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By now, you've likely heard that the Biden administration is angling for more of our hard-earned cash. Clearly, low tax rates are wonderful for the economy, but politics often drive less optimal paths. Rather than rehash the tax hikes proposed to corporate and personal tax rates, I thought we should review the issues facing estate planning for higher net worth families.

Our firm places incredible emphasis on after-tax returns for clients. Accordingly, we maneuver investments within the tax code, attempting to derive maximum benefit for clients. Believe me, tax deferral in an IRA is the least powerful technique at your disposal, and the taxes on retirement plans can be downright ugly for the super-wealthy. Many investors don't realize that the Step-up in Basis Rule allows cumulative untaxed gains to be forgiven at death. This rule presents the most impactful benefit in the tax code for investors and investment policy must be adapted to utilize it to its fullest. Accordingly, our $1 billion in client portfolios currently contain $350 million in untaxed gain. Bernie Sanders...

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Segment is a big advocate of buying market exposure on dips. However, an investor must use this strategy within a certain context; otherwise, the tail can wag the dog. Buying the dips can have an undeniably profound positive impact on long-term results. Segment’s three primary equity strategies all had fantastic 2020 results, due primarily to staying invested and adding to positions as the March decline accelerated. It was painful and required discipline but was surely profitable.

It’s a shame that our human nature makes us more inclined to liquidate into market weakness, not buy more. It’s the hot stove phenomenon; we naturally recoil from that type of stimulus. I have written many times about the numerous studies that prove investors hate losses three times more acutely than they enjoy profits. I know some investors who surely experience that regret as 10x. This trait accentuates our harmful recoil reactions and can have profound negative implications for long-term results. So the context that needs to be understood is that buying the dips must be only an enhancement or...

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Back in the pre-Covid glory days, when you could have charity golf tournaments, I played in the LifeHouse tournament at Carlton Woods. I'm not much of a golfer, and because it's such a time-consuming hobby, I tend to stick with things for which I have a natural propensity. I mention this because this tournament was different, and I will tie it to an investment lesson in just a minute.

This tournament was different because I made a mental deal with myself. My swing and I determined we would limit our effort on every downstroke to 75% power. I had learned after decades as a shankster that hitting the ball hard could lead to spectacular glory or the agony of the brushy ravine on the right. This simple minimal effort trick shaved almost 20 strokes off my typical score. I had no 300-yard drives to wow my small crowd of three and nothing impressive except a mid-80's round, the likes of which I had never before achieved.

So how is this related to investing? It's natural to see GameStop, Bitcoin, or PlugPower rise 500% or more and wish we had some. But...

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Hedge fund managers are far and away the wealthiest and most powerful operators on Wall Street. This is despite producing some of the worst overall results for investors. Their periodic eye-popping results offer great camouflage and encouragement that fantastic things are possible. Casinos operate on the same mindset.

Last week laid bare some of the risks of hedge fund investing.

Several funds were nearly obliterated last week on rising share prices of companies the hedgies were “short.” Shorting is the process of borrowing shares from other holders and immediately selling them. Shorting produces great results when those share prices fall and can be bought back cheaper, and then returned to the rightful owner. But crazy things happen when prices go in the other direction.

Shorting a $20 stock has a maximum return of $20 since stocks can only go to zero. But shorting a $20 stock has unlimited downside when the price rises.

The shorter loses 15x his original investment when the $20 stock goes to $300, as happened last week with GameStop...

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Whatever you are doing that’s working, stop it.

The cyclicality in investing is profoundly impactful. Unfortunately, most investors misread the signals and misplay their hand. They look for trends that have persisted and invest late in the game, often just in time for the reversal. Therefore, investing in last year’s loser is often a better strategy.

Segment follows this "invest for bottoms, not tops” methodology.

Last year, technology won the battle. That is unlikely to repeat this year.

Our bet is that energy is the surprise.

The supply glut the energy industry has endured over the past several years culminated in last year’s washout event, in which oil futures briefly traded under $0.

This means last March, an owner of oil had to pay someone to take his oil. Read more

This seminal moment challenged...

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2020 was certainly an interesting year for stocks.

We are glad it ended on a high note in the face of very challenging economic conditions. One reason for the divergence is that the markets are always forward-looking, and 2021 is likely to be a much better year for the economy. The market’s current action is now dominated by companies that benefit from us living more virtual lives. So even though some industries struggled, most stocks did well, and some did exceptionally well.

There are four primary contributors to 2020 being our best year ever for client results:

  1. Longstanding overweight to stocks
  2. Overweight to technology
  3. Underweight to energy
  4. We bought the March dip in many accounts

The biggest change in the markets this year is the surge in trading from a new set of investors in their twenties and thirties, the Robinhood traders. Robinhood is among many apps available on your phone to trade stocks for free. Having new money in the...

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Segment's business model is focused on compressing client costs and taxes and letting the market do its work. We operate this way because taxes and costs are controllable to a remarkable extent, and the benefits of doing so are repeatable. Stock pickers and trading-centric methodologies forfeit these benefits in search of market-beating returns.

Our methodology's mechanics rely on internalizing as many functions as possible, making us different from traditional wealth managers who rely heavily on external contractors like mutual funds, which often charge hefty, opaque fees. This internalization means we essentially run an asset management business without charging any additional fees, resulting in significant client cost savings.

We run three equity investing strategies that we custom mix-and-match for individual clients based on issues like cash flow, risk tolerance, return expectations, and tax status. Our most popular strategy is the Segment Rising Dividend Tax-Efficient Portfolio, which we call "Segment...

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When you’ve been in the investment business for 36 years, you tend to get the same sort of questions over and over again. One that I hear repeatedly surrounds how scary the current moment is.

Yes, this is a scary moment in our nation’s history. However, scary moments also existed when the market crashed 27% in one day in October of 1987, during the tech crash in 2000, and the 2008 meltdown caused by the mortgage crisis. Today, it’s riots and COVID issues.

The point is that there’s always a reason to talk yourself out of taking the risk of investing. It takes a certain optimism to realize that though each risk seems frightening through the windshield, it will appear impotent in the rearview mirror. I recently answered that popular question a little differently, armed with evidence I discovered in my own account.

A Facebook friend responded to a financial comment I made on my personal page. She asked for my advice about investing in unpredictable times like these. I replied that maybe she was asking the wrong...

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One of the greatest misconceptions investors have embedded in their psyche is the assumption that predictions about the future are accurate or even valuable. I struggle with it too. To the extent that many other investors have the same information and believe the same thing, the value of opinion and acting on what is to come is often moot. I'll give you a personal experience to illustrate the point.

I have several friends who are deep into the mortgage business. With ultra-low interest rates, business is booming with active buyers and sellers, along with refinancing. We all surmised that when Rocket Mortgage went public earlier this year, the price might not have reflected how fantastic the upcoming quarterly report might be. I bought stock and call options in what I thought was a move ahead of this trend.

As it turns out, Rocket did report eye-popping results. The prior quarter resulted in a $50 million loss, and the recent quarter was a $3.5 billion profit. Unfortunately, the consensus was expecting a $3.8 billion quarterly profit, and the stock promptly lost 20%....

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