Hey guys, it’s Finance Fridays again… and it’s actually Black Friday, which is kind of the poster child for consumerism and materialism. However, today I want to talk about a concept called “Stealth Wealth“.

Stock Photo from: Pexels

The above picture is the Northrop Grumman B-2 Spirit also known as the “B2 Bomber” or “Stealth Bomber”. For those interested, here is an excerpt about its Stealth characteristics:

Stealth

The B-2’s low-observable, or “stealth“, characteristics enable the undetected penetration of sophisticated anti-aircraft defenses and to attack even heavily defended targets. This stealth comes from a combination of reduced acoustic, infrared, visual and radar signatures (multi-spectral camouflage) to evade the various detection systems that could be used to detect and be used to direct attacks against an aircraft. The B-2’s stealth enables the reduction of supporting aircraft that are required to provide air cover, Suppression of Enemy Air Defenses and electronic countermeasures, making the bomber a “force multiplier“. As of September 2013, there have been no instances of a missile being launched at a B-2.^[64]

To reduce optical visibility during daylight flights, the B-2 is painted in an anti-reflective paint.^[75] The undersides are dark because it flies at high altitudes (50,000 ft (15,000 m)), and at that altitude a dark grey painting blends well into the sky. It is speculated to have an upward-facing light sensor which alerts the pilot to increase or reduce altitude to match the changing illuminance of the sky.^[96] The original design had tanks for a contrail-inhibiting chemical, but this was replaced in production aircraft by a contrail sensor that alerts the crew when they should change altitude.^[97] The B-2 is vulnerable to visual interception at ranges of 20 nmi (23 mi; 37 km) or less.^[64]

(from Wikipedia)

What is Stealth Wealth?

Well, it’s kind of exactly what it sounds like.

Let me give you an example:

Do you know who this is? Even if you do, let’s assume you don’t.

Based on just this picture he seems like a nice little old man.  So he pulls up to the house next door to you in his 2014 Cadillac XTS with Nebraska plates.

Perhaps he is a retiree visiting his kids (and grandkids) for the holidays right?

Maybe.

Or perhaps he’s Warren Buffet, currently sitting on $78.6 billion in net worth, #2 in the world. The above picture is from Forbes by the way.

In case you’re wondering, Bill Gates is #1, currently sitting at $86 billion.

However, because Bill Gates is more recognizable I chose Warren Buffet to illustrate my point. I also want to include that Warren Buffet that:

• He has committed to giving more than 99% of his fortune to charity. So far he has given nearly $32 billion.
• With friend Bill Gates he launched The Giving Pledge in 2010, asking billionaires to donate half their wealth to charitable causes.

Another example

This is somewhat before my time — but do you know this guy?

You can probably tell from the somewhat dated curtain pattern behind him that this picture was from awhile ago. So this guy pulls up in this truck:

On first impression, you might think he (and his son) are here to fix your fridge or your leaky faucet.

This guy is Sam Walton, the founder of Walmart, and that’s his iconic 1979 Ford F-150 Custom.

Unfortunately, Sam passed away in 1992, from multiple myeloma. He had hairy cell leukemia as well, which is very rare. At the time, I was still a 10 year old boy, however, I remember my dad talking to me about it. He had read about Sam Walton and his passion for building the Walmart empire in which he always put the customer first. Additionally, he tried to keep prices as low as possible, choosing instead making profits by volume instead of mark-ups. As we all know now, it worked. There are some critiques on his cost-cutting labor practices, but I won’t get into that too much here.

When Sam Walton passed away in 1992, his net worth was ~$100 billion dollars. If you recall above, currently, in 2017, Bill Gates is #1 in net worth at $86 billion. So basically, Sam Walton’s net worth in 1992 is more than Bill Gates today.

When the shares passed to his children, they hung around in the top ten of billionaires for a few years after. Currently the Walton Family has an estimated net worth of ~$150 billion.

Here’s a newer example:

Everyone knows this guy right? It’s Mark Zuckerberg.

Picture from Forbes.

His net worth is ~$73.7 billion currently. His face is almost instantly recognizable to the general public because of how much publicity around his rise as the founder and CEO of Facebook. However, he chooses to wear the same gray shirt everyday.

And here’s his car:

Well, this isn’t exactly his car, but this is the kind of car he drives. The Acura TSX. A really great car in my opinion, but let’s be real. If you saw this guy pulling into the parking spot next to you at Safeway or something, you would just consider him just another dad making a food run… not someone worth more than $70 billion.

Interesting, but what’s your point?

My point is that for some reason we consider people as “rich” or “poor” based on their car and their clothes… and this makes no sense. The car you drive and clothes you wear probably have very little correlation to how much wealth you actually have.

I remember when I was a kid I would see people drive around and Mercedes Benz and BMW and just assume they must make a lot more money than my parents to be able to afford such cars. I think in general, we are heavily influenced by celebrities who drive Lamborghinis and Bugattis. However, even among celebrities there is not necessarily a correlation. The “richest” celebrities don’t just all automatically buy Bugattis — although the rap songs like “I woke up in a new Buggati (clean version)” would have you believe otherwise.

So basically, what I’m saying is, make sure that the car and clothes you buy are for you.  Utilize your own internal Value Cost Ratio. If cars are your thing, then go ahead and buy the Tesla or the BMW or whatever it is. If clothes are your thing, then I guess go ahead and buy whatever high end stuff you like. Just make sure it’s worth it to you.

Wealth isn’t what car you drive or clothes you wear. It’s not even what’s in your bank account or 401k or whatever.

In my opinion, “Wealth” is having the ability to do whatever you want without having to worry about money.

The requirements are different for everyone.

As a married man with 2 kids, true wealth to me is making sure I have enough money so my kids are taken care of until college and my wife and I have enough money to have a reasonably comfortable retirement. By that definition, I probably won’t be “wealthy” until I’m retired.

However, if you are a bachelor without plans for marriage or children, your definition of wealth is different. It could be as simple as having enough money to go surfing everyday or having enough money to travel 3 times a year.  Or perhaps your ultimate goal is to have enough passive income to not work and do the above.

It’s all relative.

Sensei’s note:

I do realize that Bill Gates has a Porsche 959. However, while being nice, it’s certainly not that ostentatious relative to him, costing around $225,000. Interesting anecdote, the Porsche 959 was not street legal in the United States until 1999, when Bill Clinton signed the “Show and Display Law“. You can bet Bill Gates was helpful in pushing that law through. His car was stored for 13 years at the Port of San Francisco before law was passed.

I guess, in summary, Kendrik Lamar said it best:

Don’t worry, this is the clean version.

Being Humble is Underrated.

TL;DR

Cadillac XTS, 1979 Ford Pickup, Acura TSX — not exactly a Bugatti Veyron.

However, that is what some of the richest people -ever- drive.

In my opinion, “Wealth” is having the ability to do whatever you want without having to worry about money.

Just remember it’s all relative, and exercise your own Value Cost Ratio.

Make sure that whatever car or clothes or whatever you buy, is for you — not just to show off — unless of course, that’s what is important to you.

Being Humble is Underrated.

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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