What the Bad Boys taught us about Life and Investing

Today, we'll be discussing what the bad boys taught us about life and investing. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting. We are here in Southeastern Michigan. If you'd like more info about what you hear during our show today, please give us a call at 586-226-2100, or you can reach us on the web at summitfc.net. If you go to the website, please check out the podcast page. You can see all the amazing past shows and also subscribe on Apple Podcasts, Spotify, or Amazon Music. So today we are talking about a subject that is near and dear to a lot of people in Michigan, especially in Detroit. And that is the bad boys, which were the Detroit Pistons teams in the 80s and early 90s. So a lot of people are probably thinking this is this is a very different topic from investing, but we're going to show how interesting. applying what the Bad Boys did to investing can work out for you very successfully. And, you know, in my opinion, the more you look, the more you can see how those Pistons teams went on a journey that provides a very powerful lesson about investing. So, yeah. You know, they had to assemble the right pieces. They had to develop a system. They had to endure some extremely painful losses. They had to ignore critics and they had to keep believing in their strategy before the results were obvious to everyone else. So in other words, they sort of had the win the long game. And that's what a lot of investors have to do in many cases. So hang with us. I think this is going to be a great show. Before we jump in, let me introduce my co-host, Tony Shore. Tony, a lot of people outside Michigan actually hated the bad boys. They were accused of beating up Michael Jordan sort of physically for a couple of years there. What did you think at the time? What do you think now?

Well, I mean, hindsight's 20-20. Looking back, it's a great story, and I love what they did. At the time, I will be honest, I didn't hate them. In fact, for a while, I'm like, yeah, Pistons, you know, because I always root for the underdog and, you know, Jordan and the Bulls, their reign. I was just like, yeah, I was rooting for anything else to take the attention away because all the attention went to Michael Jordan for a while there. And I was in Minnesota. I grew up in Minnesota, you know, and I lived in Minnesota in the 80s. In the 90s, I was out in L.A. So to be honest, we didn't really have a pro team. We didn't have a pro team. Minnesota didn't have a professional basketball team at that time. Now, growing up, since we didn't have a pro team, I was always a Lakers fan because they were originally from Minnesota. They were the Minneapolis Lakers. Yeah. Why do you think they're called that? There aren't any lakes. There are very few lakes in California. Very, very few. And none in Southern California. It's a desert. So you got desert and mountains in Southern California. Not many lakes there. So at least not natural lakes. So the Lakers were the Minneapolis Lakers. And that's how they started. And then they moved to L.A. So I followed them and I liked a lot of Lakers players growing up. But the Pistons, I would root for them. You know, I was a Bulls fan briefly, you know, when Jordan first started coming on the scene. But then I'm like, nope, I'm rooting for the underdog. You know what I mean? And I think, you know, the Pistons, the bad boys. Now, you really threw me off here, though, and our listeners might be thrown off, too. I thought you were going to do a parallel. What can the movie Bad Boys, the famous movie, Bad Boys, Bad Boys, what you going to do when they come for you? I thought it was Will Smith and who else was in that? I forget. Martin Lawrence. Martin Lawrence and Will Smith. I thought this was going to be a parallel to that. Like you were going to take some kind of financial lesson from that movie. And I'm like, oh, you know, he might be able to find a parallel. I think this is tougher. I thought this was a stretch. But you in the intro, you really brought it home. I mean, you have to look at the long game. You can't look at it's not just this game. You got to look at the long game. A lot of times they say you got to play one game at a time. But they really had a plan moving forward and had to prove themselves by winning the long game. Right.

Yeah. Yeah. I mean, the Celtics and the Lakers were sort of taking turns having dynasties.

Yes.

We're up and coming. And, you know, it was pretty crowded at the top there. But it was a way to sort of sort of battle through it.

Yeah. Yeah. That's a great story, too. I don't know if they've ever. They should make a movie out of that. Honestly.

There was a 30 for 30 on ESPN about the bad boys that did a really good job. I had it saved on my DVR at home for like eight years.

Oh, that's awesome. Yeah. Big Pistons. I know you're a big Pistons fan as most of our listeners probably are as well. So this is good. Where do you want to begin?

