later.

Some starting pitcher blew out his knee trying to field a bunt. And so I came up to take his spot and then I stayed ever since. Nice. Yeah, as a starter. Yeah, I was predominantly a starter all throughout my whole career. And then, you know, after that 95 season, so like four years in a row, 96 to 99, I averaged like 32 starts, 190-something innings, 10 wins. So like I was pretty steady Eddie, you know, not like the ace of. the staff by any means, but just somebody could kind of count on to run out there every five days.

And how many, right, versus today, which we'll get into more of this, but, right, you were throwing 140 pitches? How many pitches were you throwing versus what they do today? You're always geared up for 120 or more, depending on the situation, you know, and it doesn't mean you always get there, but, you know, the mindset back then was always like, I'm taking the hill, I'm going nine, relievers take the day off, you know, obviously I only had four complete games in my big league career, so it didn't happen too often. But you're, you're definitely your goal was to get to at least the six inning mark, you know, because they had this this stat. I don't even know if it still exists today, but it was kind of called this quality start that you would

use for like arbitration. Yeah. Yeah. So six six, six innings with three Ernie's or less. So that was that to me like that was the bare minimum. I love you call them Ernie's earned runs. Yeah. Three. So that was the goal. six innings, three Ernie's or less. Yeah. That was the minimum. To me, that was like, you got to hit this or else. And now what today, it seems they've gone to like four innings or?

Yeah. I mean, like, I don't even know how they, because, you know, it used to be you had to have, you know, five innings pitched in order to, you know, be eligible for the W. And I don't even know if they've changed that rule now because a lot of these starters are not even getting to five. innings. So, you know, I don't know how they create the statistics that they need to go into arbitration or free agency to determine their worth if they don't have any Ws because they can't get to five innings. That's one of my favorite sports stats ball time of Maddox had more wins. I don't remember the number 300 and whatever than three and oh counts. Yeah. Right. Isn't that insane? And some of the most of those three and no counts were intentional walks.

Right. Yeah. That counted back back. I mean, it was just stupid. I remember, you know, I had to, because if you remember, when I joined Milwaukee, we were in the American League, but then halfway through, we moved to the National League. So then I had to hit and do all that stuff. And I got to step in against him. And it's like he was throwing a wiffle ball. You know, I watched these little TikTok videos now of like this whole wiffle ball league and the way the ball moves. And I'm like, oh, yeah, I saw that, but it was with a baseball. It was with the real ball. And he wasn't putting any junk on it. No, he was just that good.

I think you were telling me, this is right, you had to go against Randy Johnson once in the batters box as well. Yeah, well, I mean, I'm left-handed. I grew up switch hitting, but, you know, then I took three years off in college, three years off in the minor leagues, three years off in the big leagues. So it's like nine years without hitting, and then all of a sudden you got a hit again. Yeah. So I was like, I'm not going to try to learn them both.

I might as well to stick with left-handed. That way if I get plunked, you get plunked in my right arm, not my left, I can keep going. But then, yeah, I stood in against Randy Johnson. I was thinking myself, like, you know, I kind of remember, I think it was maybe Larry Walker or John Kruk or somebody, like at the All-Star game, just like switching batters boxes, like, why bother? And what was that around the time and it killed the bird? Randy Johnson, remember that?

It was, I think he did that before because when I got with him, it was, He was with the Diamondback, so that was like 99. Yeah, that was crazy. So here's a real quick story. He, early in the season, we're in Milwaukee, so maybe, I don't know, maybe second or third week in. Anyway, base is loaded, and I'm up, and there's one out. So I can't really bunt, so I got to swing away. And he jams an absolute snot out of me, but I hit it so.

so poorly to the shortstop that because it was so slow, they tried to turn two. And I'm not fast, but I still made it to first on time. So run scores. There you go. Somehow I got to second base. I don't remember. But anyways, timeouts called. And Steve Finley, who I knew because he's a San Diego guy, he comes in like from center

field. And he's like, hey, do you know that you're the first guy this season, first lefty to get an RBI off the unit this year? I was like, are you kidding me? You know, I was like, I'll take it. You know, my bats shattered. My hands are stinging. But whatever.

Which makes me think, what do you think, like, what were you throwing? What was he even throwing back then? 99 or something? Was he over on? I mean, he could get it up to 99, but he kind of was settling in around the 93 to 95 range. And then what were you throwing in the 87, 88? Yeah. And I mean, it sounds like what, six, eight miles an hour, but that is a world of difference.

Like two totally. different worlds. And what do you make of these guys now, Skeens and this Brewer's guy now who's throwing, like, whatever he's throwing, 106 or something? Yeah. I mean, I've seen them both in person. I was in Chicago and Skeens actually came into town to pitch. So I got to watch him live. And I mean, look, I've been in the cage against 100 miles an hour and, you know, eventually you're going to catch up to anything. So you can't just sit there, in my opinion, and throw 100 miles an hour straight as a string. Somebody's going to catch up to it. You got to have a second pitch or you got to have movement or you got to have them both, something. But I will say, I think the hitters, you know,

are definitely, I always wondered like why all these guys today are hitting like 240 and 250. And like, God, when I played, if you were 240, you were kind of waiting to get tapped on the shoulder to get sent out. But I think, yeah, the guys show harder. But that's also probably some of the reason why these guys can't go 7, 8, nine innings because they're just blowing it out on every pitch. Yeah. But do you think is it science or they're better athletes or they've just been like eating right and doing better stuff since they were children? I think it's kind of, I think it's that last category.

I mean, there's a little bit to the others too, but I think they've just been, you know, a lot of these guys have full on trainers. They've got nutritionists. They've been, you know, they're playing year round. I mean, I didn't lift a weight until I got into like my senior year of high school. These guys are doing all kinds of stuff from the get-go. Yeah, band work at 10. Yeah.

You know, and not that you want to see it at all, but like, you know, the kids that have to go under the knife for like Tommy John surgery. I mean, they've almost got Tommy John surgery now to like a drive-through where you get it done and you actually can come away stronger after a year. I mean, there's a lot of cases where that's happened. In fact, I heard there were a couple dads who had it done electively for their kids. Of course, they got in trouble for that. But I mean, it's like, shoulders is another story. You can't, haven't fixed shoulders yet. But yeah, that whole Tommy John thing, they've got it stronger now.

Right. And that seems weird to me that that's not steroids or you can't do, but you can like surgically make your arm better. Yeah, I don't know. I mean, it's the flavor of the day, I suppose. And what if you like put some carbon fiber in there? Like, what's the line that you can't? Yeah, that's next.

There'll be some like AI tool in there eventually. Exactly. You were saying you were painting the corners and whatnot. What's your thoughts on this, we have this year, the automated system? Would you have loved it or hated it? Well, I would have hated it because, so like when I played, the strike zone was rectangular, but it was kind of more on its side like this. So you used to get like, you know, this much extra on the sides,

but you never got anything above the belt. So, you know, you only had this kind of window up and down, but you had a little bit more this way. And you could get more, depending on the unplead. empire depending on your consistency. And you just kind of knew it. Like you knew who the umpires were with big zones, small zones. All you really wanted was consistency. Now, is that a relationship thing? You were working them? Or you just kind of knew. I mean, I got to know them all first name bases. Ask them how their kids were. I mean, you know, who doesn't want an inside scoop? And it's not,

I wasn't trying to use them. I thought they were, you know, for predominantly nice people. The game within the game. To maintain a relationship. Why not? And then, but today, you know, Now the strike zone's the same rectangle, but it's just turned on its end. So you don't get anything beyond the corners, but you get the higher strike. But a higher strike at 87, 88's not going to get it done. Like, that's just going to get walloped out of the park. So, I don't know. It's hard to say, like, every era, you know, guys think, like, oh, I could do better in this era.

