Jalen Ramsey Show – 012: Ethics in Investing Partners

Welcome back to The Jalen Ramsey Show. We’re here every weekish to have a conversation about your life and your money. Open lines at 818-338-0011. Time to take your calls and, some say, the advice is worth exactly what you pay for it! Let’s start off today out west with Josh in Las Vegas, Nevada. Welcome to The Jalen Ramsey Show, Josh.

Thanks for taking my call, Mr Ramsey. How are you doing today?

Better than the Jaguars under Tom Coughlin. How can I help?

Well, to give you a little background, I’m a first round pick, second year player, and was an ROY candidate. I’m the lead back on my team and feel confident that, if I continue to work, I’ll have a nice little career here in the league. Given my circumstances and that my father did the best he could raising my siblings and me in abject poverty, I went out and bought him a house last offseason.

What a wonderful way to honor your father.

I thought so. He’s a good man and, Jalen, I didn’t go break the bank or anything. I got $6.69 million at signing and I just took the cash out of that. I figured that was the right move. But now my buddies are saying I should have gotten a mortgage on the house and just invested that cash because I could borrow for less than I’ll make in investments. Or, like, maybe I should have bought it for me then paid myself for my father’s rent to live there and kind of create a cash flow vehicle. I’m kind of second-guessing and wanted to get your thoughts.

No. You did it right. But this is a good question — if I can borrow at 2% and invest at 8%, that’s a six point spread. Assuming, of course, you make 8%. Because if you make 1% or lose money — you still owe the full payment plus 2%. So that’s the risk. The reward, as we noted, is 6% on say a $300,000 loan. The question to ask someone without millions of dollars in the bank is, “hey, if this is such a great move, why not borrow on everything and pad your wealth-building with those savings?” Well, because of the risk obviously. When you miss payments on a car or house, you could lose the asset through repossession or foreclosure and get nothing for it.

I don’t consider myself in that situation though. I mean, I am financially well off. Knock of wood that nothing crazy happens and I am set for life.

Right. So why not borrow? Well, I’d like propose a strong ethical reason to reject an unnecessary loan of any kind. And that reason is simple — a portion of any dollar you pay to banks or lending houses is laundered back in programs and lobbyists that damage our communities. So staying with our example, you borrow at 2% and that 2% is used for what? Sure, you got the 6% on the spread to pad your retirement portfolio or whatever — but what does that 2% go to? It goes to executives at Well Fargo or whoever your lender — which is really an investment partner in your scenario — is who will then donate to political candidates and causes that promote redlining laws, which hurt men like your father who need a home, sacrifice like a montherfucker, but don’t have an NFL player to bail them out.

I mean, I can’t buy a house for everyone. I think I made a good —

No one is attacking you here. But you’ve got a lot of money now and how you spend that money matters. We are in a moment of social justice and part of that is economic justice. We all know how seedy check cashing and payday loan business are; they’re predatory loan sharks. Banks are no different — in fact, America’s biggest banks own many of these businesses. It’s just marketing and logistics to churn through payday loan customers with less fanfare than middle class account holders who need to be assuaged at a local branch by some kid in a suit. But these payday loan stores make huge profits that paralyze their customers with debt and then they use a portion of those profits to fight laws against their business and falsify claims that their businesses benefit communities on the whole. Hell, who do you think was the force behind gutting the Consumer Financial Protection Bureau? Banks. Banks that want to prey on people but had the CFPB watching out for the consumer.

But the mortgage would have been at like 3%. The payday loan places are like 20%.

They’d get 20% if they could. Look, most people need to get a mortgage so that’s kind of baked in to our culture. But you don’t. You don’t need to give Wells Fargo another 3% in their arsenol. You’re trying to help your community; Wells Fargo is, objectively, harming your community. They’re a known commodity.

I use Bank of America so…

Fuck you! Pay attention! Do not do business with these people! I mean, no one should but, on a per capita basis, your wealth gives them a lot of ammunition to use against our communities than, say, the family with $12K in the bank and a $15,000 car loan.

I am all for the social justice stuff. I just didn’t realize it went so deep.

It’s everywhere and these assholes are, for now, necessary evils. But we don’t need to be promoting big banks or acting like they’re anything other than cancers in our community. Period. Full stop. Sure would be nice to have banking services at every post office, huh? Not on Chase’s watch. How about a college loan program where the lenders do anything more than take the cash from the treasury window, mark it up, and issue hundreds of thousands of dollars in debt to attend Trump University without any risk to themselves? Fuck — how about just recognizing that continually laundering money for cartels because the profits are greater than the losses (and no individuals are ever held to criminal charges) maybe isn’t the kind of value system we should have attached to damn near every dollar in domestic circulation?

I didn’t know they were such a problem.

That’s because another big chunk of their profits goes to marketing and advertising so that people aren’t aware that the institutions raping their community are businesses they feel they know quite intimately.

So you think I did the right thing?

Mathematically, when you technically consider risk, the answer is a bit vague because of your wealth. From an ethical standpoint — including, how wonderful for your father to be the outright owner of a home after all he did for you and your siblings — you did the right thing by avoiding a mortgage that would simply be interest dollars paid to keep children homeless, just as you experienced.

Alright, thanks for the advice. I feel a lot better knowing I didn’t inadvertently hurt my community with this move.

Good call. Ethics matter. I mean, Josh here isn’t calling about stealing a loaf of bread to feed his starving children but just because you can make a buck doesn’t always mean you should. And I want everyone out there listening to understand, I’m not saying you can’t choose who to do business with. You’ve got a household to feed; go steal that loaf of bread. But when you’ve got a lot of wealth that means you have a lot of power. So part of financial responsibility isn’t just protecting and growing your money, it’s also preventing it from being used to harm others, as best you can. No one with a multimillion dollar worth like Josh here should ever give one cent to these horrible institutions.

We have  some time left so let’s go to line two where we have Dan calling in from the swamp in D.C.. Dan, welcome to the show.

Hello Jalen. I appreciate you taking my call today. Ummm…I guess the reason I am phoning in is because I am kind of in an odd situation here. I own a team that has been quite unsuccessful and many have blamed on my hands-on ownership style as part of the problem. Now it SEEMS that our team is leading the division and, I think by coincidence, most of my time has been focused on dealing with team naming issues and COVID quarantining. In fact, I missed a game because of it so you can see how —

Need you to get to the questions here, Mr Team Owner.

How soon should I exercise my rights, you know as the owner, and get back to tampering with the day to day on-field and roster moves? I don’t want to lose my edge.

Well, we host the Redacteds on October 11th so, from my point of view, get in there now and start spreading your wisdom and knowledge immediately. You need to keep ideas fresh in that locker room.

Right! Never let things get stale! It’s a copycat league!

Sure. Whatever. Exactly right. So, do whatever it takes but I really hope you take my advice on this one.  

Had to keep it short this week because I need to catch a plane to Buffalo. Let me call my shot right here — Josh Allen is surging, per CBS, in the QB power rankings. He’s beat the Jets and the Dolphins. We’re going to embarrass him and remind everyone at home why NFL media hacks are nothing more than NFL media hacks. For all our listeners out there, you all sit tight, mask up, and we’ll see you next time, right here, on The Jalen Ramsey Show.