Preparing for the Upcoming Wave of IPOs

June has officially arrived, which means a lot of kids are starting camp, vacations are on the horizon, and Q2 estimated tax payments are due next week. Another big theme in markets taking place right now is the highly anticipated “big three” upcoming IPOs. In light of this historic wave of IPOs, I wanted to share a few considerations for investors and how I’m approaching this with my clients.

SpaceX plans to make its public debut on Friday at a valuation of $1.75 trillion. The company plans to raise $75 billion, making it the largest IPO in history. Along with being the largest IPO, it has also been the most highly debated initial public offering that I’ve encountered in my career. I’ve been asked “how do I get access to this stock?” and had just as many conversations asking “how do I avoid this stock?”

In addition, Anthropic and OpenAI have both expressed their plans to go public later this year, each targeting valuations exceeding $1 trillion. Three IPOs above $1 trillion valuations alone is unprecedented, not to mention the fact that all three of these could occur within a 6-12 month period. There are a lot of opinions about what these IPOs mean for the broader stock market. On the positive side, these are three of the fastest growing companies that most investors have never had access to before. By going public, investors can now have exposure to three companies that are on the frontier of innovation. On the flip side, these companies are spending a lot of capital, none are currently profitable, and all have much higher valuations relative to the revenues they generate compared to other public tech companies.

With the SpaceX IPO in particular, another topic that has gotten a lot of attention is how quickly the stock will be included in popular indexes. Historically, most of the popular indexes (i.e. Nasdaq-100, S&P 500, etc.) had restrictions regarding company profitability, the number of shares available to trade, and the length of time following the initial listing before a company was eligible to be included in the index. Following the news of the SpaceX IPO, multiple indexes including the Nasdaq-100 (QQQ is a popular ETF that tracks this index), changed their rules to accelerate the timeline for when companies will be added to the index. SpaceX will be eligible to be included within the Nasdaq-100 after just 15 trading days.

POs often experience an initial “pop”, with the average return being 19% on the first day of trading on public markets. Intuitively this makes sense. Companies want to generate positive media coverage and create a buzz around their brand. Additionally, the general public has previously not had access to invest in these companies and so there’s a lot of excitement and demand to buy these shares. However, after the initial hype begins to fade, most companies have underperformed the broader stock market over the next three years following their public debut. SpaceX’s IPO was oversubscribed by institutional investors and so I expect the stock to have a strong initial debut. The concern with fast track index inclusion is that all the people who own index funds are buying the initial “pop”. If the stock doesn’t live up to the high expectations and the price falls over the months and years ahead, index fund owners are the ones who bear the brunt of these poor returns.

I’m not going to get into whether the fast-track index inclusion is the “right” or “wrong” decision, but I do want to share how I’m thinking about this change of rules and the potential implications it could have on your investments.

I’ll start by sharing an analogy that I think helps explain some of the potential challenges of index funds needing to buy SpaceX stock. Imagine that Taylor Swift releases a new album and announces she’s going on tour this summer (I know there are at least a few “Swifties” reading this newsletter). You’re determined to see her perform this new album so you begin to look up concert tickets. You have a specific date in mind that you’d like to attend the concert. Also, you want to see her perform at a particular venue, on the lower level, and want your three best friends to join you for the concert. You start your search and quickly realize that finding four seats in a row, at your preferred venue, on your ideal date doesn’t exist (or is ridiculously expensive). Why do I share this analogy? Because all of these criteria are “constraints” which limit your ability to find what you’re looking for at a reasonable price. 

The same concept applies to investing. The responsibility of an index fund manager is to mimic the composition and the performance of the index that it tracks. This means that when a new company comes into the index, the manager is forced to buy shares of this stock based on its proportional weight within the index. This constraint can be problematic for a few reasons.

  1. Forced Liquidity – The cash to buy shares of the new company needs to come from somewhere. This typically means the fund manager is selling other stocks to generate the liquidity to buy this new entrant to the index. If SpaceX enters the index as one of the top ten largest companies, this could put downward pressure on other large stocks.

  2. Supply & Demand Imbalance – A very limited amount of all SpaceX shares will be eligible to trade within the first few months due to restrictions on current & former employees selling shares. If index fund managers are forced to buy SpaceX shares, this creates new demand for these shares. When there is high demand and limited supply of a stock, this typically forces a stock price higher.

  3. Post Lock-Up Liquidity – Over the six month period following the IPO, SpaceX employees will be eligible to sell their shares. This creates an increased total amount of shares eligible for trading. As mentioned above, one concern is that investors who own index funds may be paying a higher price for SpaceX stock because the portfolio manager is forced to buy the stock earlier than before. Once employees are eligible to sell their shares, this new wave of supply could cause the stock price to drop at the cost of index fund investors.

Will things play out this way? My honest answer is, I don’t know. Anyone who says differently is sharing their opinion because we’ve never had a company IPO at this valuation and the index fund providers just recently changed their rules.

So what am I doing about this and how do I approach positioning investment portfolios?

First, this is one of the primary reasons that I don’t invest in index funds. The two main ETF providers that I use, Dimensional and Avantis, both take a flexible approach to trading and rebalancing that isn’t subject to the same constraints that index fund managers are. Additionally, they screen companies based on their profitability and valuation before determining how much of a specific company to own within their funds. Another option to customize which stocks you own or to exclude specific companies is by owning stocks outright through direct indexing.

I’m hopeful it’s a strong debut for SpaceX this week and beyond. If this post triggered any questions or you want to further discuss your investment strategy, I welcome the opportunity to chat with you about your personal situation. 