And it's happened that way since the beginning of time. But you don't see a lot of guys throwing 87, 88 in today's baseball. So I just, I don't know if it would work. Yeah. But it seems like if you were, a lot of them that maybe you painted and it was like, oh, that was a ball. They're like, check it. Yeah. I nicked it.

Yeah. Well, they're smart to, to discourage pitchers from checking balls and strikes because every pitcher would think every pitch is a strike. It's always a strike. Yeah. I think a lot of managers just say, like, even though pitchers are technically allowed to check, I think most managers have told your pictures, like, don't even think of tapping your hat. And you were saying if you had it high in the zone, someone's going to launch it out of there. What was the worst home run you ever gave up or the,

you just put your head down? I can't. Or was it a head down of like, man, that got crushed or a pat tip of like, hey, good for you. There were a couple, like Troy Gloss, funny enough, you know, Carl's Bad High alumni. Yeah. He hit kind of a meaningless home run.

It wasn't like a game winner or anything. But when he hit it, we were at Angel Stadium and when he hit it, it was so loud. You know, I knew it wasn't coming near me, but I totally flinched, like as though like lightning had struck right behind me. It just sounded so loud. And then it turned and it was, you know, probably 30 rows back. So I was like, oh, that's really nice, Troy, well done.

But I remember giving up in a big game. So, you know, when we went to the National League, you know, Cubs are obviously a natural rival. So Cubs came up into Milwaukee in the summer. This is 98. So this is all the whole Sammy Sosa, Mark McGuire, home run, you know, chase and everything. So it's like the county stadiums packed. And that place holds 50-something thousand.

And it was never filled when it was just us. So like it was probably half Cubs fans. But it was rocking a lot of electricity. Still true today. Sorry. Yeah. And I threw a really good change up to Sosa. I mean, the thing, it was, you know, my change up kind of like had some dip in it as well.

And it was dipping down. and it might have been like mid shins at best. And he went down and clobbered it. I mean, just clobbered it out into left field, like massive home run. And I was like, what in the hell? Like, that was an excellent pitch. You're like, you shouldn't be able to do that.

No, but, you know, Sammy, Sammy's a free swinger. So, like, you know, he has holes that you can exploit, but once in a while he'll run into one like he did. And then his next at bat, I threw him the same pitch throughout a sequence. And he swung and made. miss so badly he like did a 360 so it's like sometimes you throw a good one and they get it you never know um so you gave up that year you gave up homers to sosa and mcguire yeah so like i don't know if you remember but USA today after the newspaper did a thing after the season it was kind of like a

congratulations to the both of them like hey really cool watching you guys do the home run race and all that stuff and then it listed out like all the pictures on like the sosa side and the McGuire side who had given up home runs. And if your name happened to be in bold, that meant that you were on both sides. So I think I was like one of 13 guys that was bolded. Hey, you're in the paper in bold. Yeah.

I love it. So part of one, right, we're here in baseball season, the money seems like it's gotten out of control in professional sports. So you've now moved into the investment advisor world. But just let's start. there of like, how did you know, like, did you think you, were you in charge of your money at the time? No, I wasn't. I had a, I had an advisor that I had been introduced to through one of my teammates. And I'd had him for a couple of years. And, uh, you know, he was doing a good job. But in hindsight,

a lot of advisors were, I was late 90s, you know, mid to late 90s. So a lot of advisors were doing pretty well during that time. It was, it was in 2000. which was kind of the dot-com busting and the last year of my career. So I'm trying to salvage my career. I'm trying to get a new contract. I'm not paying attention to anything. I really had no idea what was going on in the market or anything. Well, as it turns out, as you remember, the market was starting to turn over because of the dot-com bust.

And my advisor, instead of looking at me like a guy that might retire in a year, looked at being like a 30-year. looked at being like a 30 year old and said, oh, well, you're 30, you know, let's just keep going risk on. So he kept double again. Instead of like, oh, you might retire next year. Let's go to safety and, you know, see what happened. So I, you know, into the season, I didn't get my next contract. So that was it. And I went and, you know, opened up my portfolio and 70% of my funds were gone. And I was like, holy cow. So obviously, you know, he got cut loose. And, I was an accounting major at school, so I was, and, you know, I enjoyed my finance classes.

And I liked the market, but so I started kind of taking it over myself and tried to immediately swing for the fences just to get some back. And of course, that exacerbated the problem. So I quit with that. And then I just kind of got in with some friends. I had a buddy who ran his own little hedge fund. And so we kind of had a lot of conversations of like how, what's the best way to make my way back and be patient and so forth.

And so I was doing it for myself for a while and finally took a job in the mortgage industry, all different facets, then went into venture capital. And then while I was in venture capital, there was a firm here in San Diego that was kind of a marketing advisory firm, you know, a big seminar type thing. And they needed like a service advisor. So they were going to can one of their advisors and they interviewed me to take over that book a business. And so I was like, yeah, I want to be an advisory. I just didn't want to hunt and gather a ton. So took over that book, serviced it, did really well, grew it up, ended up leaving that company

after four years. And I've been independent for like the last 12. But that's kind of how I got into the route. So when you, right, everyone the, well, let's just ask, is it myth or truth that most of these pro athletes blow through their money? Well, it's both. Is it different now or then? It's not a myth. There's definitely some truth, but it's not every athlete. There are definitely some out there that are very heady. They are smart with their money. They don't go crazy with it. But then there is the flip side. There are plenty of athletes more than there should be that have blown through the funds. And in all different manners, they've done it on themselves. They've done it on their family. They've taken too much risk because they need the thrill of victory. You know, call it whatever you want. But yeah, they've made way too much to have blown through it. The entrepreneurial folly. If I'm great at this, I must be great at everything. Absolutely.

I'm great at buying car washes. It's bad largely, but they sure do think it works. So put a percent on it. Like what percent do you think actually get out of their career well? Well, so let's exclude the folks that are just kind of getting a cup of coffee. You know, like they maybe get a year or two make like a million. million bucks, whatever. Those guys, we're going to exclude them.

We're going to talk about the folks that got like the three-year contract, like the three-for-30 or 40 or whatever the numbers are today. Those guys and greater, I would say there's a solid 20% of them that can't make it last. And the perception is like, oh, this guy's set for life, right? Well, I mean, you ask any Joe Schmoe off the street right? And they're like, hey, if you're going to make $30 million over the next three years, even including taxes, do you think that you can live on that? And most everybody who's been working a normal budget, punching a clock, would think that that's like hitting the lottery. They could make that work.

Yeah. But, you know, and, you know, I just said lottery. Like, you find lottery winners that that happens to it. It mostly comes from people who, like, go from nothing to a lot really quickly. They just don't have the wherewithal to be mindful of how to make it stretch. Or they don't have the right people in their corner to help them make it stretch and everyone's got a handout. I mean, it's a myriad of different things. And does the league help?

