Dear Financial Samurais,
Despite no clear trade deals with China, the S&P 500 continued its steady climb this week, now up an impressive 14% from its April low. The market has fully recovered all its post–Liberation Day losses.
It was particularly interesting to see the S&P 500 gap down ~2% on Wednesday, April 30, only to finish the day slightly positive after Q1 2025 GDP came in at -0.3%—the first contraction since 2022.
For the economics enthusiasts, the GDP decline was largely due to a surge in imports, which subtract from GDP growth. Why? Because GDP measures the value of goods and services produced within a country. When we import, we're spending money on goods made abroad, not domestically. As a reminder: GDP = C + I + G + (X – M)
Then on Friday, April’s employment data came in stronger than expected, with 177,000 jobs added versus the 135,000 estimate. The unemployment rate held steady at a low 4.2%. This strong labor print pushed back on recession fears and gave another boost to the S&P 500.
So far so good, but I'm no longer aggressively buying the dip, with the S&P 500's valuation back to ~20X forward earnings again. Time to build up some cash reserves once more.
The Psychological Trick To Buy The Dip
As I’ve written in several newsletters since mid-March, I’ve been buying the dip. At first, I was buying and losing as the S&P 500 kept heading lower. I bought with hesitation and often felt foolish. But now, I don’t feel so bad.
What kept me methodically investing through the chaos was the desire to help someone else—despite the pain in my own portfolio. After 29 years of building my taxable portfolio, there wasn’t much I could do to stop the bleeding. My portfolio had grown too large relative to my cash flow.
However, I realized I could protect my children’s portfolios. Their balances were still small enough that I could make a difference. For example, a 15% decline on a $60,000 portfolio is a $9,000 loss, an amount I could cover. So, that’s what I did. I transferred cash into their custodial investment accounts and bought the dip on their behalf.
When you invest with a clear purpose—especially for someone you love—it becomes easier to stay the course during market downturns. But if you’re investing just to make more money, without a deeper reason, buying the dip gets a lot harder.
Check out: Use A Stock Market Downturn To Make Your Kids Millionaires
Society Isn’t Focused Enough on Building a Large Net Worth
I read a compelling Bloomberg article titled Top Colleges Are Too Costly Even for Parents Making $300,000. It resonated with me because I’ve long argued that households earning $300,000 a year can still feel like they’re just getting by—an argument that’s earned me plenty of criticism. In my article, I even laid out a detailed budget to show where the money goes, yet many people strongly disagreed.
But now, it seems like more folks are waking up to the devastating impact of inflation on our finances, especially if we’re not saving and investing aggressively. The cost of college, housing, and healthcare continues to rise, and even mid-six-figure earners are starting to feel the pinch.
But I noticed a glaring blind spot in the Bloomberg piece: the authors focused entirely on income, completely ignoring assets, when trying to determine whether a family can qualify for aid.
This omission reflects a broader mindset in society: we’re conditioned to focus on paying for life through active income rather than building wealth through assets and passive income.
Living paycheck-to-paycheck might be the American way, but it doesn’t have to be. Please focus on building a large enough net worth to eventually escape the grind and live life on your own terms. Your active income won't last forever.
Check out my analysis and the original Bloomberg article here: The Income Limit To Qualify For College Scholarships And Grants
Going Through the Emotions of a Recession as an Early Retiree
After speaking with many of you recently, a number of you are seriously considering early retirement or a career change. With so much uncertainty and chaos, it’s natural to feel like it’s safer to hang on for just one more year until the dust settles.
But if you’ve already run the numbers and tested various scenarios, there may be no better time to break free than during a recession and bear market. If you can leave your job when times are tough and still make it work, then chances are high you’ll thrive once things get better.
In my latest post, I share what it’s been like to be jobless since 2012, having now weathered two recessions—and likely a third this year. So much of financial success isn’t just about the math; it’s about managing your emotions.
Check out: What A Recession Is Like For Early Retirees: The Good And Bad
The Inspiration To Take Action
Finally, I just realized something kind of meta—and important. The main reason I ended up buying the dip for my children's custodial investment accounts and 529 plans was because I re-read Millionaire Milestones! My author copies recently arrived, and I went through every chapter again to prepare for last week's podcast interviews.
But something unexpected happened: I got fired up! Re-reading the book reminded me why strong financial habits matter so much, especially when it comes to building generational wealth. And maybe that’s the true power of a good read—it motivates you to refocus and take action. With consistent effort, 10 years from now, you and your children could be far wealthier than you ever imagined.
Millionaire Milestones officially launches this Tuesday, May 6, and I can’t wait! Order a copy on Amazon or wherever you buy books, and gain exclusive access to our fireside video chat on May 21 at 5:30 PM PST by signing up here.
To Your Financial Freedom,
Sam