How I Invest My Own Money | Refresh Wealth Investment Process

For this post, I want to start by sharing what has taken place in financial markets this year. There’s no shortage of opinion articles on the consequences of prolonged geopolitical tensions or the impact that AI advancements will have across industries. Even if you tune out the media, you likely feel the effects of current events, such as it costing nearly double to fill up your car with gas or mortgage rates shooting up over 0.5% right as you’re starting your home search. Despite these events, the stock market has performed quite well this year. As of Friday’s market close, the three major U.S. stock indices were all positive, with the Russell 2000 (small and mid-sized companies) being up nearly 12% year-to-date. Stocks outside of the U.S. have continued the trend of outperforming U.S. stocks both in developed and emerging markets.

My approach to building investment portfolios is to invest 70% of your stock allocation to U.S. stocks and the remaining 30% to stocks outside of the U.S. Within these allocations, you have slightly more exposure to smaller companies and companies with higher profitability, both of which have benefited investors this year.


One interesting fact to share that you may not be aware of is that through the first quarter of the year, all of these indices were negative. Since March 30th, all three indices are up double-digits, with the Nasdaq 100 (large tech stocks) up 16% over the past three weeks!

Three weeks ago, not many people would have expected double-digit returns from the stock market. I know I sure didn’t. This is a prime example of why I don’t invest my own money or your money based on opinion. While the stock market has averaged ~10% annualized returns throughout history, it hasn’t been a smooth and steady climb. These sudden rallies are actually quite common and they often come when you would least expect. That is why staying invested is so important for building wealth to capture these returns when they occur.

Refresh Wealth Investment Process – Look Under the Hood:

Now that I’ve covered what is going on in markets, I want to give each of you a look under the hood for how I evaluate new investment opportunities. To start, I evaluate investment funds on a quarterly basis. A few of the questions in my evaluation process include the following:

  • Are the funds performing as I would expect?

  • Are these funds still the best option to get the targeted exposure from a total cost perspective?

  • Are there opportunities to increase the tax efficiency of the investment portfolio? 

My investment philosophy has remained consistent, though I continue to look for opportunities to improve how it’s delivered across your investment accounts. I believe in the primary benefits of indexing, which include low costs, broad diversification, tax efficiency and a rules-based approach. I pair these benefits with academic research of what drives stock returns over the long term, which include a company’s profits and the price you pay for those profits. This combined approach has proven to deliver better returns than purely indexing. The two primary fund companies that I use within client accounts are Avantis and Dimensional Fund Advisors. Neither of these companies attempt to “time the market” or speculate on which stocks will be “winners”, which is how traditional “active” managers approach investing. Instead, they start with the entire index and then take a data driven approach to screen for companies that generate above average profits and companies that are trading at below average prices relative to these profits. Based on these screenings, they slightly overweight their positions to companies that have higher expected returns relative to their weight in the index.

This approach aligns with my belief of not attempting to “outsmart the market”, rather to take the best of financial science and apply it through thoughtful implementation within these funds. This approach does have slightly higher expense ratios compared to index funds, however, I believe the benefits of this approach outweigh the additional costs. To reflect this, I’ve included a comparison of both returns and costs for Avantis ETFs relative to the closest Vanguard equivalent ETF. Dimensional has a similar cost and return profile to Avantis, however, their ETFs don’t have as long of a track record as Avantis.

While I don’t often make changes to the portfolios, which is intentional to minimize taxes and trading costs, I do continuously review the investments and research other fund companies to ensure these funds are still the best method to implement the target strategy.

Hope this post helps give you a glimpse into my thought process and the intentionality that goes into constructing and monitoring investment portfolios at Refresh Wealth.

What are the best ways to invest in my child’s future?

Among Refresh Wealth clients, there have been quite a few babies born over the past year! There are even more new additions expected throughout the remainder of 2026, so I wanted to focus this post on a topic that may be relevant for your family. 

“What options exist for investing in my child’s future?”

I’ve outlined a few of the accounts that are relevant for parents with young children below.

Dependent Care Flexible Spending Accounts – While these are not accounts for investing in your child’s future, they are an attractive option for anyone who is paying for childcare expenses. Childcare expenses are often a large line item in the budget for families with young children, so FSAs can provide a bit of relief by covering some of these expenses with pre-tax dollars.

How: Through your payroll deductions, you can contribute up to $7,500 to an FSA and reimburse yourself for childcare expenses. 

529 Plans – These are tax-advantaged education savings accounts. In addition to college expenses, these can be used for K-12 tuition ($20,000 / student annually), tutoring, online education subscriptions, and test prep services. You can change the beneficiary on the account or you can use up to $35,000 to start a Roth IRA for your children, if there are excess funds.

How: A lot of states offer tax-advantages for enrolling in the state-sponsored 529 plan. For any states that don’t offer tax benefits, my preference is My529 due to their robust investment options and below average administrative costs.

Custodial Accounts – For parents who prefer to have more flexibility in saving for their child’s future, establishing a Uniform Gift to Minors (UGMA) account can be a great option. These accounts are opened in the parents name and can be used for any purpose that benefits your child (i.e. down-payment on a home or wedding). The account transfers to your child at the age of majority (18 or 21, depending on state law) and they have discretion on how to use the funds. Lastly, a portion of the investment earnings are taxed at the child’s lower tax rate, providing some relief compared to holding these assets in a parent’s name.

How: You can open these accounts at any major financial institution (i.e. Schwab, Fidelity, Vanguard) and each parent can contribute up to the annual gift exclusion ($19,000 in 2026).