Or did they in your day? And do you know if they do today? They didn't back then. No, there was nothing league-oriented that helped. I think now they have something going on. I think from what I've heard, the NFL seems to have kind of the best part of that. And, you know, and to be honest. I'm not trying to knock NFL players, but that that's one of the sports where you can go from,

you know, nothing to something very, very quickly. Basketball is another. Like I found that baseball and hockey tend to have a little bit better, you know, financial acuity just simply because there's the minor leagues. I mean, like, I made $850 in rookie ball. So I was eating McDonald's living with four guys just to make it through. week or a what? Month.

A month. Come on. Yeah. So, and then I, they're just like, hey, if you want your chance of making the show, here you go. Yeah, that's what it is. I mean, you're chasing this pot of gold at the end of the rainbow, but the whole journey there is like, you know, eating fast food and living with three or four guys. And that's just what it was. So, like, you understand the value of the dollar and how to budget yourself because you don't have a lot of it.

And then, you know, and then even like my minimum salary when I made it to. the Bigleys was 109,000. Yeah. And I was, you know, I'm 23 years old, so that's a ton of money, but it's not like it is today. And, you know, so I still, you know, I think after that first year, I came home and lived with my parents for like a month before I bought a little condo of my own. So it's like I had a, I had a good sense. And maybe some of it was my, you know, college background and whatnot, but I had a good sense of like kind of how to manage some money. And I think, more guys that have gone that route do. But like I said, football and basketball,

you have the ability to go from college. You know, now you got NIL money. So they get a little bit more beforehand. But it used to be like you had nothing and then you got all this money dropped in your lap and what do you do with it? Yeah. What do you ever wake up in the middle of the night

or just walking down the street and like, damn it, I wish I should have been in this age and I'd be making $30 million more? or is what it is? Well, again, it goes back to like, yeah, I'd love to be playing today because of the contracts that are being thrown out.

But it's just like, would my 87, 88 paint the corners type of game survive today? I don't know. The answer might be no. So I'm just thankful. I got in when I got in. I got the service time that I got.

I made the money that I got and have worked its way back. And I've got my pension. So that's obviously very helpful. And so, and then, you know, just the memories that come from it. I met my wife through baseball. I got to hit. I got to pitch. I got to see most of the fields. I just, you know, it's a great time I wouldn't have changed. The, so what would your

advice for these younger players of like, well, I'll go back for a second. Like the NFL is interesting because you start, you're starting to see players retire super early, right? The Bears just lost their center, all-star center from last year who just was here one year. But you can also see that. If they've taken care of the money, there's plenty there. They'd be like, why am I bashing my brain and going to die of CTE? Like, let me get out of the game. Did you, right, was that ever a thought in your era? Do you think baseball is different because there's not as much risk?

Yeah, I don't, you don't really see anyone walking away from baseball early just because of what you said. There isn't that risk of CTE or, you know, maybe you're an outfielder and you run into a wall. maybe you get a freak line drive as a pitcher back at your face or something like that. But like those are very, very few and far between. Whereas, you know, football, yeah, you can get run over and CTE. You can get paralyzed. You can break this, that, and the other. So if you, I kind of get where they're coming from, if they've been good with their money

and they've got a good handle and they look at the financials and say, yeah, I've got what I need and I can just live off the interest or whatever, then. it's a lifestyle choice and I don't begrudge them that at all. Yeah. The fan in me does. Like, hey, get back here. We need you. Yeah.

No, I get that. That's, you know, you don't expect a 26 or 27 year old to be pulling the plug on your team when they're, you know, an integral part of it. Now, with your advisor hat back on, is the math simply, right? And what's the average baseball career? Do you even know? Like, I think the average football career is like three years? Well, it was, it was two and change back when I was playing. And so for every Tony Gwyn, there were 10 guys that came up for, you know, September call-ups and never came back.

So, yeah. I think now it might be stretched a little bit, like into the three-something range. But even for my sake of my argument here, say you're making $5 million a year and the average, let's even call it four years. So you got $20 million. But the advisor math is, hey, you're making $20 million over these four years. And then what? versus a person with a career is going to make their $20 million over 15 or 20 or 25 years or whatever the case might be. Right?

So that math is different because it's coming in every month into your accounts. Here it's all put in. You have like a lot of path dependency. Like you were getting out right at the wrong time. So with your advisor head on like, how do you think of that math? Well, it's, you know, some of it's dependent on the person in their lifestyle. You know, if they're frugal, you know, and they're, you know, they come. from an upbringing where, you know, it's not all about the flash and the keeping up with the Joneses

and all that stuff. And, you know, and you can sit them down and say like, okay, what, what do you need to live on? You know, it's most of it's math. What we do is math. It's like, it's just numbers. So like, if they've got 20 million, let's let's call it, let's just say they live in California. So between Fed and state, you know, it's going to be closer down to 10 when they're done. But, you know, should most advisors right now should be able to produce five to six percent on a really low risk basis i mean i'm talking like two out of ten so you know what is that that's five six hundred thousand dollars so you know you just kind of got to go to the client and be like what's what's your monthly nut well if it's you know 30 grand a month then we're well within our means yeah

you can shut it down and go into you know retirement world and will be fine. If your monthly nuts, like 70 grand a month, then you might want to go get a part-time job, whether it's like coaching at a college, or it's doing private lessons or open your own batting cage or just go into some other line of work and get a little bit of income going

because those numbers, you're not going to be able to sustain it with those kinds of returns. But it's about understanding what their lifestyle is. And it's that way for every client, but you really have to nail that conversation. down with an athlete. And then how you have athletes on your roster of clients? I have a couple, yeah.

We can't name names, probably. I will not name names, no, but it's a... You name sports? Yeah. Yeah, it's ballplayers. It's baseball. Nice. But it's, but they are, they're more frugal oriented.

So it makes my job a lot easier and it makes their retirement a lot less stressful. I just went to a charity event that was at Michael Jordan's old house up here in Northbrook that was been trying to be sold for 20 years or something. Yeah, I think it was listed at 40 some million and they eventually sold it for seven. Yeah. But this guy who bought it's just kind of trying to keep it the exact same, like a mini museum. But two things. One, the weight room from last dance where he started lifting weights as like fourth year in the pros.

Right? That should answer the Jordan. LeBron debate all time. He didn't even start lifting until he was in the pros. But too, the nut on that was incredible. Like this is a, I think it's a 30,000 square foot home. Something like that. Yeah. Yeah, it's a compound. But anyway, I digress. But to me, that's the interesting math that maybe the athlete or they don't even know. They're like, oh, I'm going to, the dream is to keep going for 10, 15 years maybe, right? And they're thinking I'm going to be making these millions every year. but the reality is probably like, actually, you're only going to, you have this short window to make as much as possible. And then be as cautious with it as possible. Yeah, I remember, like I said, in my last year, so I got a three-year contract for years four, five, and six. And, you know, as I was coming up towards the end of year six, my shoulder was starting to give out.

So I was kind of, I was losing some velocity. I could still paint the corners. I could still make the ball move. I was in great shape, but I just was kind of losing some velocity. So I was just trying to hang on and see if I could get that last contract, maybe be like a lefty out of the pen, a little lefty, lefty setup kind of thing. And, you know, gosh, if I can just get like two more years, because at that time, you know, the salaries were starting to go up,

I probably could have got like two more years for like, I don't know, maybe three or four a year. Yeah. But even that would have been enough to put me over the top. You know, because again, I didn't live very flashy. I still don't live very flashy. So I only needed like a certain number to make the lifestyle work, but that contract just never came. And then that on top of the losses that occurred from the advisor, you know, I had to go back and get into the working world.

