Dear Financial Samurai Readers,
Happy Lunar New Year! We’ve entered the Year of the Snake—a symbol of wisdom, strategy, and transformation. In Chinese culture, the snake is known for its patience and precision—traits every investor needs as we navigate the latest market shake-ups.
And what a week it’s been. From DeepSeek’s surprise AI launch to OpenAI securing another massive funding round, to President Trump reigniting trade wars with fresh tariffs, the start of February is already packed with market-moving headlines. Meanwhile, I’m rethinking my venture capital investment strategy as capital calls keep piling up. Let’s dive in.
AI Shockwaves: DeepSeek vs. OpenAI
The biggest headline this past week? China’s DeepSeek dropped an open-source AI model that reportedly rivals OpenAI’s ChatGPT and other top LLMs—claiming to have done it with just $5.6 million (which I don't believe). But if partly true, this raises a major question: do AI companies really need the billions of dollars in funding they keep raising?
As expected, U.S. tech stocks initially tanked on the news. Investors panicked over what this could mean for AI spending and the dominance of companies like Nvidia, Microsoft, and OpenAI. But then, through Jevons Paradox, the market quickly realized that cheaper AI development could actually accelerate AI adoption. Stocks rebounded, with Apple emerging as a winner, as it benefits from lower AI costs while playing catch-up in the space.
And while DeepSeek stirred the pot, OpenAI flexed its own strength. The WSJ and CNBC reported that OpenAI is in talks to raise another $40 billion at a $340 billion valuation—double its October 2024 valuation! Investors, including SoftBank ($15-$25 billion), are still eager to pour billions into OpenAI despite all the DeepSeek panic.
At the end of the day, the AI race is just getting started. And like with search engines—where Google holds ~90% market share despite Microsoft’s Bing existing for 15+ years—the best LLMs, even if just 10% better, could dominate the industry.
Read: Deep Panic Thanks To DeepSeek's Fast, Open-Source AI Model
Trump’s Tariffs: Trade War 2.0
Markets were climbing higher on Friday—until Trump declared an economic emergency and slapped tariffs on imports from China (10%) and Mexico & Canada (25%). Even Canadian energy imports (oil, natural gas, electricity) got hit with a 10% duty.
As expected, the retaliations came fast.
Canada: Prime Minister Trudeau matched Trump’s 25% tariffs on $155 billion worth of U.S. imports, including alcohol and fruit—a move that could impact major U.S. exporters.
Mexico: President Sheinbaum Pardo fired back, rejecting Trump’s accusations of Mexico collaborating with criminal organizations and implementing her own tariffs on U.S. goods. She also suggested the U.S. should focus on fighting domestic drug trade and money laundering rather than blaming Mexico.
So, what does this mean for investors?
My best guess is that these tariffs won’t be as impactful as feared. The White House will see interest rates rise and stocks and consumer confidence dip, leading to a negotiated de-escalation in the coming months.
It’s the classic “standing at a concert” analogy—if one person stands up, the entire row behind them has to stand up too, leaving nobody better off. Tariff wars tend to play out the same way so the logical conclusion is a compromise.
For now, I’m sticking with my strategy: buy the dip.
The Case For Open-Ended Venture Funds
I'm investing in private AI companies through both closed-end traditional venture capital funds and open-ended venture capital funds. However, moving forward, I’ve decided to stop investing in new closed-end funds. The unpredictability of capital calls has become a headache.
Some Advantages Open-Ended Funds Have
More Liquidity – You invest only what you have on hand, avoiding last-minute scrambles to meet capital calls.
Greater Transparency – You see exactly what the fund holds before investing, unlike closed-end VC funds where you commit blindly.
Lower Fees – Some open-ended funds charge no carry, unlike the typical 20%-30% fees in closed-end funds.
More Simplicity – No surprise capital calls, no messy K-1s, and no stress about cash flow management.
Read & Listen: My conversation with Fundrise CEO Ben Miller on open-ended VC funds
Eventually, some of these private companies will go public—just like ServiceTitan did at the end of last year. One of my questions is: what happens when open-ended funds hold public stocks? I dive into this and more in my conversation with Ben.
If you want to invest in private growth companies, check out Fundrise's venture capital product. It invests in AI and more. I've personally invested over $160,000 in Fundrise Venture and Fundrise is a long-time sponsor of Financial Samurai.
Finding Free Money
Over 2 million federal employees just received a severance offer worth 8 months of salary—if they resign by February 6, 2025.
As someone who literally wrote the book on negotiating a severance, this case study is fascinating. Over the years, many people have asked me whether How To Engineer Your Layoff is amicable to government jobs, and now you can see it absolutely is.
If you’re a federal employee considering quitting, this buyout is a golden opportunity. But there’s a catch—there’s no guarantee the government will actually follow through on the payouts. My advice? Wait until the last minute to decide. If you accept early and the government reneges, you are exposed.
Read: Dear Federal Government Employees, Take The Money If You Can
Even if you’re not a government worker, learning how to negotiate a severance is a game changer. If you’re planning to leave your job, never quit—always try to negotiate first. Employees have more leverage than they think.
Stay On Your Toes
Enjoy the Lunar New Year celebrations, stay focused on your financial goals, and embrace the wisdom of the snake—strategic, patient, and ready to strike when the time is right.
Wishing you health, wealth, and prosperity in the Year of the Snake!
To Your Financial Freedom,
Sam
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P.S. Went to the Sultan + Shepard concert last night at the Warfield in San Francisco and didn’t get back until 1:30 AM—hence the delay in this newsletter. But the night sparked a new goal for 2025: enroll in DJ/electronic music school.
If anyone produces EDM music, I’d love your thoughts on the best equipment to buy and how to get started. DJ Samurai could be in the house one day!