Trump Accounts – For any child born between January 1, 2025 and December 31, 2028, they are eligible to receive a $1,000 deposit from the U.S. government. In addition, parents are eligible to contribute up to $5,000 annually per child. These funds must be invested in index funds and can’t be accessed until the child reaches age 18. The account grows tax-deferred and upon withdrawal, the funds are taxable at ordinary income tax rates. (Think of an IRA for your child).

How: You can open a Trump account by completing this online application. Additionally, you will want to include a Form 4547 with your tax return in the year established.

Trust Accounts – Establishing a Trust account can be an attractive option for any child with special needs or for families who are seeking to transfer significant wealth to the next generation. Trusts can provide additional protection over the assets, offer potential tax benefits, and enable the parents to have more control over how and when the funds are used. That said, this often comes with more administrative complexities (i.e. filing an annual tax return for the trust) and higher costs to set-up and manage going forward.

How: First step is to discuss the trade-offs of establishing a trust with a financial planner and an attorney. If you decide to go this route, the next step is mapping out the initial funding plan for the trust. 

As you can see, there are a variety of account types to save for your child’s future. There isn’t a “better” or “worse” option, each of these accounts have trade-offs. So if you’re thinking about what makes sense for your family, I’d be happy to discuss which account best aligns with your intentions.

What does an Anthropic tender offer mean for you?

First, congratulations to the team on closing a blockbuster funding round to further propel Anthropic’s remarkable growth! With the funding round complete and an employee tender offer announced, many employees are thinking about their equity. This post isn’t going to focus on how to “optimize your equity ahead of an IPO”, though I’ve written about this topic previously for those who are interested in learning about equity planning strategies ahead of an IPO. Also, this isn’t a post of yet another financial advisor telling you to “sell and diversify your concentrated stock position”. Rather, I want to focus this post on a concept that may not be on your radar.

Before diving in, one thing that is unique about Anthropic is that there are quite a few employees who come from outside of the tech industry. Individuals who have spent their careers in public policy, research labs at universities, and as practicing attorneys. For many of them, this is new territory being the first time they have ever received stock options or RSUs. Even for those employees who this isn’t their first rodeo with equity compensation, the exponential valuation growth in such a short timeframe may be a first for you.

For this post, I want to focus on the concept of “funded contentment”. This can mean different things to different folks, but ultimately this is defined as having the ability to align financial resources with personal values to support a purposeful life. It’s the mindset shift from pursuing “more” to defining “enough”. In the book, The Geometry of Wealth, Brian Portnoy writes about this topic and he outlines the “4 Cs” framework: Connection (relationships), Control (autonomy), Competence (mastery), and Context (purpose), as the key areas for a meaningful life.

So why write a post on this topic associated with a tender offer?

With this rapid ascent and continued growth trajectory for Anthropic, the value of your equity has the potential to be life-changing (for some of you, maybe it already is!). I’ve spoken to a few individuals who joined the company just two years ago who have seen their equity value surpass eight-figures. For many of these individuals, this amount of money is more than they ever imagined they would possess. As a financial planner, I’ve witnessed both the joys and perils of sudden wealth, as well as how big decisions surrounding money can be highly emotional. Once of the best ways to alleviate the stress associated with high stakes financial decisions is to have a plan for your equity.

Whether you’ve had a savers mindset up to this point and your thoughts are shifting from “do I have enough?” to “how do I not mess this up?”or if you have been heads down building a company, raising kids, trying to be a great spouse, and haven’t thought much about your equity, this post is equally for you as well.

Artificial intelligence is changing so quickly and there are still a lot of unknowns regarding this technology and how it will shape society going forward. While I won’t attempt to predict how things play out in the future, I do believe it is important to be planning for your equity and what it could mean for your life despite the many unknowns. Before modeling exercise scenarios and building financial projections, I believe it’s important to think about and make equity decisions within the broader context of your financial life. To help facilitate this process, I like to start by asking the following question.

“If the value listed in Shareworks was in your bank account, would you change anything about your life today”?

I’ve asked this question to dozens of folks over the past year and responses have varied quite a bit. However, one common response is “well, I wouldn’t retire, if that’s what you’re asking”. I primarily work with individuals in their 30’s and 40’s, so retirement is not often their primary focus. Although, many of these individuals do have other interests outside of their day job and realizing $10M would position them to be well on their way to not needing to work. Even if retirement isn’t the goal, financial security could also mean pivoting into a less lucrative role that energizes you and gives you greater control over your time. Beyond the topic of work, the real reason I ask the question is to give someone the space to think about what’s possible for their future and how money can enable them to pursue this.

I’ve been amazed by some incredibly thoughtful responses that I’ve heard to this question.

  • “I would love to help cover the costs for my parents to move out to California and get a place out here so we can see them more often and they can be present with our kids”.
  • “It would be pretty sweet to go to the Dominican Republic for a windsurfing trip!”
  • “I’ve thought for years about getting my private pilots license. Maybe the tender proceeds could cover private flight lessons and renting a plane to practice”.
  • “It’s our 10th wedding anniversary this year. We got married in Maui, so it’d be awesome if we could cover some of our friends to get out there for a week to celebrate with us”.
  • “I’ve made a few investments into early-stage ventures and really enjoy scouting for up & coming companies, so additional cash would give me the ability to make more investments”.

The costs and long-term financial implications range with each of these situations, but the point is that each of these individuals were able to identify ways that using proceeds from the value of their equity would improve the quality of their life in a meaningful way today. In each of these scenarios, all of them still maintained an 80%+ stake in their company stock.