So, so yeah, I was, I'm one of the, say, 20% that kind of, you know, lost it. not, I won't say it was of my fault. I didn't like gamble it away or spend it away or any of that stuff. But I also didn't, I guess, watch closely enough to the advisor as he was doing his thing because I was so worried about trying to save my job. So, you know, shame on me. It's the cross I bear. Do you think the advisors know better now? Or who knows? Like some still have people who don't that are saying you're 30 years. Well, I think, you know, look, I'm not, I get frustrated sometimes at the overarching compliance that's run through our world sometimes. I know that they make a lot of these rules for the lowest common denominator, you know, like the dummies who don't do their job right,

and I get that. But I, the one good thing I think about the overarching compliance and regulatory stuff is it's a lot harder now to do what that guy did without paying the price. Like now, now, I mean, there's so many disclosures that you have to go through with clients about what's their risk tolerance, what's their time horizon, what's their liquidity needs, and you have to re-verify this stuff every year. And if you don't and you don't have meticulous notes these days, like, you're going to get sued. So like, if I had gone through that whole process and woken up and saw that we were like 70% down, I'd have been like, what the hell? Do you know, that's, what are you doing? Like, that doesn't make any sense. sense, that's not kind of what we should have been doing. And he would have really... It's like, well, the NASDAQ's down 75. We're doing, we're outperforming. Yeah, I would have gotten even more pissed at that argument.

But, yeah, so he would have, you know, he would have had a lot bigger problems on his hands where, you know, back then, I guess there just wasn't as much, you know, kind of written down and so forth. So I'm appreciative that there's that. And I'm very mindful of it. I mean, it's one of the first conversations I have with people. is trying to ascertain like, you know, where, where's your tolerance in this whole thing? What do you need? I want to make sure that I stay in bounds with whatever investments I'm choosing for you that meet

those needs. And I'm going to, you know, articulate it and I'm going to make sure it's written down somewhere. Do you ever want to haircut that? Doesn't it? Seems to me always the client has, they answer that question this way. And then the reality when Chitt starts hitting the fan is somewhat different. Oh, well, you know, I said I could. They always want like, you know, 90% of what the market gains.

They're just not willing to take on 90% of what the market loses. So I have to, I articulate different scenarios for them. Like, you know, my use of different alt categories now, I feel very comfortable, you know, in trying to make a particular percent, but only lose a smaller percentage, you know, and it's kind of that delta in between that they're paying me for. Yeah. You know, otherwise, you know, if you want 90 on the upside and 90 on the downside, then just go get an S&P fund and don't use me, like save yourself a few bucks.

Right, but even if someone, well, you have two problems. One's like, well, I want 100% of the upside and 5% of the downside. Yeah, it's not going to happen. We're not the right. I'm not an alchemist, right? We can't do it. But then even if they're like, no, I'm comfortable with the 20% drawdown and they're down 14 and they're calling you up freaking out.

I'm like, well, remember, I have it written down here. Here's what we talked about. Like, well, I changed my mind. Yeah, no, I look, as long as I've got it written down that like, And again, if they're down 14%, but that's, you know, 20% of where the market's down, then I'm technically in the realm of where I should be based on our conversations that we've, you know, had over the years and it have been documented. But yeah, you're right.

I mean, everyone has a short memory. They all forget, you know. Like 2022 was a bad market year. And, you know, clients market was down like 18. And I would say my average client was maybe down four. So like that was a year where that sort of strategy showed its hand, showed it's, you know, played itself out. And clients were like, okay, now I get why we do what we do. But then there's years like last year where the market's going up pretty good.

And they're like, hey, how come we're not doing as well as the market? And I'm like, you guys just aren't listening. It's like you have, it's like amnesia every day. Talk through some of those alts you're using. So I think you mentioned buffered. It sounded like you were saying buffered, maybe without the name. Yeah, I've got some, on the liquid side, I've got buffered ETFs from a couple different families, you know, tracking the S&P on different downside buffers or different time horizons. And then I also use a lot of structured notes that I custom builds that I do.

Those are for a little bit longer in duration, more alpha to the upside. But the longer you do the duration, then the more, you know, the better your terms are going to be on both alpha and protection. So I like to sprinkle some of those in. I've used some private credit funds that I like very much. I've got some private credit funds that I like very much. So, yeah, I'm a big fan of, you know, things that have a low beta to the market. Any worries with the private credit, with some of the lockups and gates and whatnot that have been going on? Yeah, you know, so these are more like interval funds, so they don't have the lock, but they can have the gates like you mentioned.

And, you know, but you have to, again, you have to factor that in. So like even though it has a, you know, a mandatory liquidity window, a tender offer, you still have to, in my opinion, look at it as a quote unquote ill liquid fund. Because to your point, if 100% of their people want their money out at that particular tender offer, you're not going to get much of anything at all. So you have to just, you have to be mindful of that. You have to build the portfolio to where you don't count on that as a source of liquidity. But, you know, most of the funds I use, if they've ever been gated, it's been for like maybe a quarter or two. And it's still been like a 30 to 70% type of redemption.

So it's not, it hasn't been like, you know, there was one interval fund that I went through in the real estate world where they just, their business model went to hell in a handbasket and they just sucked as a manager and everybody knew it and they all wanted. I was getting like 5% redemptions every quarter for like a year. It kind of sucked. In fact, they never even recovered from it. So, but that was that was less, in my opinion, that was kind of less of. of the makeup of the portfolio and more of the mismanagement from the fund people. Yeah. And but so overall, you're not overly concerned with private credit? I mean, I think that like with anything, there are good players and bad players within a particular space. And I, you know, you have to, you have to look under the hood.

You can't just look at a private credit fund and say like, oh, here's the returns. You know, like I sit with a couple of the funds that I use are in Chicago, headquartered. So when I get into Chicago to see my daughter or any other reason, I sit down with those guys. And I start going through like, okay, break out, you know, I want to know what's the default ratios, you know, how many are impaired. You know, what's your top 20 loans? What's the overall exposure to the portfolio? You know, I just kind of, what's your average duration on these? You know, I want to know all these facts so that I can kind of determine, are you still,

you know, looking for the same either CLOs or direct lenders in the same spaces or are you venturing into new spaces that I'm not comfortable with? Like there was a, there was a direct lending kind of fund a while back, I want to say maybe six years ago that I was using that their model was great, but they ended up getting so much money in the door. They started lending into areas that were sort of outside their wheelhouse because they had too much cash they had to put to work. And, you know, I and some of my colleagues were like, that's not what I signed. up for. I don't like that. So we bailed out. And lo and behold, about two years later, they went basically belly up and started trying to Ponzi scheme their way out of it. So, yeah, I'm very,

very mindful of, I don't, I mean, I just don't look at the returns on paper. You got to look under the hood. You got to kind of know what's in there. And even then, I'm not going to know everything, but I want to know as much as I can. So I'm, yeah, there's been some bad private credit out there. I think there's a lot of money thrown in a lot of things that maybe shouldn't have been. But I think that's going to get exacerbated in the public credit market more than in the private side. Yeah. And it's almost like the structure helps in this case, right? Like it, the gate they're on purpose, so everyone can't rush out and you don't see the loan through. Yeah. I mean, that's where that's where some people think liquidity is like a bad word, but

or illiquity is a bad word, but it's not. Like it, it saves a lot of people from selling at the wrong time and doing stupid things, you know, whereas when there's just, you know, just a gate there, you know, just let the manager do his job and let him navigate through some turbulent waters. And how do you think? So it sounds like you get very involved in the investment process, right? There's kind of two RAA models of, hey, I'm just your buddy that we go out to steak dinners and have golf games and then someone else handles all the investments versus like

we're doing golf and stakes, but then we're also, I'm in charge of all your investments. you seem like you're the second model. I'm definitely the latter. Yeah, I'm hands deep in it. I mean, I do a lot of conferring with colleagues like, hey, what are some of your best practices? What are some investments that you're using right now? Tell me why.

