How This $150B+ Wall Street Strategy Could Lower Your Taxes

Hi, Miriam. Hi, Tellus. So, audience, those of you who know our show know that Miriam recently started covering a new beat, moving from covering the private asset manager world for many years, hundreds of years. It felt like hundreds of years. And has transitioned to covering personal finance, wealth, and kind of focusing on basically what rich people are doing with their money. And not rich people. And not as rich people. OK, OK. But for those of us who aspire to have a lot of money, we kind of want to know what people who do have a lot are doing and thinking about when it comes to their wealth. And one thing that you kept hearing about was something called a hot strategy. Everyone was talking about it. It was being discussed. Water coolers around the tri-state area. And that was talking about tax efficiency, how to offset your gains that are going to be taxed. And you were hearing about something called tax-aware investing and specifically long-short tax-aware investing. Yeah, I'd been hearing about this strategy, tax-aware long-short, from pretty much every wealth advisor I talked to. And I wanted to figure out how big it had gotten and how it worked. And that search led me to Brent Sullivan. He runs Tax Alpha Insider, which is a publication that focuses on tax strategies for people looking to be the most efficient with taxes in their investing. He also manages a number of conferences around this subject. And Brent is usually based in Seattle, but today he joins us in our studio here in New York. Welcome, Brent. It's a pleasure to be here. So, Brent, just for our listeners at home, what is tax-aware investing? What is tax management? Well, I think about tax management in as three different things. The first one is the thing that you invest in. And so that could be stocks, bonds, real estate, et cetera. The second thing is location where you put the thing. It could be in a taxable brokerage account. It could be in a tax advantaged IRA, Roth IRA. It could be in your estate or out of your estate. So that's where you put the thing. And then the third thing is the timing. And the Timing is like if you have a real estate asset and you're depreciating it, or if you have a direct indexing portfolio and you're realizing tax losses and you're deferring taxable gains. All of those things together, again, the investment, the location, and then the timing. That, in my mind, everything you can do around those things is tax management. Location, location, location. Works for investing as well as real estate. I mean, it's federal, state, estate. Those are your location, location, locations. So Brent, so I am – as most people I think are, I'm aware of the idea that tax-aware investing is a smart thing to do. You sell your losers to generate some tax losses and then that offsets potential future capital gains on your winners. But it sounds like what you guys are talking about is something that is a much more souped-up, sophisticated version of that. So why don't you – how did you define for Miriam when she called you what exactly is tax-aware long-short? Am I even saving it right? Yeah. Or you could say long-short tax-aware. You could put that descriptor on either side of the long-short. So what the heck is this thing? What is different about that from the kinds of tax-aware investing that I think most people know about? Well, so tax-aware long-short is really an extension or a combination of two different things. One, it is the direct indexing, individual securities approach to portfolio construction that allows you to sell losers. Again, like you said, tell us bank those losses, store them on the household balance sheet, and then deploy them later against capital gains. So you want to net those two. Now, what's new about tax aware long short is that now we're injecting leverage into the portfolio. Leverage comes in two forms. One, it is the margin that you add. So you borrow and then you invest that margin. And the other form of leverage is short positions. You're borrowing those shares and then selling them. That creates a short position. What that does is increase the surface area of the portfolio. So now instead of just $1 invested, maybe you have $2, maybe you have $5 invested. And what does that do? It gives you more potential upside. If you like what the manager is doing, you can capture pre-tax alpha. But then also as the market is bouncing up and down, positions are dipping below cost basis or the short positions, the cost to cover. And as they're oscillating around, you can harvest those losses. So the way I describe this in the story that I did about the strategy is if you think of like a $10 million portfolio, if you – I'm going to think about that for a second. Dream about it. But the 140-40 leverage strategy would allow you to add $4 million of additional longs. Like you would borrow against your $10 million to add long positions worth $4 million. And then you would also add $4 million of additional short positions. And what the short positions do is they allow you to continuously generate losses. And when you guys say borrow, what are you talking about here? Like it's not just a loan, right? these are securities-based loans. You're using your