Protecting Gains? It’s Complicated.

Protecting Gains? It’s Complicated.

Clients generally understand how our low-turnover methodology equates to better returns over time. For example, with enough tax deferral, an 8% return can be augmented to a 10% return (in dollars). But that’s not all. Preserved gains that remain untaxed until death are tax-free in many circumstances. This can make low-turnover methodologies even more compelling….

Roth Conversions

Roth Conversions

Roth conversions remain one of the most underutilized tax planning strategies around. Imagine the limited benefits of continued tax deferral for a 90-year-old retiree with a $500,000 IRA and an income of $100,000 a year. That income is comprised of pension distributions, IRA required minimum distributions (RMD), and some dividend income. Let’s say she has…

ESG? Not So Fast.
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ESG? Not So Fast.

Gil penned a piece on ESG Investing in Financial Advisor Magazine! Do well by doing good. That’s the trendy, feel-good mantra of ESG (environmental, social, governance) investing proponents. It’s much the same claim as electric cars being environmentally friendly. The carbon footprint of an electric car battery is far worse than a gas-powered car’s lifetime of…

Russian Surprises
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Russian Surprises

As the tragedies in Ukraine and other Russian surprises have unfolded, I was most amazed by how unprepared the Russian army seems and that a ragtag team of civilians defending their homeland could put up such a fight. I always love an underdog. Along with showing the scrappiness of the Ukrainians, this serves to expose…

Tax Loophole

Tax Loophole

There’s much wisdom in exercising caution when stirring up things long undisturbed. Politicians often run amok in efforts to garner “points” with their constituents. In this case, Mr. Biden ought to have let sleeping dogs lie. His recent attempt to discard the Step-up in Basis Rule, a popular tax loophole, was met with understandable resistance,…

Percentage Returns Are Not Created Equal
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Percentage Returns Are Not Created Equal

There is nothing more mesmerizing than eye-popping percentage returns. While investors equate high returns to transactional intelligence, studies routinely show that randomness and luck are the far more likely explanations. Investors often don’t fully appreciate that all percentage returns are not created equal. These occasional high returns earned by aggressive investments give them a marketing edge when investors…

Direct Indexing: “New” Trend We’ve Been Doing for Decades
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Direct Indexing: “New” Trend We’ve Been Doing for Decades

Segment’s strategies are grounded in decades of experience of dealing with things as they are and not as we wish them to be. Sometimes this puts us twenty years ahead of the crowd.  With 2021 came a “new” trend: Direct Indexing! Back in 2003, I attended a dinner meeting with an executive from one of the…

Profound Power Of The Unrealized Gain
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Profound Power Of The Unrealized Gain

Gil published a piece in Forbes Council titled, “The Profound Power Of The Unrealized Gain.” Unrealized gains have a benefit that doesn’t show up in percentage return. “Money managers and hedge funds hang their hats on their trading prowess and the glory of periodic home runs. Any success they have provides good cover for the…

Segment Ranked by HBJ among Houston’s Top Wealth Management Firms
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Segment Ranked by HBJ among Houston’s Top Wealth Management Firms

For the eighth consecutive year, Segment has been included among the Largest Houston-Area Wealth Management Firms by the Houston Business Journal. For 2021, Segment ranks 15th among the largest firms in Houston. We are proud to serve our clients and are grateful for their continued trust in us. Subscribers can follow this link to see…

Predictably Irrational Investing
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Predictably Irrational Investing

The field of economics has long assumed that people make decisions that optimize their own utility, and to derive the greatest benefit for themselves. However, psychological studies show that we humans do not do this, but rather we often make irrational choices, and we do so predictably. In this case, irrational investing choices. The reason we…

Don’t Overvalue Dividends
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Don’t Overvalue Dividends

Gil published a piece in Advisor Perspectives entitled “Don’t Overvalue Dividends.”   “My advisory firm is a big fan of stocks that pay dividends. Segment’s tax-efficient rising dividend portfolio is our most popular strategy. But if you dig into the numbers, the dividends our holdings pay are not huge. This is because we manage for…

Implications of Biden’s Proposed Tax Changes
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Implications of Biden’s Proposed Tax Changes

Gil published a piece in Forbes Council titled, “The Implications of Biden’s Proposed Tax Changes.” “Investors are understandably concerned about President Biden’s plans for additional tax revenue. In my experience, these concerns focus primarily on a couple key parts of the president’s proposal. Below, I’ll take a look at what those parts are and their…

The Great Inflation Debate
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The Great Inflation Debate

Signs of inflation abound with chip shortages, car shortages, and sky-high lumber prices, among others. Many forecasters are predicting 70s style inflation or even stagflation.  Given the similarities in Jimmy Carter’s and Mr. Biden’s policies, it’s a valid concern.  Yet, I feel there are extenuating circumstances this time that give me hope that we can…

Segment Ranked in Barron’s Top Financial Advisors
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Segment Ranked in Barron’s Top Financial Advisors

We are proud to be ranked once again on Barron’s “Top 1,200 Financial Advisors List” for 2021, and as one of the Top 50 Advisors in Texas! Segment is dedicated to supporting our clients and advocating for your best interests when it comes to these unpredictable times and financial markets. Thank you for trusting us,…

Ego Rush of Short-Term Investment Victories
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Ego Rush of Short-Term Investment Victories

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…

Hedge Funds Comeuppance

Hedge Funds Comeuppance

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…

Odds-On Favorite Stock For 2021
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Odds-On Favorite Stock For 2021

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…

Dividend Payers’ Worst Year Yet?
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Dividend Payers’ Worst Year Yet?