Tell me where they fit. I do a lot of collaboration. But at the end of the day, I'm the one that's picking them, again, based on all the data and criteria that I've ascertained from the client. And so it's very important for me to know kind of what these holdings are and what they're doing. I mean, I can't know everything. I don't have access to all the CFOs,

but I try to be as informed as possible. Yeah, right. And that seems like the hard, like maybe there's a scale limit or something, but like I can't have 7,000 light items and all these client portfolios and have all those meetings and get knee deep and all that stuff. Yeah, you're right. No, I keep the menu.

You know, I would say, you know, I've probably got 70 to 80 different types of holdings, whether that's ETF, mutual fund, interval fund, whatever that I'm looking at on a daily basis. And once in a while, I'll go to a future proof or something like that. And I might try to hear of a new two or three that are out there because it's like the old GE model, cut the bottom 10% and replace them. So, you know, I'm looking to do that.

But I can't, to your point, I can't be looking at 7,000 things. So one thing I don't do a lot of is buy individual equities because I just don't have the time or the ability to do the research. into an individual stock to the level that a client deserves. You know, if they ask me about like, hey, should we get in an Nvidia or an Apple or an IBM or, you know, whatever, just pick any stock, then I can, you know, I can look and I can give them, you know, a little bit of overview as to what I can see. But it's like I wouldn't make a recommendation to them either way.

I'd just say, look, this is what I see about what you're asking. You make the call. So for most of my clients that want individual equities, that's coming in unsolicited. Well, you miss the boat there, right? There's only really seven equities that they need to know. That's true. That's true. I only need to know seven.

You're right. And then do you, like, I always bristle on the buffer notes. I don't know if everyone gets them on the client side of right. Like you're not going to get the first 10% of loss, say. But you're going to get everything after that. Yeah. So do you think that your clients, it's a bad question because you're not going to say no, but like they understand that dynamic and they're comfortable with that dynamic? Well, yeah, because, you know, you're using growth-oriented money.

You know, it's not like you're taking money that should be earmarked for fixed income and putting it into, you know, a buffered ETF. That doesn't make any sense. But if it's money that's earmarked, you know, whatever your percentage is, 70, 30, 60, 40, you know, pick a number, it doesn't matter. But if you're picking growth money that's earmarks to growth, then it shouldn't be a tough story to sell because if that was growth-oriented money and it wasn't in a buffered ETF and the market's down 20, well, you're probably going to be down 20. But because you were in the buffered ETF, you're only down 10. So now we can either ride this out through the next, you know, duration, whatever that duration is.

Or we can look at it from perspective of like, oh, the market's down 20 percent. Things are on sale. We can now try to get more alpha on the way up because we only lost half as much as we probably could have in a normal growth instrument. But then you're giving up some upside to capture that, right? If you stay in the buffered ETF, that's correct, because you're going to have a cap because of the buffered style. But my point was like, well, if we now look and the market's down 20, but we're only down. 10, we should be thankful that we've got an extra 10 that we didn't lose. Let's get out of the BATF.

Let's just go kind of more alpha hunting now because things are on sale. Love that. And then I think a lot of people are understanding that it gets less good. It's basically what you're saying, right? If depending on how it unfolds, even on the upside, if you're at near that cap, like now you have that full downside, say you're up 20% on it, the cap's 25. Right? You only have five more upside and 20 downside.

It seems like a good time to get out as well. Well, yeah, so I wouldn't say the word get out. I would say reallocate. So like, you know, you would go from like the January series. So like let's say, let's say, you know, I got in at January and my buffers 10% and my cap's 15. But now I'm into like October, November. The market's up 20, 25. I'm already above my cap.

My earnings is, you know, my upside. is already at its cap or very close to it because of time deterioration. So to your point, yeah, it might make sense then why don't we cut this series down and reload into the November or December series and start my buffer over again? Because if we start to pull back in the market, I'm just giving away gains. I'm nowhere near my buffer. And that same logic applies into structured notes as well. Like we will build structured notes three, four, five years in direct.

but you get like a year and a half into it and your notes up because of the multiple it's up like 30%. But then it's like, well, if the market goes down, I'm just giving away all my gains. I'm too far from my protection level. So why don't we cut the note out early, build the same exact note and just start our downside buffer at a higher number. Any worries on the structured notes of or you have like, right, that you're taking on that credit worthiness of JP. Yeah, there's credit risk. So, you know. Or are you like, hey, if JP Morgan goes under, we all, we have bigger problems?

That's, that's kind of the thought process. I mean, we're certainly not building notes from like bank on the corner type of thing. But, you know, we, I did have like the very first structured note I ever built back in 2020 was with Credit Suisse. You know, and at the time, they were totally fine. And when they were going through their issues, I had one structured note that I ended up kind of getting out of because of some of their issues. and I didn't take a haircut or anything on it, just moved on. But yeah, we only build with like a handful of banks. We're looking for like double AAA rate of banks,

a lot of tier one capital ratio coverage, you know, and all that doesn't mean that that bank can't screw the pooch because they can. But to your point, like if J.P. Morgan goes under, then we've got bigger problems. You are on a unique position in this podcast because you don't do much, if anything, in manage futures or tail hedging, right?

The buffers are sort of it, but tails more way out of the money in case there's that 50, 60% down. So try and answer for me how your clients view them, even if they know about them whatsoever, right? We're kind of drinking the Kool-Aid, everyone that comes on this podcast,

but it'd be good to get the view from someone who's like, eh, I know of them, but they're not really all that important to me, or I don't see the value and why. I don't know if there was a question in there, but you got to just. I only know enough to be

dangerous, so I'd hate to kind of, you know, expound on it too much. But I think that's the question of why aren't you interested in learning more about it, to be more than dangerous? Oh, it's not that I'm not interested. I guess I've just never, you and I, I don't think we sat down long enough to really go through the ins and outs of it. Like I said, I've used one fund from the AQR family. But again, I've just used it as like another tool.

I'll be the first to say I don't know as much about the inner workings or what's under the hood on that one as I might some of my other assets. But it's, I will tell you immediately, like, I'm interested in that area because, again, it's, it's an alt. You know, it's not your mainstay, stock bond, you know, 60s style portfolio. So I'm, I'm interested in any kind of arrows I can put in my quiver that are going to give me that. level of diversification where I'm not just beholden to the ebbs and flows of the market on a daily basis. But for sure, you're saying your clients aren't calling you saying, hey, I'm interested in managed future.

Like, do they know one thing about it? No, no. In fact, I would say in the last three years, I might have gotten one call on a managed future, but, you know, the ones I get now are like, hey, what do you think of this crypto or what do you think of, you know, this type of thing. No, I don't, I haven't gotten many on the managed future side. My quick pitch, do you, would be the buffer and the structured notes. Those are your first responders.