I guess I'll start with just how it took years, you know, to get to where they wanted to be. Because a lot of times people look at the bad voice, they just look at the finished product. And, you know, maybe they remember Isaiah Thomas sort of directing the offense and Joe Dumars dropping his his signature rainbow three pointers. And nice Bill Lambert and Rick Mahorn sort of beating people up and Dennis Rodman before he sort of went crazy getting rebounds. So Rodman did go crazy. Yeah, he went a little crazy there for him.

Off the deep end, yeah.

Yeah. So, you know, they had a lot of intensity and they won back-to-back NBA championships in 89 and 1990. Nice. At the time, Chuck Daly was only the fifth coach in NBA history to win back-to-back championships. So that was like a...

That's not easy in the NBA to win back-to-back championships or have a dynasty like that.

Yeah, so that was a big deal. I also thought it was really interesting that from the word go, it took 10 years and 38 trades to build the bad boys. That's crazy. Yeah. So like it was not just an overnight thing. It was literally assembling pieces very patiently, facing lots and lots of setbacks and seemingly brick walls. But they toughed it out. So how does that tie in here to retirement and investing? And a lot of times we sit down with people or people look at their peers or their parents and it looks like they just showed up at age 65 and assuming that the wealth sort of appeared overnight. But that's that's not how it worked. It's a long, long. I wish. Right. Right. Yeah. So you just got to remember that. You know, it's not about the result necessarily. It's about the process and getting the process going. So I got a handful of lessons here that I'm going to share today to sort of get us to that point. So everyone can can reach these goals and the heights of the Pistons. I don't know if I can call it a dynasty winning back to back years, but, you know, have a championship level retirement. How about that?

Yeah. There you go. Yeah. You want a championship level retirement. I like the sound of that. That's, that's great. So what are some of the lessons that we can directly use here? I know you have a few for us and they're always great. This analogy is great. I really, I'm like, he's going to really have to stretch this, but, but you make it, you make it, it's perfect.

Yeah, I think we'll see how we do here when the dust settles and we'll see what all of our listeners and viewers say, but lesson number one is great results are usually built before they become visible. So when you first get going in investing, it usually feels very unrewarding. You're saving and you make deposits every single month and you're sacrificing spending today so that things can work out better. The goal is financial freedom for tomorrow. But for a while, it just seems like nothing's happening. A young investor might even say, is this really even making a difference? But the answer is yes. The progress is not always immediately visible. In our last podcast a couple of weeks ago, we were talking about how when it comes to compounding interest, it's slow, slow, slow, slow, and then all of a sudden it gets exponential towards the end. So you just gotta keep grinding. You gotta keep making little sacrifices. Maybe it's not as much vacation. Maybe you don't take as many vacations. Maybe you don't eat out quite as often. Making all those little sacrifices, going the extra mile, they add up over time. And that was definitely the case with the Pistons. I mean, they they drafted Isaiah Thomas all the way back in 1981. Chuck Daly didn't become the coach until 1983. So it took years and years and years before this team sort of started getting together. They had to sort of strengthen the foundation, get it going. Step by step. And I would say when it comes to investing, every single contribution matters. Every single year that you stay invested matters. Every extra percentage or dollar or hundred dollars that you increase your savings rate matters. Every time you're thinking about making a mistake and maybe pulling all your money out of the market, you know, maybe call your financial advisor and just make sure you're not making any emotional mistakes when it comes to your financial plan. So every little thing you do strengthens the foundation and helps build your way towards success.

Yeah. Yeah. And you can't I mean, there's no like, oh, I'll do this and then I'm set. Like like you say, drafting Isaiah Thomas didn't instantly deliver a championship trophy. Right now. And so, you know, I'm contributing to a 401(k). I'm set. No, you got to keep at it. But I like that you did say, hey, it's like they say, it takes pennies to make a dollar. Right. And so every dollar counts and it's about how much you keep. Right. It's not necessarily even about the final amount. It's how much you keep, too. So you've got to have all the planning involved. And that's where you guys come in to make sure that happens. So what's next?