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…

China Trade War
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China Trade War

The Dow Jones market index fell 3% yesterday on news that the China trade war is escalating. President Trump is hiking tariffs on China in round two, with China responding by depreciating its currency. When the World Trade Organization welcomed China in December 2001, many changes had been required of China in order to be…

Using IRA’s for Charity

Using IRA’s for Charity

The ability to use an IRA for charitable giving is the result of several recent rule changes. Originally introduced in 2006, it was a political volleyball until gifting IRA’s was ratified as a permanent feature of the tax code in 2012. Being relatively new, it’s still rarely used in tax strategy, but deserves more attention…

Should You Start College Fund for Unborn Child?
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Should You Start College Fund for Unborn Child?

“It’s never too early to start saving for college.” You’ve probably heard that before, but as education costs rise, the word “never” is becoming increasingly important. It’s not too early to start the day a child is born, or even before they’re born. In fact, it’s not too early to start before any grandchild has…

Don’t Get Yield Myopia

Don’t Get Yield Myopia

Investors love dividends, and for good reason. Getting paid to hold a profitable stock is always an added bonus, and dividends receive preferential tax treatment too, being capped at a 23.8% rate. However, dividend yields are greatly misunderstood by many. Many investors think of dividend yields as a return on invested dollars, thus a higher…

FREE! FUNDS!

FREE! FUNDS!

Fidelity upped the ante earlier this week in the mutual fund price war by declaring that two of their index funds would carry zero cost for investors. This goes to show that investors may have taken the pursuit of low cost to a ridiculous level. Considering the hundreds of funds that Fidelity manages for $Billions…

Exotic Investment Strategies That Don’t Really Work

Exotic Investment Strategies That Don’t Really Work

Most investors think of stock ownership decisions as somewhat binary: buy/avoid; sell/keep. There’s another choice: Sell what you don’t own in hopes of it declining. This is called shorting. Segment almost never shorts because the math of ownership is simply too compelling. Yet, with the trauma inflicted by the market decline of 2008-2009, many investors…

Segment Ranked in 300 Top Investment Advisors
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Segment Ranked in 300 Top Investment Advisors

Segment Wealth Management is pleased to announce that it has been named to the Financial Times 300 Top Registered Investment Advisers, as of June 18, 2015. The list recognizes top independent RIA firms from across the U.S. This is the second annual FT 300 list, produced independently by the FT in collaboration with Ignites Research,…

Ways to Reveal Hidden Costs in Your Portfolio
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Ways to Reveal Hidden Costs in Your Portfolio

In speaking with investors and advisors over the past few months, I have come to realize that a serious misunderstanding exists when it comes to the facts on advisory fees. One recurring area of confusion is how account level fees and product fees mix with one another. Clients nearly always assume that the account level fee they…

Disingenuous ETF Arguments

Disingenuous ETF Arguments

Any routine reader of this blog will know I’m a fan of Exchange Traded Funds (ETFs). ETFs are fast becoming the world’s most popular investment product. The king’s crown of most popular product still belongs to active mutual funds, but ETFs are on pace to dethrone them. With rare exception, ETFs are far cheaper to…

Power on, ETFs!

Power on, ETFs!

Many articles are starting to surface acknowledging and critiquing the groundswell movement to passive investment strategies and near-wholesale movement to Exchange Traded Fund (ETF) investing. Several of these articles take the position that this portends doom of one type or another. For the reader’s edification, passive strategies are generally mutual fund or managed account investment…

So You Want Bitcoin?

So You Want Bitcoin?

Bitcoin is all the rage with prices up a whopping 900% for 2017. One bitcoin breached the psychologically important $10,000 mark Tuesday for the first time and then shot up to $11,000 by Wednesday. As a primer, bitcoin is a digital currency, which means it has no central bank or government that backs it. Given…

The Tough Stuff That Separates Investors From Savers
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The Tough Stuff That Separates Investors From Savers

October 9th, 2017 marked the tenth anniversary of the stock market peak in 2007. In the months that followed this peak, the market plunged deeper and deeper until the week ending on October 10, 2008 became known as the worst stock market week on record. I took a moment to reflect on the damage this…

The Annuity Conundrum

The Annuity Conundrum

Many advisors, like Ken Fisher, make their living by bashing annuities. I too have had some harsh words for annuities, and still often do. They are often over-priced, and some even seem deliberately designed to confuse. Annuities also have some nasty tax consequences, especially for the very wealthy. But annuities can do things that no…

In the Wake of Harvey

In the Wake of Harvey

The devastation from Hurricane Harvey is widespread and disheartening. However, the outpouring of aid and the community spirit that have arisen in the face of the tragedy are inspiring, and they seem to be born of the famous, independent, hardscrabble Texan mindset. As I ponder ways this calamity will play out in the financial markets,…

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