Dear Financial Samurais,
We are now at war with Iran following U.S. airstrikes on three locations within their borders Saturday night. As a result, Americans everywhere may be a little less safe, and a whole new generation of people may grow up harboring resentment toward us. Whether the strikes were effective in significantly diminishing Iran’s military capabilities and potential nuclear weapons remains to be seen. Let’s hope so.
If this conflict escalates, I’m reminded of the powerful words from Staff Sergeant and Medal of Honor recipient David Bellavia, who once said:
“Iran, Russia, China, North Korea, ISIS, al-Qaida. They may be watching this right now. Our military should not be mistaken for a cable news gabfest show. We don't care what you look like. We don't care who you voted for, who you worship, what you worship, who you love. It doesn't matter if your dad left you millions when he died or if you knew who your father was. We have been honed into a machine of lethal moving parts that you would be wise to avoid if you know what's good for you.
We will not be intimidated. We will not back down. We've seen war. We don't want war. But if you want war with the United States of America, there's one thing I can promise you, so help me God: Someone else will raise your sons and daughters.“
Let us pray that this doesn’t spiral into a prolonged and deadly conflict.
Repercussions of War on the Markets
As I highlighted in last week’s newsletter, the stock market has a complicated but often surprisingly resilient relationship with war. So far, the Tel Aviv Stock Exchange and the Iran Tehran Stock Market Index have held up relatively well despite rising tensions.
Historically, markets have often digested the onset of conflict and refocused on earnings, monetary policy, and economic fundamentals—unless the war leads to prolonged uncertainty or global disruption.
Let’s hope diplomacy can re-emerge, but as always, we must prepare for a wide range of outcomes—both economically and personally. Here's an another chart that highlights major conflicts and how the S&P 500 reacted.
Here’s how the Israeli and Iranian stock markets have performed.
So the takeaway from this latest unfortunate event is simple: buy the dip—if there is one.
Here’s how I see the most likely scenarios playing out, in order of probability:
1) Bonds rally first, driving down interest rates. The stock market may sell off slightly in response to the initial uncertainty, but then recovers as yields decline and investors reposition for risk.
2) Both stocks and bonds rally. Risk-on investors anticipate more fiscal spending, increased certainty now that war has been declared, and potential windfalls in defense and energy earnings. Meanwhile, risk-off investors are still drawn to relatively high guaranteed yields, providing support for bonds.
I don’t expect both stocks and bonds to sell off simultaneously—but we’ll see how the market digests the news this week.
Another consideration is how the Trump administration approaches tariff negotiations. The majority of investors now believe Trump will back off on aggressive tariff hikes with continued delays. However, with the administration going from talks of peace a couple weeks ago to bombings this weekend, maybe our trading partners will be more ready to negotiate. That should be a net positive for the U.S.
Rising Home Inventory
If you’re looking to buy a home, here’s some good news: inventory is rising. I'm also noticing more single-family homes sitting on the market here in San Francisco. But in most cases, it’s because they were overpriced from the start.
Summer tends to be a slower season for real estate, so if you're hoping for a better deal, now or this coming winter may be the time to strike.
According to Redfin, nationally, sellers currently outnumber buyers by 33.7%. Just a year ago, that gap was only 6.5%, and two years ago, buyers actually outnumbered sellers. In other words, we’re seeing a clear shift back toward a buyer’s market, thanks in large part to mortgage rates staying higher for longer.
The top 10 buyer’s markets right now are: Miami, West Palm Beach, Fort Lauderdale, Austin, Jacksonville, Tampa, Phoenix, Las Vegas, Orlando, and Nashville. The common theme is that these cities saw the highest price increases during the pandemic and also can build more housing easier.
The shift toward a buyer’s market helped inspire my new post, Execution Fear: The Silent Killer of Great Real Estate Deals.
What I’ve consistently noticed in real estate is that buyers tend to lose their minds when the market is hot, jumping into bidding wars that reset prices sharply higher. It’s not a gradual climb—it’s a step-function up. Then, when the market cools and deals are everywhere, many buyers retreat out of fear.
But if you truly want to land the best deal, you need to be bold when the market is soft—because that’s when motivated sellers appear.
I’ve never entered a bidding war, and I hope I never will. Buying real estate requires an even cooler head than buying stocks. Real estate is emotional—you can picture your dream life in a home, and those daydreams can run wild. That’s exactly why discipline matters even more.
If you want to dollar-cost average into a soft real estate market, consider Fundrise. With a minimum investment of just $10, it’s an easy way to gain real estate exposure without taking out a mortgage, managing tenants, or maintaining a property. Fundrise primarily focuses on residential and industrial commercial real estate, where rental yields are typically higher and valuations lower.
Letting Go And The Two Timeline Approach
One of my favorite metaphors is this: instead of trying to carpet the world, wear slippers.
In other words, rather than trying to make the world more comfortable or perfect for yourself—by carpeting every rough surface—it’s far more practical and empowering to adjust yourself by simply wearing slippers. The idea is rooted in personal responsibility, adaptability, and acceptance.
I was inspired to write You Can’t Save the World, So Focus On Your Finances after receiving an email from a reader who was disappointed I included a Fat FIRE example of someone with a $14 million net worth in my post, The Best Way To Determine If You Have Enough Money—even though a Lean FIRE example was featured directly below it.
Rather than focusing on the example most relevant to his own financial situation, he zeroed in on the wealthier example and asked me to only write about scenarios he could personally relate to. Wear slippers folks. Life will be so much better if you do!
My final post of the week touches on something I’ve mentioned before—the importance of thinking in two timelines to build greater wealth and live a more fulfilling life.
They say happiness comes from focusing on the present and not worrying about the future. While too much worry can lead to anxiety—and sometimes worse—it’s precisely our ability to envision the future that motivates us to prepare wisely today.
Too many people don’t track their finances diligently, and ten years later, they’re left wondering where all their money went. Don’t be that person. If you want more options and freedom down the road, start paying attention now.
Trying To Enjoy My Time Off
Today marks one week since we arrived in Oahu. So far, not bad—our kids are attending summer school, and we’re all adjusting to living with my folks under one roof.
Although I’m trying to take it easy, I squeezed in a consulting call last week because a reader had an important decision to make about a potential separation package this weekend. Another reader pushed their call to next week from two weeks ago. And of course, there’s the time spent writing this newsletter and new posts. So I’m finding it hard to fully switch off.
One thing I’ve noticed is that the warm island weather has made me sleepier and less motivated to write. I’m starting to wonder if island life is really conducive to building wealth. It might be better to build your fortune elsewhere first, then come enjoy the islands later—though that, too, can create tension with locals if you’re not mindful.
I’ve got plenty more summertime insights to share in upcoming posts. In the meantime, I hope you're having a relaxing and enjoyable summer wherever you are!
To Your Financial Freedom,
Sam
Subscribe To Financial Samurai
Pick up a copy of my USA TODAY national bestseller, Millionaire Milestones: Simple Steps to Seven Figures. I’ve distilled over 30 years of financial experience to help you build more wealth than 94% of the population—and break free sooner.
Listen and subscribe to The Financial Samurai podcast on Apple or Spotify. I interview experts in their respective fields and discuss some of the most interesting topics on this site. Your shares, ratings, and reviews are appreciated.
To expedite your journey to financial freedom, join over 60,000 others and subscribe to the free Financial Samurai newsletter. Financial Samurai is among the largest independently-owned personal finance websites, established in 2009. Everything is written based on firsthand experience and expertise.