So lesson two is a portfolio, just like a basketball team, needs different roles. So, you know, the bad boys were not five identical players. You know, Isaiah Thomas was the leader and the main playmaker. Joe Dumars was really good at defense. They would always put him on whoever the best guard was on the other team. Sure. He was usually tasked with guarding Michael Jordan and sometimes Magic Johnson. You know, Dennis Rodman, he had rebounding and defense and energy. And, you know, he went on to win defensive player of the year. Yeah. So. But all these players had had different roles. Right. And we didn't need every single piston to be the leading scorer. So a portfolio can kind of work the same way. Clients call me up all the time and they'll say, like, literally just a couple of months ago, a client called me up and said, Ken, why are we holding on to this fund? It's not making as much as the other funds. But then the Iran war starts. This happened to be an energy fund. So the energy fund was underperforming a little bit. Now the Iran war starts, oil prices shoot through the roof. And before you know it, and again, past performance can't predict future performance, but this energy fund is up almost 30%. So it was sort of being a role player for a while. And then all of a sudden it had a It had a hot hand. It had a hot, hot shooting night. So, you know, whether it's a particular stock or fund or, you know, maybe bonds seem boring or maybe there's a popular technology fund that's doing really well. And people are saying, gosh, I don't like this this dividend portfolio. But if there's a market decline. you know, maybe cash all of a sudden is the star player on the team. So the question is not that every single player scored 25 points. It's did the team perform the job it was designed to perform?

Yeah. Yeah. And you're going to have these things happen. I mean, you can see it lately. I mean, the Magnificent Seven for a while there hasn't even been carrying the S&P 500. It's the mid to small caps stocks. And so we see an evening out a little bit or spreading out. So, you know, you might have, oh, I have precious metals and energy. And boy, this year they really underperformed. But the reason you have some in those portfolios is because when tech stocks go down and chips have a downtime, a lot of times those others are up here. And so it's offsets. The goal is the long term. What are your long term returns? Not on what day. Oh, this year this did bad. And this year. You're going to spend the, you know, you have 30 years in retirement and you're probably not even to retirement yet. You know, it's time. Right. Right.

You're going to have wins and losses, but it's where you end up. Right. Right. Absolutely. Yeah. Diversify. Diversification just means let's spread the investments in different asset classes. Diversification doesn't necessarily eliminate losses, but it can help manage risk. But my favorite part about this section is just imagine telling Dennis Rodman that he was a failure because he didn't score as many points as Isaiah Thomas. Yeah, that would be crazy. Right. You got to have you got to have some role players in the portfolio.

Yeah. I'll be honest. I forgot Rodman was he was part of the bad boys, you know, because I always picture him with the bulls. Right. When he went over. Yeah. Yeah. Yeah. But he was part of that whole thing. And he was he was a great player. Wow. His rebounds were amazing.

I mean. Quick Dennis Rodman story.

Oh, boy.

Yeah.

So it doesn't have to do with North Korea, right?

You're not going to go there. Yeah, good. There's so many great inappropriate Dennis Rodman stories. Sure. But one time during the pregame warmups, Dennis Rodman was just standing at the free throw line watching everyone else do shooting drills. Uh-huh. And Isaiah Thomas came over as the captain and was sort of giving him a hard time, like, come on, Dennis, it would mean a lot to the team if you would come warm up with us, too. And he said, I'm not just standing here. I'm studying everyone's shot as it leaves their hand so that I can better tell what angle it's going at so that I can position myself to get the rebound.

Oh, wow.

I thought that was like, whoa, next level prep.

Yeah, that is next level prep. And you know what? It showed it paid off because he was right there for those rebounds. It's like he knew he studied the angles and he knew where that thing was going. That's that's pretty crazy. That's pretty crazy. So what else? What other comparisons do you have here from the bad boys to our investments?

So lesson three is you must survive the losses that will almost inevitably come before the wins.

Yeah. And you were talking about that a little bit. Right. I mean, you know, like with the different portfolios, it plays a part in that, too. Right.