existing loans to get, I mean, and that's a margin loan essentially, right? Yeah, there's two forms of borrowing. So on the long side, it is a cash loan. So you can think of the margin, just like in a portfolio margin account or a brokerage account, you can think about checking that little box that says, yes, I'm going to borrow cash. You take that cash and you reinvest it. So that is a cash loan margin. And then on the short side, you're borrowing securities this time. So it's two different forms of borrowing, both injected into the same portfolio. Like what Miriam said, now we're talking about much more just exposure. I think about like a fish net. The net is just much larger in the water. You're dragging it behind your boat and you're catching more fish just because the net is bigger now. And those fish are tax losses. And the shorting side of it, tell me if I'm understanding this right, is that you're basically trying to lose money a little bit, right? Like you're trying to short stocks that you are hoping are going to go up in the hopes that you make some losses that you can then use to offset future gains, right? Well, so that's an important thing. So this is an active strategy. We always want to make money on a pre-tax basis. Always. Every single position wants to outperform. The goal is never to lose money on balance. Okay, okay. But we know we're realistic. We understand that this individual portfolio or this individual security-based portfolio is going to oscillate around cost basis and cost to cover. We know it's going to happen. And so can we take advantage of that? For sure. We can get pretty much the same exposure, not identical, pretty much, and harvest those losses at the same time. What does that do? It gives us this like really interesting tax benefit. But again, the whole modus behind this thing is pre-tax alpha. And why has this grown so big? Like what gave rise? Because this sounds complicated and obviously you need to borrow. So somebody needs to lend it to you. So there's a lot of moving pieces here. How has this grown to? It's over $150 billion in AUM now. AUM, that's assets under management. Yes, that's right. Those are big numbers. And that's up from roughly zero five years ago. Wow. OK. So how did we get here? Why has this grown from zero to 150 billion over a pretty short horizon? The thing that's really interesting about it is really that you can really amplify the exposure to a manager if you like them. So if there's a big manager out there and you're just like, wow, they're so good at alpha. I just like love what they do. Alpha meaning excess return above the benchmark. Like you think they're just a good investor. They're going to pick good stocks and beat the market. Yes. Exactly. If you really like them, this gives you a way to really turn up exposure to them. So the first thing is just like, does the alpha make sense? And this gives you leverage. Now, the second thing is that the tax benefits are eye popping. But they are, again, a secondary concern here. But that's, I believe, the second thing that's getting people's attention. So first, that pre-tax alpha and access to cheap leverage. The second thing are those tax benefits. And those tax benefits can be on the order of five to ten times greater than a typical tax loss harvesting long-only portfolio. So five to ten times greater. People's eyes just pop out of their heads. I'm guessing there was somebody pushing this strategy or selling this strategy. Is that part of what has explained the big growth of it? Like have there been some brokers or managers or investment advisors who've really like made a big push to get people into this type of thing? Yeah so this is the long arc that I think goes back decades and decades What the long arc Yeah I want to hear it Okay so if we think about the origins of investment management in the United States we really talking about an active management story We have indices and then you have managers who are trying to outperform those indices And then something happens in the 70s. Jack Bogle comes along, launches the first index fund, and just totally refutes the active ethos. And then what happened, 80s and 90s, is there was like a little bit of a splinter. And the splinter was you had one camp of investment management firms that said, no, no, no, we can still outperform. We're going to do it systematically. And then at the same time, you have the passive ethos really, really trying to wring every single basis point out of the portfolio. And so what they did was introduce something like direct indexing. Direct indexing is a recent term, but at the time we had benchmark replicating portfolios with individual securities. So instead of owning an S&P 500 ETF, you're buying individual securities that will track the S&P 500, for example. Exactly. And this started to become in vogue, I want to say, in the early 90s. Okay. So we've got these two separate streams going at the same time in parallel. We start to get custom indexing. Okay, well, now we can have an active strategy as a benchmark instead of just the S&P 500 or the Dow 30, whatever. So now we're talking about custom strategies. Okay, so passive is evolving back into active. At the same time, we've got the systematic investors who are