The Power That Builds Fortunes
Compounding works quietly until you supercharge it (Scroll for a sneak peek at what we were buying after "Liberation Day")
We like to think of compounding as something automatic. Set it, forget it, and let the decades do the work.
But the truth is this: people who build real wealth don’t just wait around.
Warren Buffett’s fortune didn’t come from finding one magical stock or passive investments in index funds. It came from strategically buying, especially when the world was in a state of panic.
That’s how fortunes are built.
Not just from time, but from timing your effort.
Let’s get specific.
Take what just happened after Trump’s “Liberation Day” announcement in April.
Tariff fears sent stocks lower almost instantly. Headlines warned of trade wars, recessions, inflation spikes—you name it.
Just like that, the market gave disciplined investors a discount.
Two days later, it bounced back sharply.
By the end of June, markets had reached all-time highs.
Anyone who added to their positions during the drop didn’t just stay the course. They shifted into a higher gear.
Here are the trades we sent out to American Dream Investing’s paid subscribers on April 4:
That’s what accelerated compounding looks like in the real world.
Buffett calls it the snowball effect:
You start with a tiny clump, give it a push, and let gravity handle the rest. It’s slow at first, but eventually it gains mass, momentum, and speed.
Here’s the shift in mindset:
Compounding is the foundation, but knowing when to add to the snowball is how you get an edge.
Every once in a while, you’ll hit a patch of fresh powder—discounted prices, overreactions, short-term panic.
That’s when you sprint down the slope and pack more snow on top.
That’s when wealth gets built fast.
You don’t need to predict the next drop.
But when it appears, you need to recognize it and take action.
How to put this into action:
Keep your core portfolio compounding over time
Stay alert for opportunities when fear temporarily lowers prices
Have cash on hand so you can act
Know the companies you own, so you can buy more when the price disconnects from the value
Fortunes aren’t built by watching.
They’re built by moving deliberately, consistently, and with conviction when the moment calls for it.
So keep your snowball rolling.
And when the next blizzard hits, be prepared to add another layer.
Talk soon,
Karl Kaufman
American Dream Investing
From First Trade to Family Fortune
P.S. We’re working on something that shows you exactly how to recognize those moments—when the market hands you fresh snow and it’s time to pack it on.
I’ll walk you through how to spot them, what to buy, and how much to add. Stay tuned.