Yeah. Yeah. In 1987, the Detroit Pistons reached the Eastern Conference finals and then they lost an extremely painful seven game series to the Boston Celtics. Yeah. And then in 1988, they made it all the way to the NBA finals and then lost to the Los Angeles Lakers or should I say Minnesota Lakers? Yes. So and that that was a really, really close one, too. So, you know, in game six of that game, NBA Finals, Isaiah Thomas badly hurt his ankle. Despite hurting himself, he produced one of the most memorable quarters in NBA history, and they lost by one point. So there's sometimes a lot of effort and emotional impact for what things were going on. And then everyone's asking, was the team good enough? Had they missed their opportunity? And investors have doubts all the time, right? If there's a bear market, Even a really well-constructed, diversified portfolio can make you feel like a failure. A recession, especially if someone loses their job, they can make them wonder, should I even be investing at all? So just remember, a year or a couple years of poor performance doesn't mean that you're on the right track. Market volatility is unavoidable. Economic news, global crisis, all kinds of things can happen. But just remember, you can't control everything. You just want to be prepared for good times and for bad times and have a financial plan and work with a financial planner to make sure that you're playing a solid.

Yeah. I mean, even if you suffer setbacks, you have a plan for moving forward. And they got there. They improved each year. I think that was good. There were setbacks, but it didn't derail what they were trying to achieve. That's the important part. They didn't make emotional decisions. The team owners and the coaches didn't make emotional decisions saying, oh, we got to get rid of these players or get something different going or try something else. Nope. They stuck with it. So what's lesson four? Yeah.

So lesson four is the goal is not to create a plan that only works when everything's going right. So this might be the most important lesson from today is that a good decision can produce disappointing short-term results. And even a bad decision can sometimes produce very exciting short-term results. But if you put all your money into one popular stock and that stock doubles, was that automatically a wise financial plan? Know, not, not necessarily. We definitely don't recommend putting all your eggs in one basket, right? Um, and in a lot of cases that, that ends up blowing up in people's faces. I had a client that, um, you know, tons of clients that invested in Bitcoin and other cryptocurrencies. I know you hate those with the passion. Um, so personally, it's not, they're not for me. Yeah, yeah. So, you know, there's people that made tons of money and then they just saying this is going to keep going. This is going to keep going. And then they end up losing half or all of their money. And I've had a I had a client once that invested in a solar stock and they ended up making just like 50 times what they originally invested. And they just kept hanging in there and hanging in there because they just, you know, they're reading online and they're like, oh, yeah, this is just going to keep going. And then they end up giving back hundreds of thousands of dollars because they just held on to it for too long. Yeah. Yeah. So, you know, trying to hit home runs every single time, you know, maybe a basketball analogy would be trying to hit a half court three pointer every single time. That's not a very high percentage shot. So we want to have a diversified portfolio. We want to not take one year or three months and say, let's throw this whole thing out. Sometimes these decisions, these investment decisions are not very exciting. But, you know, playing defense on a basketball team is sort of boring and boxing out on rebounds is sort of boring and making that extra pass is sometimes a little bit boring. But those things can win championships. They can't. Absolutely. It might not make the highlight reel, you know, boxing out for a rebound, but having a diversified portfolio, being patient. And one thing that I always tell people that are saving for retirement is volatility in the stock market is actually the investor's best friend if you're not pulling money out anytime soon. Right.

If you're in the savings stage and your dollar cost averaging your way in, which most of us, all of us who are working and contributing to 401(k)s or TSPs or 403(b)s, your dollar cost averaging into the market every paycheck you're putting money in. They're taking money out of your paycheck. putting it into those accounts and people who are regularly contributing to say an IRA or stock accounts going through you guys and investing. If you're investing on a regular basis, you love corrections in the market. I mean, it's, it's fantastic actually because you're buying low. You need those times to buy in. If the market, all it did is rise, it'd be pretty tough because you, you'd have to spend a lot more to get in and keep adding to it, right?

Whenever there's a dip in the market, I always tell people, would you rather pay more or less for this fund? And they say, well, I'd rather pay less. I was like, great, you've got your opportunity right now.

You need to buy low and sell high. And that's what, what is the stat? It's about 90% of individual investors who do it on their own in the stock market end up buying high and selling low. It's it's very tempting. And so because it's emotional, you know, something gets hot and then you want in. But it's if you hear about it, if somebody at the you hear about somebody talking about it when you're walking, you know, at the restaurant or the bar or at work, it's usually too late.