One other underrated aspect of a tender offer – it provides a great opportunity to phase into wealth. Selling 10-20% of your equity at a known, fixed price gives you a chance to see how you feel when a wire transfer for seven figures hits your checking account. Not to mention that having secured a base amount of tangible, liquid cash from your equity can make the process of patiently waiting through a six month “lock-up” period post-IPO much less nerve-wracking.

So as you evaluate your decision to participate in this tender offer over the weeks ahead, I encourage you to think about what does “funded contentment” mean to you. Congrats to all the Ants, I’m excited for what’s ahead!

Make Tax Season Less Taxing – What Documents You Should Expect

As we embark on tax season, I also wanted to share an overview of the most common tax forms that I would expect clients to receive and where you can find these documents. Hopefully this serves as a helpful reference as you’re uploading documents for your accountant or making sure that you’ve got all the necessary forms as you begin to prepare your tax return.

Equity

  • Form 3921 – Reports the exercise of an Incentive Stock Option (ISO). Can be found on Carta or Shareworks.

  • Form 3922 – Reports the purchase of shares acquired through an Employee Stock Purchase Plan (ESPP). Can be found on the platform your company shares are held.

  • 1099-B and Supplemental Forms – Reports the gain or loss from the sale of stock.

    • For private companies who ran a tender offer last year, this will likely be issued from Nasdaq Private Markets or the company who facilitated the sale or buyback for your company. FYI – If you sold unexercised options, this income is reported on your W-2.

    • For public companies, this will be issued by the institution where your company stock plan is held. The supplemental tax form includes your adjusted cost basis, which is important for individuals who sold shares purchased at a discounted price via an ESPP, RSUs, or stock options. Not all institutions issue supplemental tax forms (ex. Shareworks), so downloading the full account summary report will include the details of your historical vesting and purchases of shares.

Retirement

  • 1099-R – Backdoor Roth IRA contributions, as well as After-Tax 401k contributions with In-Plan Roth conversions (i.e. Mega Backdoor Roth strategy).

    • Note: If you rolled over or consolidated an old employer’s 401k into your current 401k or an Individual Retirement Account (IRA), this will produce a 1099-R from the financial institution where your 401k was previously held.

Other Tax Documents

  • Form 1099-SA – For individuals who distributed funds from their Health Savings Account (HSA), this form is issued by the HSA custodian to report distributions and confirm if they were qualified medical expenses.

  • Form 1098 – This form reports mortgage interest that you may be eligible to deduct.

  • 1099-INT – This reports the interest earned on your savings account or through the sale of treasury bills / redemption of savings bonds.

  • Donor Advised Fund or 529 Education Savings Accounts – While there isn’t a standard tax form, you’ll want to share the total contributions / donations made last year with your accountant to include on your tax return.

  • K-1 – This form reports your proportional share of income / losses for any partnership interests or trusts that you are a beneficiary.

  • Estimated Tax Payments – If you made any tax payments to the IRS or your state’s department of revenue, include receipt of these payments with your accountant.

  • 1099-NEC – For anyone who received self-employment income for consulting services, this form will be issued from the organization(s) that provided services that summarizes the revenue you received for these services.

Hopefully referencing this post makes this tax season slightly less taxing than prior years. 🙂

Starting the Year off Right

I hope you enjoyed a wonderful holiday season and the new year is off to a strong start! 

As we start a fresh calendar year, I want to highlight a few changes to contributions limits across your employer benefit plans.

  • 401k contributions – The contribution limit increased to $24,500 this year.

    • Catch-Up Contributions – Additional $8,000 for anyone over age 50.

  • Roth IRA – The contribution limit increased to $7,500 / person this year. 

    • Catch-Up Contributions – Additional $1,100 for anyone over age 50. 

  • Health Savings Account – The contribution limit increased to $4,400 (self-only) and $8,750 (family) coverage this year.

For anyone who typically front-loads their 401k contributions to max out this account early in the year, it’s worth double-checking your employer’s policy matching contributions. Some employers will only contribute during pay periods that you’re actively contributing. So front-loading these contributions could actually result in leaving money on the table. I wrote more about this topic here. The matching policy is often defined in your 401k plan summary booklet, which I’d be happy to review for any of you, if I haven’t done so already.

One other aspect to evaluate with your 401k is if your company offers the ability to make “After-Tax” contributions. Not all 401k plans allow this, however, it has become increasingly popular among late-stage private companies and public companies to offer this as a benefit to attract and retain talent. While the employee deferral is limited to $24,500, the total contribution limit (employee deferral + employer match + after-tax contributions) is $72,000 for 2026. 

At first glance, that’s a large number to be saving on an annual basis into your 401k. Often, it is not feasible for most people with salary-only contributions. However, some plans will allow you to elect a specific % (i.e. 50%) of your annual bonus or commissions to be contributed to your after-tax 401k. Additionally, for anyone vesting RSUs or who realizes stock proceeds from a tender offer, you could use some of these proceeds to supplement your monthly expenses so that you can increase the contributions to your after-tax 401k.

While the after-tax 401k doesn’t reduce your tax exposure for the current year, the real power of this strategy lies within the ability to convert these contributions into your Roth 401ks through “In-Plan Conversions”. This is an important step to complete the process and make sure these funds get moved to your Roth 401k. Once the funds are invested within your Roth account, all of the future growth is tax-free. Taking advantage of after-tax contributions / in-plan Roth conversions for even a few years can reduce your lifetime tax bill by creating a sizable tax-free account that is compounding to and throughout your retirement.