saying, hey, we can do that too. We can do tax loss harvesting. This is a tax overlay on an active strategy. Fine. We've been doing these active strategies all along. Decades. Maybe for institutions that didn't have to pay taxes. So now we can start to do them for taxable investors. Exactly. Exactly. So that's a migration. Again, that's an important point was this migration of sort of institutional minded investment managers. And now they're starting to deliver private wealth products. That is not easy. Right. Because remember, pension funds don't have to pay taxes. Endowments are not taxed. You know, the people who are taxed are you and me. Exactly. And also just like what it takes to support a private wealth distribution is just an enormous effort. So the passive folks have been doing that for a long time. They had that groundwork already laid. The active folks are arriving to this and saying, oh, we can put a tax overlay and we can move into private wealth. This is interesting. So then now what we're seeing is a further, like almost a combination of these two ideas. We're saying, oh, if you're an active manager and you can already do tax loss harvesting, we're going to give you access to our best strategies. And the way that we manifest our best strategies is with longs and shorts. And now we can do it in a tax efficient way. That's where we've arrived. But against this, we also have the backdrop of a bull market that just goes on and on. Ever since the financial crisis, effectively, we've been in a bull market and stocks are going up, which means that the people who had been in these direct indexing strategies may no longer be able to generate a lot of losses. And so that's another thing that I looked at in the story that I wrote is these portfolios have become ossified, which is a term that the industry likes to use, which means you're still tracking the index, but it's really hard to generate enough losses to offset your capital gains in these direct indexing strategies. So if you're somebody who still wants to do that, you kind of have to look elsewhere. That is the massive tailwind that propels this whole thing. It's really just capitalism. Stocks keep going up. That means that portfolios are well beyond cost basis. Again, that's the price paid to acquire the positions. What that means is that every time somebody rebalances for routine risk management, maybe they have lifestyle expenses, they're selling securities. Every single time that they do that, they're incurring capital gains. And so is there a way to defer that capital gains bill? And there is using tax loss harvesting. And that's a simple strategy. We're just trying to net losses and gains. And what that does is not eliminate the tax bill. It just pushes it into the future. And as you push it into the future, you can think about it as like a free loan from the government. And it grows faster than the time value of money. It grows at the portfolio value. So that's oftentimes highly valuable. All right. We're going to take a quick break. When we come back, let's talk about just exactly what we're talking, how much more you can gain by doing this. I think people will be interested. And then also a little bit more about how all this stuff works. All right. When we come back, more with Brent Sullivan of the Tax Alpha Insider. all right welcome back so i wanted to ask more about the borrowing side of this so so the the souped up version of tax lost harvesting that people are doing here that has grown to as mariam said 150 billion dollar well she got your number so yeah it's more than that more than 150 billion of money. So real big money here. I assume that requires a lot of borrowing. And so somebody's doing a lot of lending. Who's doing this lending? Where are people getting the cash that they're borrowing against their portfolios to do this? So this is really an institutional lending example. And so the way that it works is you have prime brokers. Prime brokers generally only serve hedge funds and things like that, large family offices. So now we're talking about a private wealth thing. This is totally different. It requires a different solution. So we're talking about Fidelity and Schwab and the prime services that they have inside of their custodian broker overall platforms. So that's really who's lending. And again, it's in two forms. It's margin, that's cash, and then it's securities, which means that they have to go source those securities. So two forms of lending. So this, I mean, this, this sounds, you know, I know that a margin loan isn't, isn't super cheap. You know, people compete, so the rates are fairly low, but it's not, super cheap. What are the economics of this? Yeah. So, I mean, it's really interesting if you, like, if you're encountering the strategy for the first time and you're just like, wow, I mean, like margin rates, if I just look at a retail brokerage account, 6%, 7%, 8%, how could this strategy make sense? How does that even work? So the important thing to know here is that when you borrow on margin, you do in fact pay that large rate. But on the short side, what happens is you borrow shares, you sell those shares, those shares generate proceeds. Those proceeds go into a quarantined account. That account collects