And I'm borrowing this from Patrick Casley, who borrowed it from another guy that I'm forgetting his name. Those are first responders, right? The market has this thing, you're, you're protecting that first 10% blah, blah, blah, that managed futures, 2008, 2020, 01. If you'd had 30% in your back when you retired, you would have been okay. Yeah.

They're the second responder. So a long, drawn out 2008 type sell-off, they're going to kick in because they go short equities. They go long bonds. They go long commodities, whatever's causing the issue. So that'd be my quick pitch. They're the second responder. That's definitely something I'm going to delve into.

little bit more. Yeah. And then tail risk is probably the first responder too, but then you need a COVID week or a Black Monday or whatnot. So do you find clients aren't as interested in, I'm happy to pay 2% a year for kind of portfolio insurance, which I know that's a bad. I said portfolio insurance in the same sentence as Black Monday, which is bad juju, but yeah. No, nobody's really kind of express that interest again because a lot of the sort of alts that I'm using right now don't have that market beta. So you get that that tariff tantrum or you know, things like that where there's that kind of quick spike down type of thing. They are, I wouldn't say completely insulated, but they certainly don't absorb the majority of that drop immediately. So they don't, they don't

have that panic. I don't get a lot of those phone calls, let's put it that way. And that's interesting, hearing you say the bed, do you assign, I've never thought about it that way? Like, once you have that buffer, the beta is totally different, right? It's like, it's a one beta, it's a negative one beta down 40%. It's probably a 0.4 beta or something up 30%, right? There's, it's shifting, it's dynamic. So how do you think about that of assigning it for the, at the portfolio Well, so I'm mostly thinking of the beta on on the on the more private credit, private equity side. So like, you know, how, you know, like kind of what's my max upside capture?

What's my my downside capture? Like does this thing ebb and flow the way the market does? And so, you know, on a on a buffered note or a structured note, it's going to have a less beta again because you have to factor in both buffers and caps. but I'm looking at it more from like those, I still think of those as market assets, you know, but they just, they have a few little, you know, highlights to them. Right, they're still in your equity bucket, for lack of a better word.

Yeah, exactly. So I'm looking at things like if the market goes up or down today, like what type of holdings do we have in here that just aren't going to, you know, beat to that drum? Are you a scoreboard watcher? watching every day, every minute of the market, or you're like, hey, this stuff works out, our portfolios are fine.

It seems like being an athlete. Yeah. I mean, I look at the, I look at the market every day, but like I don't sit here and watch every tick. I mean, I get in, I do my work, I look at probably my top 30 holdings. Is there anything that's out of place? Anything that's like, you know, went down more than the market went down or went up less than the market went up for any period of time?

You know, do I need to run through them real quick? see what might be broken, make a few phone calls. But like, no, I'm not, I'm not sitting here watching every tick trying to capture, you know, upswings or anything like that. Right, but that's hard for you? Because you were used to watching the scoreboard all day every day. It's not because I've, you know, I learned over time that like, you know, Rome's not built in a day.

This is going to, it's going to take a while. You got to have a long, thoughtful process to what you do. And if you do have a thoughtful process, you don't need to look at it every day. You should glance at it or you should look at it in depth on a periodic basis. But like, you know, if I have an ETF or something that has a bad day, you know, more so than the market, I'm not going to just jettison it immediately. I'm going to like kind of put it on watch. Like, hey, it was just a bad day.

Maybe I missed a distribution date and that's why it went down and I just wasn't paying attention. Like, give it a little bit of time. But like, so there, there is one fund right now that, you know, I've been looking at is actually out of that AQR family and it's had a really good streak for, you know, a lot of years. And then this year it's just not performing very well. So it's kind of on watch for me. Like, did they change managers? Did they just have they been not, not been able to ride? this up and down topsy-turvy type of year that we've had already.

They've just been on the wrong side of it each time. And so their philosophy, which worked for four years, is no longer working. Like, that one's on watch for me. And so that one might get punted. But it's not a, I'm not just immediately going to throw it out just because it has a bad day or week. It's a long season. Exactly. That's your thing.

That's 162 games, man. You got to, you got to, I'm going to give up some home runs. Yeah, pace yourself. Do you kind of view yourself now? You're kind of a manager, right? You're managing all these pieces. Instead of the team, you're managing the pieces of the portfolio. Did you ever want to be an actual manager?

No. No, because I have a good work-life balance. You know, I cut down my portfolio about six, eight years ago. I have two daughters, both ended up being collegiate athletes. and they were both in different, different world. My older one played indoor volleyball, my younger one played beach volleyball. And I'm not a volleyball player at all,

but I wanted to kind of be there to help them through the whole athletic process. Like, hey, you got to put in this hard work. This is how you mentally prepare for a match. And, you know, all the things that I was good at. And I wanted to kind of be there and watch them and help them as much as I could. And I was so happy to see them go on

and have very fruitful collegiate careers. And so I kind of made that mindset to sort of cut down my workload and, you know, have more of a lifestyle portfolio. And now that they've both gone through their careers, I'm starting to kind of build it back up, but not from a mass marketing standpoint. I'm really just kind of taken on onesie-to-sies, referrals, people that I know are going to fit the mold of what I'm trying to accomplish and have done for the last dozen years or so for clients.

So you touched on the kids sports, which we didn't touch on. Were they just before NIL? Did they get a little bit? Yeah. No, they got a lot. The older one was at DePaul. There, she played volleyball at Paul. And DePaul's a small enough school, and I think NIL technically existed,

but she might have got like a smoothie from the local smoothies type of thing. And then my youngest was a beach volleyball player at USC, which, you know, they were, four time in a row national champions. But USC didn't... And that's just two women on the... Like, how big is your team now? Yeah, two females on the court. Yeah, playing two men, two men teams on the sand.

But USC was so hyper-focused on their football program. They really didn't dole much out to other places. So, again, she got a little bit here and there, but not to the degree that, like Texas, for example, Texas got a ton of money coming to their program. they have spent a lot of money on their women's beach volleyball program. They build them a new facility. They get, like, to my understanding, they get some housing.

They get some stipend. They get all kinds of stuff beyond a scholarship that's all, you know, titled NIL. So there's a program that's investing in other sports besides just football, whereas I kind of found USC to be very singular focused, unfortunately. And we know a girl that went to like Belmont or something for soccer. ball and got 400 grand, like the numbers are getting. Yeah, it's crazy. I wish they had never opened that Pandora's box, but it's open now and you're never going

to close it. Well, that was my question. Like, do you, are you like me, old man yelling at this guy? I'm like, this is wrong. This isn't college sports. I am yelling at it, but not, I have no problem with like, you know, athletes getting something because for every one athlete that makes it to the pinnacle of their sport, there's hundreds of athletes that don't make it.

I mean, hell, the NCAA creates a commercial around that fact that most of them don't make it. But when you open Pandora's box like they did, the two main problems that they were trying to solve for the whole time now become the main problems that you can't undo, which is you get these kids chasing the dollars. So it's not about the love of the school. It's not even about the love of the sport. It's how much are you going to pay me and am I going to be a starter? And if I'm not liking the answer to either of those, then boom, I'm out of here. I'm on to the next school. And so.

Which I don't understand exactly how they works because are there, I was under impression there's no contracts. They're just giving this money. But then someone's telling me, no, there's definitely contracts. There are contracts. Absolutely. You know, but you serve that contract out for that year and then you're gone. It's not like multi-year deals.

