Dear Financial Samurai Readers,
Happy Halloween and November, the start of what I believe is the best time of the year. Our family took our little ghouls and goblins to two neighborhoods this year for trick-or-treating, and it was a blast. Watching the kids don their costumes, raid candy stores, and end the night with sugar overloads reminded me of the pure joy of childhood.
But of course, we all grow up. Innocence fades, responsibilities mount, and the world beats us down into new realities. The hope is that as adults we find new sources of joy – ones tied to freedom, purpose, and financial peace. Have you discovered yours yet?
December Fed Rate Cut Uncertainty
Last week, the Federal Reserve cut rates again by 25 basis points, bringing the target range to 3.75 % – 4.0 %, but signaled a rate cut in December is not a foregone conclusion. The probability of another cut dropped from about 92 % to 67 %. Meanwhile, the 10-year Treasury yield jumped from 3.98 % to 4.10 %, sending mortgage rates higher again.
Frankly, I’m glad the stock market paused after the S&P 500 hit a record 6,919. I’m sitting on a recently matured 3-month T-bill and waiting to put that cash to work buying dips. But I admit, my worries about another correction are growing, so I'm not going all-in stocks with any new liquidity.
History shows November through April are among the strongest six-month stretches for stocks: no tax bill, year-end bonuses incoming, retirement contributions growing again. And yes, we're all going to lose ten pounds next year too! Two cheers for misguided enthusiasm.
OpenAI Laying The Groundwork To Go Public In 2027
According to Reuters, “OpenAI is laying the groundwork for an initial public offering that could value the company at up to $1 trillion, three people familiar with the matter said — in what could be one of the biggest IPOs of all time.” The company is currently valued at around $500 billion and recently conducted a secondary offering so many of its employees could gain some liquidity.
Because I’m more than 85% certain OpenAI will be worth more in the future than it is today — and equally confident its returns will outperform the S&P 500 over the next three years — I decided to invest more in OpenAI through Fundrise last week. I wouldn’t be surprised if OpenAI becomes a multi-trillion-dollar company within five years, though of course, there are no guarantees.
I’ve seen this story before. When Facebook went public in May 2012 at a $104 billion valuation, thousands of employees became liquid millionaires after the six-month lockup expired. Many went on to start new companies, invest in startups, and buy up prime real estate. Rents surged, and I remember interviewing prospective tenants earning $500,000 all-in at just 26 years old. I
But OpenAI’s IPO valuation could be 10X larger or more. If that’s the case, having at least some exposure to private AI companies today makes a lot of sense. It seems like wealth creation is accelerating. Just look at NVIDIA. It was “only” worth about $1 trillion at the start of 2024, and now its market cap is approaching $5 trillion.
Not Everywhere Is As Bullish
All this to say, when I step outside the SF Bay Area bubble, I get it—the hype doesn’t translate everywhere. A friend of mine, a GP at a VC incubator, just returned from NYC and said the mood there was skeptical to bearish. With ongoing layoffs, weak stock market internals, and a change in mayoral leadership adding to the uncertainty, New Yorkers seem far more cautious than euphoric.
You’re reading the words of a perma-optimist living in tech’s world headquarters, just happy to still be typing and doing what I enjoy. When I sprain my ankle, my first thought isn’t to curse the world—it’s to be thankful I didn’t break it!
So when you read my work, please understand my natural predisposition. If you’re bearish or extremely cautious right now, I’d love to hear why. I’ve tried to temper my optimism with posts like It Feels Like 1999 Again: Time To Party Without Blacking Out and by encouraging everyone to review their financials with a financial professional or loved one. But perhaps I’m still not doing enough.
What’s New on Financial Samurai
1. Poor Versus Rich Millionaires: Liquidity Is The Difference
A millionaire doesn’t automatically feel wealthy. What really distinguishes the “rich” from “poor” millionaires is liquidity – the ability to easily access your wealth when needed. I create a guide to help you target how much liquidity you should shoot for.
2. How to Endure Suffering to Build Greater Wealth and Resilience
From my early years working late on Wall Street to leaving in 2012, I’ve learned the long game is powered by perseverance. You must learn how to endure discomfort to win. I share the easiest way to make suffering more tolerable.
3. The 8 Scariest Financial Situations You Can Find Yourself In
Finally, Halloween may be over, but real financial fears lurk year-round. From job loss and market crashes to medical bills and lifestyle creep, the scariest money moments are the ones that catch you unprepared. So many of our financial scaries are self-inflicted. Let's fix that.
To Your Financial Freedom,
Sam
Another Parting Handy Tip
Did you know the automatic vent sensor in your bathroom isn’t a motion sensor, but a humidity sensor? After my gut remodel, I noticed one vent kept running long after I’d left the room, despite not using the shower. At first, I assumed it was triggered by motion.
It turns out the sensor wasn’t broken; it just needed adjustment. The instruction manual lets you set the humidity sensitivity and the duration before it turns off. So before assuming your vent is faulty, try tweaking the settings first and adjust as needed.
Any relative humidity (RH) above 60% carries a high risk of mildew and mold forming on walls, ceilings, and around windows. The more venting, the better.
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Fundrise mentioned in this newsletter is a long-time sponsor of Financial Samurai as our investment philosophies are aligned. Combined, my family has about $800,000 invested with them so far.