interest. And then the broker rebates a lot of that interest to you. So now what you have is a difference between the full margin rate and the short rebate. And oftentimes that spread is quite small. And, you know, I've seen 50, 60, 70 basis points through the middle. And again, that's only applied to the leverage portion of the portfolio. So on balance, it's not quite as costly. Oh, it's far less than people think if they're just thinking about margin. And I'll say this, like everybody, you know, very sophisticated investors who are encountering Longshore for the first time are, you know, their eyes pop out of their head when they realize how inexpensive it is to finance the strategy. Well, and one thing I was getting at a little bit with this is, you know, I've written about many people have noticed that margin borrowing in the United States is kind of at a record level, right? It's around $1.4 trillion in the most recent numbers collected by FINRA. And, you know, as we've talked a lot about on this show, you know, there's a lot of financing activity happening in our economy. Like banks are doing tons of things through their prime brokerage businesses and trading desks. Is this kind of one of the drivers of that? Like, is that where all of this, like, borrowing and lending is going, is into these strategies? Yeah, the short answer is I think that it's a driver. It's a contributor for sure. And the reason is so that $150 billion that we keep on mentioning is that's net assets. So that actually doesn't capture the total margin that's extended. So the net assets, I mean, that's a dollar contributed. And then the investment manager is going to take that dollar and then they're going to lever it up again with margin. and short positions. Now, the dollar is all that we see now. A year from now, we'll have way more visibility. Important regulatory change at FINRA. We'll be able to trace how or where the shorts are actually allocated, things like that. We'll have way more visibility in a year. Now, is this the kind of leverage that either as a borrower you need to be worried about or systemically that we need to be worried about? Because you mentioned, you know, you borrow, for example, on the security side, you borrow the security, but you put it right, you sell it, you put the money in an account. Maybe these things are just sort of offsetting and it's not the kind of borrowing where I'm going to borrow and then maybe make money or not. Is it just sort of kind of all paired up in a way that as an investor and then as a financial system, we don't need to be that worried about the risk? I think there's a little bit of risk, but in general, the long and short extensions, again, that's the margin and the short positions, they're designed mostly to be market neutral. But I have to caveat this is really an alpha strategy So the longs and the shorts are meant to be practically market neutral but there is a relative value play there and it is a source of alpha And so what they trying to do is create all that unique return but do so without introducing additional market exposure So most of these strategies are beta one. They tend to track an index. What do you mean by beta one? Beta one. So I'm talking about just plain vanilla index exposure. If somebody chooses, let's say Russell 2000 as the underlying benchmark for these strategies, then typically that would be beta in this specific case. But the strategies typically stay around beta one. So you're introducing margin and shorts, but the market exposure is designed to be about the same. But again, those longs and shorts are meant to produce alpha. So you're still mostly a pet, like you could still say with a straight face, I'm a passive investor. No way. No way. Not a chance. Not a chance. AQR, which is the biggest provider of this, would definitely not call itself a passer investor. Okay, okay. No, not a chance. Yeah, not a chance. You know, I mean, like the first gate in this decision is really the pre-tax alpha. So the alpha has to make sense before this strategy makes sense. And then you get these juicy tax benefits as a fringe benefit. And the reason that the alpha is so necessary is because the strategies are expensive. Let's talk about how much it costs. Like, what are the fees to an investor to do this strategy? Yeah. So, I mean, if we talk about the management fees, you know, on the low end, oh boy, 25 basis points and the high end 100 basis points. That's just management fee and it scales with the leverage that I've seen out there. So that's a management fee on assets invested in the strategy. Exactly. That's a dollar contributed. Those are the management fees charged on just the dollar. But we talked about financing costs earlier and financing costs, again, is margin minus the short rebate. So if we talk about maybe 100 basis points there as really a rule of thumb, that's just the financing costs now. Additional costs, since these portfolios are trading so aggressively, again, they're trying to capture that pre-tax alpha, a relative value play between the longs and the shorts. They're trying to capture all that. They're going to trade a lot. Portfolio turnover might be 500%, 600%, 700%. Now, that's crazy by index fund standards, where turnover might be 