Looking Ahead – Q1 Planning

I am actively putting together tax summary letters to document the events that took place and decisions made last year. I often send these summary letters to accountants in January to give them an annual recap and provide a one-page overview to reference as they begin to preparing tax returns. These letters also include a list of what tax documents I would expect each client to receive so that everyone is on the same page. 

As we begin a new year, I believe this is a great time to reflect on the past year. A few questions to help evaluate the past year from a financial perspective.

  1. On a scale of 1-10, how well did your financial decisions reflect your personal values?

  2. What was the best thing you spent money on last year?

  3. When you think back on things you didn’t accomplish last year, what held you back? Was there a theme – time, energy, money?

The reason I believe these questions are important is because I want to make sure the financial plan that we are building together is helping you and your family to live the best version of your life. So when we meet for Spring meetings, I would love to hear your thoughts on these questions as it helps me connect the advice that I’m providing to ultimately what matters most to each of you.

I hope 2026 is off to a strong start!

Feeling overexposed to a single stock?

For this post, I want to focus on a topic that is relevant to a vast majority of the people I serve – managing concentrated stock positions. 

Over the years I’ve seen stock concentration create significant wealth and unlock new financial possibilities for many individuals and families. I have also seen single stock positions swiftly destroy vast amounts of wealth. That said, I believe it’s important to manage this financial risk by having a thoughtful strategy for trimming single stock concentration and then using these proceeds to continue building wealth across a mix of diversified assets.  

There are a variety of factors for how quickly you sell down a concentrated stock position including your outlook for the company, your personal financial objectives, and how large of a stake your company stock is relative to the other assets you own. When you work for a company, it’s natural to have an optimistic view on the company going forward. One of my responsibilities is to be an objective party who looks out for your best interests. That said, I take into account your personal financial objectives, as well as historical data on single stock positions to inform my recommended sales plan.

One data point that is worth sharing – a research report that studied the lifetime returns of U.S. public stocks dating back to 1926 revealed that just 86 stocks out of over 2,150 stocks, just 4% of the stocks studied, accounted for more than half of the total market gains. So outside of a small percentage of companies, the data says that the odds of holding concentrated stock is not in your favor for long-term wealth creation.

Now with that background, I’ve outlined a few strategies for trimming concentrated stock positions in order of most simple to more complex.

Direct Sale + Set a Gains Budget

While it may seem obvious, a simple strategy that maximizes flexibility shouldn’t be overlooked. Especially if you’ve held shares for over one year and the sale qualifies as a long-term capital gain. Upon sale, you then have full discretion for how you want to reinvest or to spend the cash proceeds.

For individuals who want to retain some exposure to the stock, setting up a rules-based approach, such as an annual capital gains budget (i.e. sell up to $xx,xxx in gains) or a target percentage of your portfolio (i.e. 10% of my portfolio is held in a single stock within 3 years). Once that target is defined, then you know how much you need to sell each year to get there.

Donating to Charity

For individuals with charitable intent, donating stock with large gains is an optimal method to fulfill your donations. The benefits of donating stock are:

  1. If you itemize your deductions, you receive a tax deduction against your income for the value of shares donated.

  2. You avoid capital gains tax and the charity is a tax-exempt organization, so they don’t pay any tax when they liquidate the shares.

Under the new tax law, “clumping” multiple years of planned donations into one calendar year is a great way to maximize the tax benefits of donations. To do this, you can establish a Donor Advised Fund (DAF) through a company such as Daffy, and contribute stock directly from your brokerage account to the DAF. This enables you to capture a larger tax deduction in one tax year and still retain the ability to disburse funds to charitable organizations over multiple years.

Direct Stock Ownership / Custom Indexing

This strategy involves owning individual stocks outright vs. owning these companies through an ETF or a mutual fund. When you own a diversified portfolio, there are “winners” and “losers” within the stocks you own. When you own these stocks outright, you can sell the “losers” and use the losses to offset capital gains on the sale of your concentrated stock position that has built-in gains. This creates a tax-neutral (i.e. you don’t pay capital gains tax) method to transition your concentrated stock position into a diversified portfolio over time.

351 ETF Conversion

This strategy involves funding a new ETF with existing stock positions. This is meant for individuals who own a portfolio of 10+ individual stocks or ETFs that all have large embedded gains rather than one single stock position that makes up a majority of your investment portfolio. For example, maybe your portfolio is a majority of Mag7 tech stocks that have performed exceptionally well over recent years and these positions have now become a larger portion of your portfolio than what you’re comfortable owning. Rather than sell these positions, take the tax hit, and reinvest the cash into a new diversified ETF, this strategy allows you to fund a new ETF “in-kind” with your existing stock positions. No taxes are due upon funding the ETF and the result is that you own one large cap, diversified ETF (similar to S&P 500) within your investment account.

Exchange Fund

Exchange funds are similar to the strategy outlined above, however, you can “exchange” your single stock position for a piece of a diversified portfolio – without having to sell your stock and pay taxes right away. I’ve outlined a high-level of how this works:

  • You contribute your single stock to the fund.

  • Other investors do the same with their own stocks.

  • The fund pools all these stocks together into a diversified basket.

  • You now own a small share of the basket instead of just your one stock.

These funds also own private real estate (usually 20% of the fund), so it does provide exposure to another asset class as well. Once you exit the fund (often you are required to remain invested for a minimum period of 3-7 years) you now own a diversified mix of stocks that were composed within the fund. It’s important to note this strategy is a tax deferral, not a tax elimination. For anyone interested in learning more about this strategy, you can check out Cache.

