#43 - Stop Acting Rich

Author

Graham Schroeder
January 31, 2025

Your home base for investing, finance, personal growth.

This week we dive into the DeepSky impact, how Aquaman is saving the oceans, and why you should seriously consider not acting rich if you want to build wealth.

Market Recap

  • Aquaman vs. Plastic: Jason Momoa’s Water Revolution

    • Jason Momoa’s Mananalu brand partners with Boomerang Water to introduce on-site bottling, reducing single-use plastic waste.

    • The system uses local water and recyclable aluminum bottles, cutting transportation costs and environmental impact.

    • By transitioning to an on-site bottling system in partnership with Boomerang Water the company aims to expand its reach in hotels, schools, and hospitals. This shift is designed to facilitate broader adoption of sustainable practices and significantly reduce single-use plastic waste.

  • DeepSeek Shakes Up AI

    • The Chinese AI company specializing in open-source large language models gained global attention this week for its efficient and cost-effective AI advancements. This month its AI chatbot app surpassed ChatGPT as the most-downloaded free app on iOS.

    • The rise of DeepSeek has caused market hits in major tech stocks this week. Nearly a $600 billion market decline occurred among leading technology companies.

    • If DeepSeek scales it could open doors for struggling U.S. tech firms looking to expand their AI presence in international markets.

  • Costco Plans to Raise Hourly Wage at Most U.S. Stores

    • Costco plans to elevate the hourly pay for its top-scale employees over three years, starting with an increase to $30.20 in the first year, followed by an additional $1 each in the subsequent two years.

    • This pay hike comes after Costco Teamsters union members voted in favor of a potential nationwide strike bringing light to ongoing contract negotiations as the current agreement nears its expiration.

    • Despite the potential for labor disruptions, analysts believe the union's actions are not expected to significantly affect Costco's overall business operations.

AI-ighty Potential

Dubbed the "the rocket fuel of AI" by Wired, this groundbreaking innovation has sparked fervent excitement across Wall Street. And with projections soaring to a potential market cap of $80 trillion – equivalent to 41 Amazons – the magnitude of its impact cannot be overstated.

But here's the real deal: nestled within this tech revolution lies an opportunity for sharp investors to invest in a remarkable company poised to dominate its corner of this burgeoning market.

And thanks to The Motley Fool, the full narrative of this extraordinary tech trend has been compiled into an exclusive report, designed to arm you with the insights needed to make informed investment decisions.

Freedom Fund Portfolio

  • January 2025 Recap

    • Total Value - $27,147.20

    • Total Return Since Inception (w/ dividends) - 27.08%

    • January Dividends - $33.44

    • This past month I started building a position in $SOFI while adding to my $SCHB, $EVLV, and $WM positions. Overall markets are up over the first month of the year up almost 3.5% after markets recovered from the sell off this week following the DeepSky news. February may look similar to January as I plan to continue building my $SOFI position in the mid-teens.

    • The truth is investing is easy when the S&P 500 has returned almost 50% over the past 730 days. Next week I will dive into what mindset you need to have when the going gets tough and some important reminders on how to build a portfolio that has balance compromised of growth, value, and dividend stocks.

  • Friday Freedom Fund Purchase:

    • .4556 share of $WM - Waste Management

    • 6 shares of $SOFI - SoFi Technologies

  • Portfolio News:

    • $AXP - American Express - Q4 2024 Earnings

      • Revenue net of interest expense increased by 9% YoY, reaching $17.2 billion for Q4 2024, and $65.9 billion for FY 2024.

      • Net income for Q4 2024 was $2.17 billion, a 12% YoY increase.

      • U.S. Consumer Services billed business grew 9% YoY, with Millennials and Gen-Z having a 16% growth in spending.

      • Revenue growth for 2025 is projected at 8-10%.

      • Quarterly dividend increased 15% to $0.82 per share.

    • $SOFI - SoFi Technologies - Q4 2024 Earnings

      • Record Q4 revenue of $739M (+24% YoY) with first full year of GAAP profitability.

      • Membership grew to 10.1M (+34% YoY) and products reached 14.7M (+32% YoY).

      • Personal loan originations hit $23.2B (+26% YoY), that were major revenue contributions.

    • $WM - Waste Management - Q4 2024 Earnings

      • Q4 revenue of $5.89B (+13.0% YoY).

      • FY 2024 revenue of $22.06B (+8.0% YoY).

      • Q4 net income of $598M (+21.3% YoY).

      • FY 2024 net income of$2.75B (+19.2% YoY).

      • Opened four renewable natural gas facilities and expect production to double in 2025.

      • Increased dividend by 10% to $3.30/share.

    • $TER - Teradyne - Q4 2024 Earnings

      • Q4 revenue of $753M (+12.2% YoY).

      • FY 2024 revenue of $2.82B (+5.4% YoY).

      • Q4 net income of $146.3M (+25% YoY).

      • Full-Year 2024 Net Income: $542.4M (+20.9% YoY).