Yeah, they can't force you to play. And there's no structure of like whatever in the NFL, like you've been tagged and you have have to do this. And it's funny, like, you know, I've had this conversation ad nauseum with people. And we've, you know, sometimes sober, sometimes not sober, tried to come up with like, you know, a solution. And one of the ones I thought, I don't remember if I came up with it or somebody else did, so I won't take any credit for it. But it was, I thought it was kind of interesting, which is like, you know, when I was playing ball in college, the rules were very much in favor of the, of the university. Like, if you tried to move schools, you had to sit out a year. Like, yeah, it was very,

very, very penalizing. And now the needle swung the whole other way. Like you can just bail on the school without them even knowing and they get screwed. So I'd like to see it where like, to me, the happy medium would be like, okay, look, if you are going to move schools, you can do that. But if you received any NIL money, you got to give half of it back to the school. Yeah. So, and then you can do that one time. If you, if you were, want to move schools a second time. You got to give it all back and or sit out a year. So it gives those kids like the first year because, I mean, look, a lot of these kids

don't know what they want out of a school or they don't know as much about the coach or the city because they haven't done their homework and they get there and they find that they're homesick or they broke up with their boyfriend or they're not getting the playing time that they thought and maybe they're at the, they should be at a different university. So I give them a one-time pass to move and try something else. But if you're just jumping ship because you're chasing a dollar, then I think that that's wrong on so many levels. And I don't get how the money keeps coming in.

Because if I'm a booster and I give the school, whatever, $10 million to get these players, and then that guy gets that money and then leaves the next year, I'm like, well, that was a waste of money. Right? I wanted them for these next four years, win a national championship, all that stuff. And now the boosters, but now it's going to revenue sharing, so you might not need the boosters anymore. But yeah, again, there's a lot of evolution going on in there. But I'd like to see where the athlete still has the ability to move because the circumstances warrant it, you know, be good for him.

But if he's just chasing the dollar or whatnot, then he should have to give back some, if not all of what he got. Because he did make a commitment to that school and now he's not honoring it. So there's got to be a level of penalty, but not just like, hey, we're going to hold you captive and mess with your eligibility. And then I see a, and I think we talked about this in California, a spot where it's like becomes the Rams license UCLA's image, right? And they run the whole program. They have the agents. They have the training. And then who does the UCLA students or alumni care if they're actually students?

So now they're just, yeah, now they're just getting paid. You're coming up with all kinds of new solutions that I think are going to come down the pike. Like I've had this conversation with some people before. And this is just pure guess work on my part. But the way that the SEC and the Big Ten have grown as the 1A and 1B powerhouse, it wouldn't shock me at all. If at some point in time those two commissioners just got together and just said, screw the NCAA. We're out. We're going to go do our own thing.

we honestly don't need them. We don't need them to tell us what's eligible and what's not. We don't need them for their money. We've got plenty of money. And now we can set our own schedules with whomever we want. And it wouldn't shock me if something like that starts to happen. 100%. And then that opens the door. Like, well, then why do they need to be students? Yeah. And then why is there a four-year limit? And all the right? You could have like the whole thing Leonard getting paid $10 million a year to play quarterback for Notre Dame for 10 years. It becomes like a G league or a minor league or whatever now. It's just this probing ground to get up there and do you need.

Because, I mean, that's part of the shame of it is now the education's become an afterthought. You know, the whole scholarship education things become like that doesn't, that's just a means to an end. It's not even important to a lot of these kids. And that's unfortunate. That's not the way it should be. And that brings it back to, okay, maybe you're making $5 million for these three years. college, maybe you blow out your knee, maybe, you know, all those problems we identified before get accelerated into an 18-year-old. Yeah, see what I mean about Pandora's Box? Like, look, we are deep

in a rabbit hole right now? Yeah. But right, are they getting financial advisors? Is this school helping them out with how do you manage this money? How do you do this? I mean, they should. I mean, somebody should be in these kids' ears who are getting seven figures, you know, like there was a, and I'm sure it's true, but like my daughter. who's at SC, she told me a story, and I got to believe it's true, that like Caleb Williams stuck around SC for an extra year because he was going to make more money through NIL than he would have made in his rookie contract.

Yeah, and he actually had a great podcast. I'll try and find it put in the notes where he was talking about, like, I've been getting paid my whole life. He was like, they put me up in a apartment in D.C. for his high school. He had a super cool condo in L.A. when he went to USC. So he's like, no, I'm not worried about being the number one pay. can handle the money and the pressure. Like I've had it my whole life.

Way to bring in Caleb. He's our... I'm all about your hometown there. Yeah. I just want to circle back because you mentioned helping your daughters mentally and everything. Where do you... Like, what would you do on that? And you consider yourself like you got your mental game strong?

I was a very cerebral kind of player. Like, you know, baseball... You know, there's two ways to watch a baseball game. You can be like the fan with a dog and a beer in your hand. and like you see the ball hit to the gap and you follow the ball to the gap. I'm watching it from the perspective of where did the outfield start?

Who's going to get there first? Is it a double cut? What kind of route is the runner on first base taking? Where's the pitcher backing up? Like the 10 other things that are going on in the play because they all make a world of difference. And then, you know, as a pitcher, especially a starting pitcher, you pitch one and you watch four.

So there's a lot of times to watch. Like, what kind of, you know, I'm going to be pitching. tomorrow. So what kind of lead is this guy when he gets on first base? Is he, you know, is he gonna, like, is he, where he's standing, like, okay, he's not stealing, but then he moved an extra step. Now he's stealing,

like watching that stuff, like watching, you know, who's got bun coverage? Would you not do film or would there be film? Film was just kind of jumping in when I was playing. Like, we would get like some VHS tapes. How about that? But that's cool. You get a four-game series. You get live film, basically if you're pitching like that. Yeah. Yeah, now you get everything's at your fingertips. So, but I was always studying that stuff. Like, where's the guy standing in the box? You know,

like is he leaning out over the plate? Is he opening up early because he wants to pull the ball? Like I was just, I just like studying because I wasn't a phenom. I wasn't Randy Johnson. I couldn't just stand there and blow it past everybody. I needed all the help I could get. So I'm like, why not help myself? Let's study these guys, find their weaknesses, find their tendencies, find which umpires were helpful, which umpires were hurtful, just all of it, you know, and just try to use as much, and I'm not a big analytical guy per se. I don't like how that's kind of overtaken the game today. But I did like having as much information on my side to help me make, you know, good choices.

And then what would you impart to your daughters? Well, kind of the same thing. Like, look, study, you know, study your opponents. Like, and again, sometimes they had access to, you know, previous matches with people. But mine was more like, watch what's, watch what they're doing in warmups. Like, are they talking to each other? Maybe they're pissed off at each other and they're not, like, communicating very well. You know, watch, like, what, like, when they go up to hit a ball, like, is their hand turning?

Because if their hand is turning, then a lot of it's going to cut across the court. And you can be ready for that, no matter how hard it's hit. Like, focusing on the little things that a lot of people just take for granted. And it helped a lot. Like, you know, if this girl, like, if you block this girl, what's her tendency the next time? Well, most of them don't want to be blocked again. So they're going to try to do these little fancy shots around you.

So if you end up blocking a girl, maybe next time, don't go up to block her again. Pretend like you're going to block and then pull away because she's going to dank it. Like, thinking, like, why do things happen? Like if X then Y type of thing, like, you know, it's a thinker's game. So you were you were bound to be an advisor and think through all this. Like, if X. Well, I was asked to be a coach. And, but I kind of left baseball with a sour taste in my mouth.