10%. And so people forget this. they say, oh, Robinhood has got no transaction costs, all this stuff. You do pay. You pay in a different way. It's a much more silent way. You pay in terms of bid outspread. So given these high prices, I think I want to get at something that's become kind of a big debate in this corner of the market, which is, are these strategies worth it? Because the more I've covered the wealth management industry, the more I realize it's a very slow growth industry. There's not a lot of organic growth. Of course, the market is lifting assets under management. You get growth from that. But new money isn't generally flowing in. So advisors are always finding ways to compete with each other. Like, what is the new shiny object that I that I can offer to my clients to attract more people to me? And so I think these strategies offer two things. They offer a new shiny object, something that you can, like, lure your client in by saying, look at look at what I can offer you here. Look at how special this thing is. But then they also offer really sticky AUM because once you invest in this thing, you can't really get out of it without paying all those deferred taxes that you've held off for later, right? That's true. But I mean, I'll say that that's the same with almost any investment product. I mean, if it is appreciating, terrific. Hooray, we achieved the first goal. The second goal is, yeah, if you want to rebalance, then it's going to be difficult to get out. But tax or long short is a flexible strategy. You can move the leverage up and down per your risk tolerance, per your preference for the manager themselves. If you need more leverage, if you need less leverage, those things are all dialable over time. And as long as you have a really long-term focus, it can be very accretive. All right. So brass tacks, though, what can one expect to get out of their portfolio from the tax efficiency side of it, right? So you could, you know, you're saying, oh, alpha is an important thing. Okay, why not just get the alpha? How much are you getting net of what you're paying for all these services to get this tax efficiency? What kind of return bump would you expect over time? So Miriam, you asked about cost and like, is it worth it? Is there enough alpha out there to offset the entire stack of costs I just outlined? And the costs again are management fees, they are portfolio transactions, and they are financing. Add all those things together, Are managers able to deliver enough alpha to compensate for all those costs? This is where we have to go back to the long arc. And the long arc says, again, there's these managers from the 80s and 90s and 2000s that have developed systematic strategies. And they have long track records of outperforming. And people don't believe this. They say, oh, you know, like active managers are going to underperform. You give them enough time and they are just going to drown in their own fees. There's no way that they're going to be able to outperform. When we look at a trillion dollar manager like Dimensional does not have long short strategies, but just as a case study, there is there is proof there is history of outperformance over time. What does that mean? Well, if we can deploy those same strategies with long short, does it make sense? Is there intuition behind the alpha being able to compensate for the costs? The short answer is, yeah, I think there is. So you've also said that these strategies aren't right for everyone. So I want to get into that because, you know, from what we've been talking about now, it just seems like, oh, why wouldn't everyone be doing this? But what would you say is kind of the rationale for doing it versus not doing it? I mean, the first thing is, like, do you have conviction in the manager? I have to keep coming back to that. It's an active strategy. You have to have conviction in the manager. If you have no conviction in the manager, you have no business in the strategy. So that's the first thing is the alpha model. Do you believe in what the AQRs quantinos? Do you believe what they're doing? If you do, then the second thing is like, well, do you have losses that you need or do you have gains that you need a lot of losses to offset? And like that pairing there between pre-tax alpha and post-tax alpha is the suitability sleeve, at least in my mind. Where I see things getting a little sticky is when this strategy gets deployed in lower and lower marginal brackets. So if folks have lower net worth, they really don't have gains that they need offsetting, then does the strategy really make sense for them? So they're going to incur costs or at least risk. The portfolios are volatile because of the leverage. Are they going to deal with all of that? And does it make sense for them if they don't have an urgent need for outperformance and the risk that it comes with and any kind of gains they need offsetting? That suitability lever is where I look at it. What kind of level of wealth would you recommend someone be at to pursue a tax-aware long-short strategy where you're doing all this borrowing and using a quantitative alpha strategy to get there? Yeah. I mean, I don't think about level of wealth. I actually think about marginal tax bracket, like where are