Lastly, for individuals with large concentrated stock positions ($5M+), there are a variety of trusts that present attractive tax planning opportunities, such as establishing a Charitable Lead / Remainder Trust or an Intentionally Defective Grantor Trust.

All of these strategies have their own set of pros / cons that are important to evaluate. My intent for this newsletter is to share an educational overview of a few types of vehicles and strategies that may be appropriate for you in the future.

Taxes are an important factor when planning around a concentrated stock position, but they shouldn’t be the only factor. If you’ve had the good fortune of building wealth through the combination of hard work and joining the right company, then my objective is to develop a thoughtful strategy that enables you to continue to grow and sustain wealth and affords you the ability to live a rich life.

As you reflect on how to manage your single stock position, remember this: 

“Concentration creates wealth, Diversification preserves it”.

Year-End Tax Planning

How are we already in October?! The month of September flew by, capped off for me with a trip to Austin to speak at a conference and visit a few clients in real life! Now that we’ve hit October, that means we’re embarking on two things: Fall Review Meetings and my wife, Lainie’s homemade chocolate chip, pumpkin muffins. 

Over the next six weeks, I plan to meet with clients for a financial check-in and to discuss planning opportunities ahead of year-end. For this newsletter, I wanted to share a few topics to have on your radar as well.

First, let’s highlight a few time sensitive deadlines to be aware of before year-end.

  • Flexible Spending Accounts – If you elected to contribute to either a medical or dependent care FSA, make sure to reimburse yourself for these expenses before December 31st. You may be able to carry-forward a small balance to next year, but these plans are often “use it or lose it” on a calendar year basis.

  • Inherited IRAs – If you previously inherited an IRA from someone other than your spouse, you may need to take a required minimum distribution before year-end. The amount & timing of distributions depends on when you inherited the account and if the original owner was actively taking distributions from the account.

  • Annual Exclusion Gifts – For 2025, any individual can give $19,000 to an unlimited number of beneficiaries without any tax implications for either the donor or recipient. This amount is doubled to $38,000 for married couples. While many of you are in the accumulation phase of life, this could be attractive to share with generous family members who desire to either 1) make contributions for your child’s education via a 529 plan or 2) assist with a down-payment. 

    • Note: For anyone with young children, a gift to your kid’s 529 plan in lieu of more toys can make for a great alternative to share with relatives on a holiday wish list. 🙂

One agenda topic for all Fall Review Meetings is year-end tax planning. Tax planning is a core piece of my approach and something that I believe should be a year-round activity. That said, the benefit of focusing on tax planning during a Fall Review Meeting is that your annual income is much more predictable now, which helps me to hone in on what your tax exposure will be for the year and which strategies are most appropriate to pursue to drive down your tax balance. 

When it comes to tax planning, one of my guiding principles is that an effective tax strategy is focused on paying lower taxes over the course of your lifetime. This involves understanding both your current income / tax situation AND thinking about your future income / tax situation.

For example, if you expect to vest a large RSU grant next year upon your company’s IPO, then your taxable income will likely be significantly higher than it is this year. That said, delaying a large charitable donation until next year when you are in a higher tax bracket and will receive a “bigger bang for your buck” by itemizing your deductions could be an optimal decision. Conversely, some of you have taken some time away from work this year and your income is considerably lower than it will be when you’re earning income throughout the full year. In this case, converting funds from a pre-tax retirement account to a Roth IRA while you’re in a low tax bracket can reduce your lifetime tax exposure.

In high income and tax years, deferrals & deductions are your friend. You can defer tax on your income by maximizing pre-tax 401k, Health Savings Accounts, and Flexible Spending Accounts. Additionally, “clumping” multiple years worth of charitable donations into one tax year via a Donor Advised Fund can help increase your itemized deductions & lower your taxable income.

Beyond these foundational principles of tax planning, I also want to share two tax law changes that were passed this summer that are most relevant to a majority of the people I serve.

  1. State & Local Tax (SALT) Threshold Increased – Previously, all tax payers were limited to $10,000 as the deductible portion of their state income and property taxes. As a result, a majority of individuals claimed the Standard Deduction as opposed to itemizing their deductions. With the new tax bill, the threshold for deductible state and local taxes has increased to $40,000. This increase is especially beneficial for individuals with high state income & property taxes. However, there’s a catch… The $40,000 begins to phase out when your household income exceeds $500,000 and is reduced to $10,000 for households who exceed $600,000 of income.

    • Planning Corner: If your expected household income is on the verge of exceeding $600,000, then reducing your adjusted gross income (within reason) will enable you to claim a larger deduction for state & local taxes. A few ways to drive down your AGI include:

      1. Maximizing all pre-tax employer benefits (401k’s, HSAs, & FSAs)

      2. Tax Loss Harvesting within your Individual / Joint Investment Accounts

      3. Shifting investment income producing assets (i.e. dividend stocks, bond ETFs, and real estate holdings) into your retirement accounts

      4. Deferring a year-end bonus to be paid in January

  2. Charitable Donation Floor – Historically, if you itemized your deductions, then any & all charitable donations helped to further reduce your taxable income. Starting in 2026, there will be a new “floor” of 0.5% of your adjusted gross income (AGI) before you receive a tax benefit for your charitable donations. For example, if your AGI is $600,000, then you would need to donate more than $3,000 to charity next year before you receive any tax benefit for these donations. Additionally, the new tax law caps the tax benefit of itemized deductions to 35% for households in the highest tax bracket (37%).