Yeah, absolutely. Yeah. Yeah. All right. One more lesson, right? Yeah. Lesson five. Great teams are not afraid to make changes. So, you know, one thing that people often forget is the bad boys were not the same team every single season. That's true. Players came and went. Roles evolved. You know, younger players got older. Yeah. Dennis Rodman became a much, much bigger part of the rotation and then eventually got traded away. James Edwards joined the team. He became an important contributor. So they never confused consistency with stubbornness. They committed to the mission. They were flexible. So your financial plan also shouldn't stay the same. Somebody that's 25 years old is different than 45 years old, which is different than someone who's 65 or in their 80s. So just a quick tip is if you are invested in a 401(k) and you're in a lifestyle fund, so I just got done saying, you know, people do have different, uh, strategies at different ages, but I still don't like lifestyle funds because they're based on your age, but they completely ignore what's going on with the stock market and the economy. So, you know, don't get me wrong, how, how old you are does matter, but what's going on in the world also matters. So again, I recommend meeting with a fiduciary to discuss your options. We help people with their 401(k)s and we will tell them exactly what they should invest in at exactly specific times. So we will proactively reach out to our clients and say, okay, buy this and sell this inside your 401(k) because we think the economy is going up or down or whatever it is. And we don't have a crystal ball and we're not perfect, but just seeing what's going on in the world, we tend to think that that's a value add.

Yeah. Oh, for sure. And I know you actually you do have a couple of more lessons that we can learn. Right. I like I like the next one. Ignore the crowd. How does that relate?

Yeah, we have time to sneak one in here. So so one thing was certain about the bad boys. A lot of people outside Detroit hated them. The national media criticized them. Yes. Opposing fans would actually boo them. But inside the locker room, none of that mattered. They were not trying to win a popularity contest. They were trying to win championships. As an investor, you mentioned this earlier, but you're going to face similar pressure. There's opinions. There's people on TV. There's headlines. There's social media. There's friends at work. There's neighbors. All the time, clients give me a call and say, hey, my neighbor told me about this stock. Of course they did. Yeah, they're saying, oh, yeah, this is going to double for sure. You know, we got to do this. Other times people are going to say the market's about to crash. You got to run to safety. Other people are going to say the only way to invest is through real estate. You got to have rental property. So, yeah. The crowd is constantly changing. And if you change every single opinion, you're just going to spend your life changing directions. So I highly recommend that you do not listen to friends and neighbors. I highly recommend that you do meet with a qualified fiduciary financial advisor to discuss things. You know, imagine what would happen if Chuck Daly just said, you know, I don't I don't want our guys to play good defense anymore because some sports writer criticized the Pistons. You know, that that would not have ended well. He stuck to his guns and eventually he was actually the coach of the Dream Team in 1992. He coached, you know, arguably the best basketball team ever assembled in 1992 at the Summer Olympics. So he had to be doing something right. So sticking to his guns paid off. So. One of the closing thoughts, last lessons here is that a legacy is built over decades. When the bad boys won their first championship in 1989, it wasn't about just one season. It validated 10 years of planning, 10 years of drafting, 10 years of coaching, tons of disappointments, 10 years of believing when a lot of people, especially the media said that they were terrible. So people notice that with retiring, it's exciting the same way winning a championship is, you know, when you can travel, when you can help your grandchildren with college, when you can live generously and live comfortably during retirement, it's, it's very, very exciting and it's very, very emotional, but it's not, It's not one big decision. It's thousands of little decisions like making monthly contributions and living beneath your means and surviving bear markets. And maybe you postpone a vacation or two. Lots and lots and lots of temptations were ignored. So it's usually not one brilliant investment that pulls it all together. It's thousands of disciplined decisions made over decades, just like a basketball championship.

There you go. Well, I'll tell you what, Ken, before we go, this has been a great show. How can our viewers and listeners out there get a hold of you and your team?

Give us a call at 586-226-2100 or visit us on the web at summitfc.net. Past performance can't predict future performance, but we will do absolutely everything that we can to put together a championship level retirement for you.

Awesome. Well, thanks, Ken. Great show. Love the analogy to the Detroit Pistons bad boys. That was a great, a good idea and a great show. Listeners and viewers, thanks for tuning in. That does it for today's episode of Money Talks with Summit Financial Consulting, LLC, and our host, the man, the myth, the legend, Ken Wink. Thank you for joining us for Money Talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit SummitFC.net. Join us again soon for another episode of Money Talks.