they going to have the biggest impact? And that's usually strategies or it's usually folks with the highest taxable brackets. And so we're talking about actually income now, not levels of wealth. Nobody pays the highest rate. That's a, you know, It's an infinite finance committee finding, but nobody pays the highest rate. But it's generally because they're thoughtfully managing around it. So even if you have somebody who's making a million dollars a year, oftentimes they're figuring out ways to thoughtfully manage that liability. But it's more about – what's interesting about what you're saying is that it's more about your income level than it is about your wealth level. The wealth level definitely matters. We suddenly have a lot of folks who are making $200,000 a year who have $30 million in... And $200,000 is not the top tax bracket. No, not even close. Not even close for married, filing jointly. We're talking about much more than that. But suddenly we have this weird paradigm where we have people making engineer salaries and mechanical engineer salaries, $200,000 a year. And then also they've got this $30 million or $50 million stock position. This is actually a real thing. This is happening quite regularly now. And so is the strategy appropriate for them? That's where we have to deviate from the marginal rates. And now we're talking about alpha and tax management. Because they have this concentrated position that they need to sell down over time. Yeah. All those poor folks who worked at SpaceX who now have all of their wealth tied up. They're all looking at tax loss harvesting strategies, right, Brent? You probably talk to these people all the time. Yes, it's been coming up a lot lately. Yeah, I'm actually surprised by the number of engineers who've reached out to me, Folks who normally do not care about tax management and are very eager to exit even considering tax management are suddenly very curious about it. How do I model this? How do I get access to it? Is this the right strategy What am I gonna be paying Is the alpha there All those questions are coming up I also wanted to point out this reader that emailed me after my story came out Like there is some degree of like misunderstanding about how the strategies work because this reader was saying that he had you know concentrated positions in NVIDIA and Apple So on paper, he was the perfect candidate to do this strategy. and he got into one of the strategies and he was actually able to sell down those positions, offset his capital gains, which was a win. But then he looked at his statements and saw this volatile movement that you described and he was like, oh crap, I got to get out of this. And then he sold and then he had to pay taxes. So that's not really an ideal outcome, right? Yeah, I mean, this is a hand-wavy analogy, but if you buy an index fund and you're just like, oh, look, the market is off 15%. I got to get out of this index fund. And it's like, no, I mean, you hold on to the index fund, you let the market ride, you understand that volatility is essentially how you get paid. But the volatility is greater because of the leverage. Substantially greater. Yeah, substantially greater. And so I always say, you know, if you can rip Van Winkle your way through this strategy, then I think you're in a much better place. So you mean like go to sleep, wake up and be like, oh, look, I have pre-tax alpha. Yeah, because that pre-tax alpha could take a long time to manifest. That is really what the managers behind the scenes who have been working on these alpha strategies for decades and decades, that's what they would tell you. There's going to be periods of underperformance. There's going to be periods of volatility. Volatility is great for tax loss harvesting. We're going to take a quick break, and when we come back, we'll have more on tax-aware investing with Brent Sullivan. Welcome back. So for those of us who are compelled by the basic premise here, but hearing you talk about stomach-churning volatility and just the complexity of these things and really knowing that you, oh, I need to sell some stuff in the future. But if you just want to do some more good housekeeping around your regular sort of taxable investments. What are the kinds of tax loss harvesting or tax aware strategies that you think make sense for most people? I mean, the simple stuff is make sure that you put the right assets in the right accounts. So I'm talking about bonds, which are producing income. It's super tax inefficient. It's taxed at your highest rate. Put those in tax advantaged accounts to the extent it makes sense. And then hyper growth in equity. You know, think about is a Roth the place for something like that. These are just like little maneuvers that are, I don't think controversial at all. They're essentially buy and hold strategies, but just thoughtfully placed. Those are simple things. So before you start experimenting with, you know, complicated, long, short strategies, just like you're saying, like, do a little bit of cleanup and make sure that you've got the right assets in the right place. Well, I wanted to add a very important piece of context, which is in order to do these long, short strategies, you need to have a wealth advisor. So I know many of our