    • Planning Corner: If you expect your income to be at a similar level next year and you desire to donate to charity, then “pre-funding” future year donations in 2025 via a Donor Advised Fund will enable you to receive a larger tax benefit in 2025 vs. waiting until 2026 to make donations. As an added bonus, you can transfer stock / ETFs directly to a Donor Advised Fund and receive a tax deduction for the current value of the investment donated and avoid paying capital gains tax on the sale of shares.

This post isn’t an exhaustive list of tax planning opportunities, but rather it is meant to put a few ideas on your radar that could be beneficial for your situation. If you are thinking about any of these topics and would like to further discuss with me before year-end, send me a message and I’d be happy to connect.

The Calculus of Value – Continued

As I shared in last week’s post, the current stock market valuations, especially tech stocks, are priced at elevated valuations from a historical perspective. Additionally, the economy is weakening by a variety of measures. Inflation is still lingering higher than what the Fed is targeting and many economists fear that the impact of tariffs have yet to be reflected in the data. The U.S. fiscal deficits and national debt show no signs of improvement, and worldwide concern over them seem to be increasing.

Despite all of this, the stock market is notching new all-time highs.

If it feels odd, you’re not alone. It’s time like this that exemplifies why it’s so important to stay invested, even when you feel anxious or have a pessimistic outlook for the future. So much more wealth has been created through time IN the market vs. timING the market.

It’s not all doom & gloom though, there have been multiple positive developments taking place. A new tax bill passed this summer was favorable for corporations and a number of foreign companies have made pledges to invest in the U.S. Additionally, the biggest theme in markets right now is the potential for artificial intelligence to deliver massive productivity gains that will add to companies’ earning power.

That said, we are in the early innings of seeing how this new technology will transform industries and companies can change course on a dime. For example, just weeks after Meta sent out massive offers to recruit top talent for their internal AI division, they decided to do a hiring freeze.

One other interesting statistic to point out is that we haven’t experienced a sustained market downturn for more than nine months since coming out of the financial crisis in 2009. Over the past 16 years, we have experienced a handful of market corrections, as defined by a decline of more than 10% from a previous high. While some of these downturns felt scary in the moment, all of them were relatively short lived and in each of these market corrections, “buying the dip” has been rewarded.

Why is this statistic worth sharing?

The average age across all of my clients is 39, meaning that most of them (myself included), have not experienced a prolonged bear market.

This isn’t my attempt to sound the alarm bells, rather, I believe it’s important to proactively educate you on the range of outcomes that are possible when you bear the risk of investing in the stock market.

In my last post, I shared that investors are currently very optimistic about the future based on stock market valuations. As a stock market investor, you have to be optimistic by nature to hand over your money to someone else in the hope of getting more back later. That said, when investors are collectively in an optimistic mood, they often interpret ambiguous developments positively and overlook negatives. As Morgan Housel eloquently states, “risk is what you don’t see”.

As I previously mentioned, elevated valuations does not mean that a market crash is imminent, however, future returns may be more modest than what we have grown accustomed to over the past 15 years. The S&P 500 has returned nearly 15% on an annualized basis over the past 15 years, and 24% annualized over the past 3 years.

Zooming out, the average S&P 500 annualized return has been closer to 10% dating back to 1928 when the index was created. This data validates that:

  1. We’ve had above-average returns for the past 15 years

  2. Investing in the stock market is one of the most persistent methods to generate long-term wealth

One of the factors that has proven to be correlated with future returns is the starting valuation. The graph below is from J.P. Morgan Asset Management and it plots each month between 1988 through late 2014. Each diamond represents the forward Price / Earnings ratio for the S&P 500 at the time and the annualized returns over the subsequent ten years.

The take-aways from my perspective:

  • There’s a strong relationship between starting valuations and subsequent ten-year returns. Higher starting valuations consistently led to lower returns, and vice versa.

  • Today’s P/E ratio is well into the top decile of observations.

  • In that 27-year period, when people bought the S&P 500 at P/E ratios in line with today’s multiple north of 22, they earned ten-year returns between +2% and -2%.


The good news – while the S&P 500 is a popular proxy for the U.S. stock market, the investment approach that I take is not trying to mimic the S&P 500. Three differences that I’ll highlight are:

  1. Exposure outside of the U.S. stock market – The U.S. stock market is the largest market in the world, so I have the largest allocation to U.S. stocks, however 30% of the portfolio are in companies domiciled outside of the U.S.

2. Less Exposure to the Tech Sector – As I mentioned, the tech sector has had the strongest performance and it also has the highest valuations among all sectors. I intentionally have less exposure to the tech sector within the portfolios that I manage, not because I’m bearish on tech. Rather, it’s because a majority of my clients work in the tech sector and receive equity in tech companies, so they already have a lot of exposure to the tech sector and from a risk perspective, there is correlation between your company & the broader tech sector.

3. More Exposure Outside the Largest Companies – The S&P 500 is composed of the largest 500 U.S. companies. However, there are over 3,000 publicly traded companies in the U.S. stock market. Within the portfolio strategy that I manage, my clients own all the companies within the S&P 500 AND many other smaller companies as well. This additional diversification will help returns if the largest companies are not the “winners” of the next decade.

Personally, I haven’t made any changes to my investment account allocations and I encourage the same for each of you. Beyond the additional diversification that I outlined above, within the financial plan, I’ve already accounted for scenarios where future returns are not as robust as what they have been over recent years.

If you happen to come into a significant amount of cash and investing a lump-sum in the stock market gives you unease, I’ve outlined a few alternative actions to consider that are productive uses for improving your financial situation.