And I just didn't want to ride the bus leagues along with kind of the way everything ended. So I kind of let that go. And I did a lot of, I did a lot of training. Like I did a lot of lessons for youth kids in my area. And I didn't show. Because, again, I like to pick up on the small. stuff and I hopefully imparted some wisdom on on some of them. One kid ended up, you know, getting to the big leagues for a cup of coffee.

So that was kind of cool. But I like looking at this at the small little nuances. And you're right. It does work very well in the financial world. You think youth sports is is in a good place or bad place? Ignoring the NIL, even earlier than that of like, where my son went through travel baseball, my daughter's in travel softball. And it's like, you're going to be pitcher only at 13.

and all this stuff. I don't like that. I don't like this hyper-focused singular sport type of stuff. I mean, most of our era grew up playing multiple sports. I certainly don't like a lot of the parent mentality that goes into that world. I mean, I went through the whole volleyball club world for multiple years, and I always tried to, like, sit in the back and, you know, just people watch. But yeah, you can get some fanatical people.

And then that trickles down right into the kid, the athlete. And it's like setting a bad tone. So I think it's gotten a little crazy. I think everyone's trying to chase this whole dream of either getting a scholarship or getting to the pros of whatever they do and chasing all mighty dollars. And it's like, yeah, I don't know. It's not in the, it's not in as good a place as I'd like to be. I think I was last year around in Colorado for a softball tournament

and I overheard another team. We're in between games and these moms are talking. And the mom mom's like, oh, we don't save for college. This is our college savings paying for this travel ball. And then we'll get the NIL money and all that. And I was like in the financial world, my head's exploding. And I almost wanted to tap them on the shoulder and be like, hey, that's super unresponsible.

And I let it go. But I'm like, that's kind of what this Pandora's box we're talking about. That's what's happening all the way. down to single digits, eight, nine, ten year old, yeah. But that's, that is, it is such a sad but true conversation that you overheard, and it goes on a lot of places. And the travel teams are all called like pro prospect, elite training. Oh, they're, they're loud.

They'll be this, right? The names are all branded to like, you're going to be a pro. And then they'll give, oh, you little Johnny made this E team, right? He's not even A, B, C, like you're the fifth team in Chicago, which isn't even good baseball. Sorry, all my baseball things, but you're, you're 100% right. Like, it's, it's sad, but like those, the club owners, like, they are lapping it up. They are feeding that frenzy.

It's crazy. And last bet, I need, I need advice. So your daughters, are you done? They played their last games now? Yeah. So my oldest is, she's been out for a couple of years. And my youngest, she medically retired here in her senior year, so she didn't play. But, yeah, she's going to graduate college here this week.

So how do you, my son actually this year to stop playing is baseball, retired. And so, but I'm seeing the finish line, right? They're in high school. They're not going to play in college. So I'm seeing the finish line's making me a little sad of like, man, that's been such a part of our lives. So how did you handle that? Yeah, I've had some withdrawal. There's no doubt about it.

You know, I do miss it. We ended up watching the NCAA volleyball national championship down in Gulf Shores on TV this year. And, you know, USC was in it again. but they got they got bounced um so i'm still kind of watching you know bits and pieces of it but yeah it's it's tough not watching my kids anymore it was a big part of of our life it was kind of how i shaped my practice and and so forth but uh but i'm happy you know at the end of the day i was hoping that it would give them the characteristics that would take them further in life like teamwork hard work dealing with pressure you know all those character traits that i think are going to make them

good individuals. So yeah, I'm glad that they had the experiences that they did, met the people that they did, got the educations that they did. But just as importantly, I'm glad it kind of taught them some of those skill sets that will hopefully carry them into the next chapter. We're going to end. Give me your Mount Rushmore for your top four baseball cities. I won't say stadiums, but cities. So mix the city experience plus the stadium. All right, well, then I'm going to, if they ever expand rush more to five, I'm going to throw five. All right, go ahead. We'll give you the four and a half.

Boston's definitely in there. Chicago is definitely in there. And you would play at Comiskey and Wrigley? I've done them both, yeah. I love the vibe at Wrigley, though. I mean, there's just nothing like a day game of Wrigley. And thank God I only had to pitch there once because it seemed like it was a boat race every time, like, 10 to 9.

The wind's blowing out. You're just like, oh, yeah. Yeah, so I got off the hook there. Those two for sure. And then as part of it, you're going out to dinner and everything after? Like, you're getting that or you just. Oh, yeah. Oh, yeah.

I'll have to tell you another story about that one time because we walked in and it was like a literal head turn because we had a table reserve force in the middle of Gibson's. It was a game that went to like the 13th inning or whatever. So we were an hour and a half late and they held that table empty in the middle of Gibson's. Yeah, an hour and a half on a, like a Saturday. And then we come walking in and everyone's like, what in the hell is going on? Who are these people? So that was kind of funny.

But let's see, yeah, Boston, Chicago, at the time, can't speak for it now, but at the time going into the Jake in Cleveland was awesome. Really? Yeah, like sitting down in the flats. the Jake was so loud. That team was so good with Tommy and Ramirez and Albert Bell. And I mean, they were ridiculous how good they were. Let's see, those three.

My fifth one is L.A. And it's not because of the town. The town is not my favorite. But the stadium was nostalgic. I grew up watching games there. And unlike Angel Stadium, Angel Stadium, Disney had gotten a hold of by the time I was in the big league, so it looked a lot different. But Dodger Stadium was still the Dodger Stadium as a kid.

And I'm sitting behind the cage at batting practice stretching, and Vince Scully and Ross Porter are just hanging on the cage, shooting the breeze. And I'm looking around and the stadium looks exactly like it did when I was a kid. Plus, I pitched pretty well there. So nothing on the city, but great. I grew up actually in Viro Beach, Florida. So I was a Dodgers fan for a little bit. Oh, there you go. Yeah, yeah.

Bring a training. So let's see. What's the last one I can throw in there? You know, I got to give it to a combination of, I got to say Milwaukee. It was a, you know, obviously spent most of my career there. Old County Stadium wasn't really the best stadium. No. And I will tell you that a lot of the atmosphere when I was there was very pessimistic as a town.

but I have now been back since over the last like five or six years, and that town is awesome. The people are much more vibrant. The park, which was Miller Park, now Amfam, it's a great baseball stadium. I can't believe Miller gave that up. Yeah, I know. I don't understand why.

I'll tell you a field you got to go to is Petco in San Diego. Yeah. That is a fantastic ballpark. It's on my list. The team's finally starting to really get after it and give it a run, but just the field, the food, the drinks, there's not a bad seat in the house. It's a great experience. Love it.

Awesome, Scott. We'll leave it there. Thank you so much. We'll put your info in the show notes. Where to get a hold of you. Anyone wants to reach out? I appreciate it, Jeff. It's really been a blast, man.

All right, that's it for the pod. Thanks to Jeff Berger for producing. Thanks to Scott for coming on. We're going to have a good one next week. Dr. Pat Welton from Welton, a longtime managed feature shop out in Carmel, California. Super nice guy, doctor, living that good California living. So that was a fun one. Stay tuned.

Come listen to it next week. Peace. You've been listening to The Deriv. Links from this episode will be in the episode description of this channel. Follow us on Twitter at RCMaltz and visit our website to read our blog or subscribe to our newsletter at RCMaltz.com. If you liked our show, introduce a friend and show them how to subscribe. And be sure to leave comments. We'd love to hear from you.

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