Dear Financial Samurai,
And just like that, the market is selling off once more after a much stronger-than-expected jobs report for May. The Bureau of Labor Statistics reported Friday that nonfarm payrolls increased by 172,000 in May, well above the 80,000 jobs economists polled by Dow Jones had expected. The unemployment rate held steady from April at 4.3%, in line with expectations.
As a result, the 10-year Treasury bond yield moved higher as investors price in more inflation. Besides, four months in, we’re still fighting with Iran, and gas prices are still above $6 a gallon here in San Francisco. At least the economy remains strong.
Although we talk about the K-shaped recovery, with the bottom 50% getting squeezed by the higher cost of everything and the top 50% getting wealthier off rising asset prices, let’s not assume this lasts forever. The top could easily get crunched with another correction in stocks, real estate, and alternative assets.
Just look at Bitcoin, now below $60,000. It has literally gone nowhere in five plus years while the S&P 500 is up well over 100%. Even one of the biggest bulls, Michael Saylor, sold some Bitcoin last week, despite saying he’d sell a kidney first. He still has both kidneys.
In other words, easy come, easy go. Everybody has conviction until they start losing tons of money.
Berkshire And Google Screwing Me And Others
I knew I shouldn’t have highlighted how Berkshire Hathaway has underperformed the S&P 500 by over 40% since Buffett stepped down. Bad karma! I was buying the Google dip at $385 and below when Google announced an $80+ billion equity fundraise, with Berkshire buying $10 billion at a discount of around $350.
On the one hand, it’s nice to have Berkshire as an anchor buyer for my largest equity position. They’re long-term holders. On the other hand, they got an unfair advantage over retail investors by buying at a tremendous discount.
Berkshire is weird to me. It sold almost all its Apple stake at $160, leaving about 100% upside on the table. Then it went out and bought a bunch of Google starting in the second half of 2025, which trades at a higher multiple than Apple.
So it seems obvious: Berkshire has lost its touch, and it’s a reminder that it is extremely hard to outperform the S&P 500 long-term. So for the vast majority of your assets (80%+), just invest in passive index funds please.
Another lesson from this latest Berkshire transaction is that there are benefits to investing alongside whales. Those with the most capital generally get the best terms. So when it comes to venture investing, you either have to be the first investor, the most helpful investor, or the investor with the most money.
Boom Loop Time
If you’re Gen X or older, you may remember watching cartoons or shows like Leave It to Beaver on a black and white TV. I remember doing so as a kid and asking my parents whether the world in the past was also in black and white. TV gave me that perception, which was completely off.
So when I saw the perception online and in the news that San Francisco was hell on Earth during COVID, I was amused. Because every day I’d go outside and think to myself, “What the heck are people who’ve never been to the city talking about?”
This doom loop narrative was an incredible blessing. Some people moved out, fewer people moved in, more spots for kids at schools opened up, and so did more choice job and investment opportunities.
When perception is different from reality, pounce. The same goes for when people view you through some type of lazy stereotype. Take advantage of the misconception!
Check out: From Doom Loop To Boom Loop: A San Francisco Story
Getting A Housing Deal Through Bad Data
If you want to buy a single family house in San Francisco today, good luck. The herd is trying to buy before some major IPOs. There are thousands of employees who have made between $5 and $50 million in AI company equity over the past three to five years, and some of that money is going to upgrade their living arrangements.
I’ve written about a plethora of strategies for getting a better deal, including spraying and praying with DocuSign and writing a beautiful real estate love letter. As a reminder, real estate is my favorite asset class to build wealth and I am a fanatic.
But one chart I came across on social media made me realize you can use bad, false, or outdated data to save 1% to 5% off your next home purchase. When it comes to negotiations, you have to adopt a yin-yang brain by always looking at both sides.
Read: How To Use Bad Housing Data To Negotiate A Lower Price
Getting Retirement For Parents Backwards
I’m not sure if my brain wires are simply crossed, but I still don’t understand why people grind at a job they don’t like or love if they’ve already reached their FIRE number.
So when I got a thoughtful comment from a reader who said his household net worth is over $10 million, but his wife still works while they have two kids who’ll be out of the house in five years, I was flummoxed.
Are you telling me you’d rather earn another $500,000 a year working 40 to 60 hours a week, come home exhausted every evening, and travel for business trips, than spend time with the people you love the most?
I guess so, because money is too addicting to quit sometimes. Here’s a WSJ survey about important values that highlights the rise of money and the decline of everything else. But I swear to you, more money beyond what you need will not do anything for your well-being or happiness.
Check out: Retire Before Your Kids Leave Home, Not After
It’s the last week of school before my kids are off for the summer. I’ll still be writing consistently, but I likely won’t be as responsive. Time to do some sit-ups and eat fewer cheeseburgers before we grace the beaches of the world.
To your financial freedom,
Sam
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