  • Paying Off / Down Debt – Eliminating liabilities increases your net worth and can help increase flexibility with your monthly cash-flow going forward.

  • Exercising Stock Options – For some of you, buying shares in your company at a discounted valuation may be one of the best risk / reward investment opportunities.

  • Home Renovations – When things are going well and you’re in a robust financial situation, this is a good time to pursue discretionary home improvement projects.

  • Shoring Up Your Cash Reserve – A healthy cash reserve doesn’t seem to matter until it’s the only thing that matters. If you don’t already have 3-6 months of expenses built up as a cash reserve, now is the time to replenish your savings.

Building a resilient foundation with your finances is a core part of your overall financial plan. When scary markets come again, it will help you weather the storm.

One theme that persists across all market cycles is that the good times are never as good as they seem, and neither are the bad times as bad as they seem. As a long-term investor, time is on your side and I believe staying invested for decades will continue to bear fruit.

The Calculus of Value

“The Calculus of Value” was the title of a recent podcast episode that I listened to by a reputable investor, Howard Marks. I’ve included a link to the episode for anyone who cares to nerd out on investing.

For the rest of you, I’ll summarize the key takeaways below.

“Value” is a subjective term and can be defined in a variety of ways. For some people, the feeling that they got a good “deal” is the primary factor. For others, the quality of a product or the service they received is of greater importance.

Ultimately, the value equation comes down to – What You Get > What You Paid

One of the main variables that influences our perception of value is our expectations.

An analogy I like to give is going to a restaurant for a steak dinner. You would expect to have a better dining experience at a Michelin star restaurant than you would at the neighborhood Applebees. Your expectations are that the food, service, ambience will all be at a premium at the Michelin star restaurant compared to a national chain. Also, you would expect to pay a higher price for that premium experience. If the dining experience matches what you expected for that price, then everyone’s happy. It feels like you received a good value.

What happens if the steak at the Michelin star restaurant is overcooked? Or if you’re waiting for your meal for over an hour?

Those things may not bother you as much when you’re at Applebees, but it feels like a major letdown when you’re anticipating a premium dining experience.

When there is a misalignment of what you expect to receive and what you actually receive, that’s often when we feel most dissatisfied and that you didn’t receive a good value.

As a result, you are more likely to avoid going back to that restaurant in the future. Maybe you even leave a negative review on Google or Yelp.

The same concept applies to investing.

“Growth” stocks, defined as companies that have a high price relative to the revenues / profits they produce, are the Michelin star restaurant in my above analogy. All is well as long as growth matches investor expectations. BUT… if growth fails to at least match or exceed investor expectations, the stock price suffers.

The darling of the S&P 500 and the most talked about public company has been Nvidia. The stock performance has been remarkable and there is no doubt that Nvidia is an exceptional company.

As the company has developed the reputation as the leader in AI, the only thing more insane than the historical stock performance is investor expectations for the future.

The chart above shows that analysts expect Nvidia to generate $110 billion of quarterly revenue and $55 billion of net profits, by the end of the decade. For context, that is more than double its most recent quarter results.

Could it happen? It’s possible and I wouldn’t bet against it. A lot can happen over the next five years though. With any nascent technology, there are still a lot of questions on how things will play out in the future. Some investors believe a second mover advantage exists in AI.

Flashback to January when news came out that DeepSeek released a new open-source model that was competitive with the models of the U.S. leaders for a fraction of the costs. Nvidia’s stock price declined nearly 20% in a week (other big tech stocks were also hit hard).

Over recent years, big tech has been the profitability golden child of America. The bar has been high for an extended period of time (i.e. high valuations), and the largest tech companies have proven they can meet that high bar. As a result, these companies have added trillions of dollars of market capitalization over recent years as their stock prices have risen at a faster rate than the rest of the companies in the stock market. As their stock prices have compounded at an exceedingly fast pace, so too, have the expectations that these companies will continue their track record of exceeding their growth targets.

The bar is exceedingly high for tech companies (see Nvidia above). S&P 500 tech companies made up about 23% of the total first-quarter index profits, yet their shares accounted for about 33% of the S&P 500’s value at the end of Q2. To close that gap, tech profits would have to grow 40%, or tech stocks would have to drop 29% from their end-of-June levels.

While tech has been the dominant sector over the past decade, the entire S&P 500 index is currently trading at an elevated level. The chart below shows the historical Price / Sales ratio of the S&P 500 going back to 1947. There are a variety of valuation metrics you can evaluate, some are easier to manipulate by accounting practices (Price / Earnings or Price / Book Value), but sales are sales.

The previous all-time high (P/S) ratio was 3.41 at the peak of the internet bubble. Today, we’re currently around 3.38. There is certainly a case to be made that sales are much more robust today than they were in the late 1990s (recurring revenue of software subscriptions was not as popular in the early days of the internet), however, the take-away should be that investor expectations are relatively high based on the price they are currently willing to pay for stocks.

High Prices ≠ Market Crash. The stock market has and can continue to trade at elevated prices for an extended period of time, which is why I believe it’s so important to stay invested and not attempt to time the market. However, it is also important to know where things stand today and to set realistic expectations for the future. I plan to publish Part 2 of this newsletter later this week to share more about expectations for the future.

Whether it’s dinner at a fancy restaurant or your investments, expectations are one of the primary drivers of your perceived value. Just like you’re disappointed when a premium dining experience doesn’t meet your personal expectations, the collective “market” also can be very unforgiving to a company who fails to meet growth expectations. Especially, if a stock is priced for perfection.