      • Teradyne exceeded guidance on revenue and profit, driven by AI-related demand in semiconductor testing. And the company increased their dividend by 9.1%

Freedom Fund Background: I created the Freedom Fund as a public brokerage account back in October of 2022 to share that anyone with a social security # and a bank account can begin their investing journey by investing a couple hundred dollars a week. Every week and month I post on X (@GrahamInvesting) public updates about the purchases, exits, dividends, and growth of the fund if you want to follow in real time. The biggest obstacle people have to investing is just getting started so I decided to start a new account at $0 to start from nothing with you.

Top 3 Lessons From Stop Acting Rich

Last month I finished the book Stop Acting Rich and Start Living Like a Real Millionaire by Thomas J. Stanley. This is the second book I read by Stanley who was a business theorist and writer who spent a good portion of his life studying and interviewing the wealthy. His most famous book The Millionaire Next Door is another one he wrote that I highly recommend. Between the two books he studied and surveyed over 14,000 American millionaires. Below are the top lessons I took away after reading Stop Acting Rich:

  • Wealth Is Built From Smart Financial Habits (Not High Incomes)

    • People naturally assume that high incomes equal wealth in our society. In the book it is noted from his data that high salaries only help if it is managed well. If individuals have high incomes but horrible financial discipline they very well may be living paycheck to paycheck.

    • True wealthy individuals focus on saving, investing early, and consistently building assets instead of spending everything they earn. Pretty obvious right? The key to wealth building is early and often habits that are built at a young age. Not high consumption habits.

    • Stanley noted that most millionaires are self-made, often coming from middle-class backgrounds where they learned the value of consistent hard work and frugal living.

    • Instead of constantly upgrading your lifestyle as you earn more money, focus on maintaining a level of spending that allows you to accumulate and compound wealth over time.

    • In the end it will not be about how much you earned. It will be about how much you keep and invest wisely.

  • Real Millionaires Don’t Care About Symbols of Status

    • The biggest lie about millionaires is that they flaunt their wealth with flashy cars, designer clothes, extravagant homes, and Instagram filtered lifestyles. However, Stanley’s research shows that the majority of real millionaires live relatively modest lives.

    • Many of them consistently drive reliable vehicles, often preferring basic brands like Toyota, Honda, and Ford over high-end luxury cars like Mercedes or BMW. Ask my wife how many times I sarcastically say “Wow look at me I am so rich and famous” anytime I see someone swerving and speeding driving a Mercedes or BMW. 🙃

    • Don’t chase expensive watches, high-end fashion, or exclusive memberships unless it is a small % of your wealth. Prioritize financial security and long-term wealth accumulation over short-term indulgences. Obviously pick your “rich life” as you wish. Enjoy the fruits of your labor. But just realize that you won’t be able to have it all at once.

    • The biggest takeaway I got from this book is that if you want to be financially successful, avoid spending money to impress others. Status symbols don’t equate to true wealth.

    • Obviously if you want to get a house and its expensive where you live but that matters to you go for it! But don’t overpay because you feel like you have to. The real estate market is way different today than it was 20 years ago in terms of affordability compared to wages. Be proud of whatever you are able to afford and don’t compare or play the housing status game. It is overrated.

  • Avoid The Lifestyle Inflation Trap

    • Stanley writes about the concept of Aspirational Wealth where people try to look rich rather than actually be rich. Obviously fake it to make it can be a beneficial aspect in life but not when it comes to building wealth.

    • People fall into the trap of lifestyle inflation and spend beyond their means on luxury items to signal success to others. Today this is fueled by social media, marketing, and the belief that wealth must be on display if you have it.

    • Stanley over and over again proves that those who spend the most on prestigious items are often the ones who struggle the most financially. Their spending habits prevents them from building long-term wealth.

    • Secret millionaires focus on investments, businesses, and real estate. Anything else is a liability that depreciates over time. Money talks and wealth whispers.

The core message from this book based on data that he studies from thousands of millionaires in our country is by building systems and habits that support financial independence and building something special in the long run. Prioritize what you want ultimately and don’t put on a false show to make others believe you are wealthy.

In this day and age this is easier said than done to stick to basic wealth building habits. The older generations grew up with neighborhood Joneses. Younger generations are growing up with comparison screens in their pockets. Don’t fall into the trap of believing everyone’s highlight reel is their reality. Fall into the trap of comparing yourself to where you were yesterday, last month, and last year.

The purpose of this newsletter is to encourage you and our other 85 Gazette subscribers to start and stay consistent with your personal, professional, and financial journey.

Thanks for investing your time reading this.

Disclaimer: Graham’s Gazette provides information and resources related to investing, financial topics, and personal growth for educational and entertainment purposes only. The content presented is not intended to be construed as financial advice. Readers are encouraged to conduct their own research and consult with qualified professionals before making any financial decisions. Graham’s Gazette and its creators do not assume any responsibility for the accuracy or completeness of the information provided nor do they guarantee any specific results from such use of information.