listeners are self-directed investors. This is not the strategy for you because you can't, you really can't do it without an advisor. And I know some people might say, why not? But Brent, you probably have a view on this. Why do you need an advisor? Yeah. Well, I've got two things. There are some direct to consumer solutions. They're worth really scrutinizing. I think they're worth a close look. You just realize that the entire suitability question and how much leverage you're going to deploy, you know, which benchmark, you know, all of the volatility involved in these strategies, you are responsible for all of that. The entire suitability question falls on the individual. If you're doing these self-directed versions. Exactly. Now, an advisor has an important role in this ecosystem, which is they can help manage the volatility, at least the emotional volatility. People don't like when I say that because they think I'm condescending to them, like, oh, individuals can't handle it. They need an advisor to pat them on the back, make sure they're going to survive through all this volatility. But the truth of the matter is an advisor can provide that role. Another thing they do is provide access, and the access is really important. The asset management industry, the AQRs, the Quantinos, they want to support investors, but they do so through wealth managers. Wealth managers are responsible for all the blocking and tackling. They handle the individual gnarly questions that households ask. They manage cash flows. They manage redemptions. They manage planning. They manage emotions. There's a symbiotic relationship between the asset management industry, the folks who actually do the trades, the folks who manage the strategies, the big brains behind the scenes who are actual experts at these strategies, and the wealth management industry, which is really like the retail, brokerage, kind of like personal interfacing layer. All these things work well together. I'm not saying that that's the only way to access these strategies, but I'm saying that it's a thoughtful way to do it. Before we wrap up, I just want to kind of come back to the central question here, which is, all right, we all know that one thing that investors can do is become more active, right? You can try and pick stocks to beat the market, right? That's one way to sort of juice your investment returns. You can also work a lot harder on your tax avoidance strategies. What is ultimately the better bang for your buck? Like how, how, how worth it is it to really become somebody who's, you know, just as passionate about tax awareness as they are about kind of stock picking? how do you balance those things ultimately? Okay, so the joke that I have with a bunch of friends is that like, you know, the ultimate investment strategy is like starting a business or getting promoted at work. Like that is like the actual thing that you should be plowing all of your time into. Just go ahead and make more money. Make more money. Make more money. Wealth is correlated, surprisingly, with income. So yes, if you can generate like income, yes, do that. Like that is the main thing. I would call all of these, like all this tax stuff, pre-tax alpha, market choices, benchmark selection, individual stock selection. I would call all of that like almost gravy on the overall income that you're able to create. Now, that changes after decades and decades and decades. But in general, if you can make more money, do that. You can't go wrong following that advice. But I do think that, you know, this is a podcast for investors and all of us are investors. We're thinking about investing. I think that people should really be thinking more about taxes. The smartest people who I talk to, including Brent, are all thinking a lot about taxes. And that's because, you know, investment performance is something that we all, you know, strive for. Investment outperformance is something that we all strive for. But it's really hard to get, right? It's not something that's within our control all the time. If we all knew how to pick the best stocks, we would be doing that and we would be making a lot of money. If we all knew how to pick the best asset managers, we would be doing that. But it's hard to pick the best asset managers. It's hard to pick the best stocks. It's actually a lot more controllable to control for your tax situation. And that's, I think, like the big takeaway from all of this. If you can decide I'm going to put my bonds into a non-taxable account so that whenever I earn dividends on those, I'm not paying income taxes. That's like a pretty simple thing that works every time. Well, and Brent, what is the most popular topic that you write about? Like what, what is the, what is the type of thing that you get the most clicks and engagement on in your, in your media business? Like what, what do people care about when they think about, you know, tax, tax aware strategies? I mean, if we're, yeah, if we're trying to dial in like the investment paradigm, I always think that if you can put a tax lens on the entire household, that in general you're better off. And just like what Miriam was saying, everything in tax management is more or less mechanical. Since it's mechanical, it is probably one of the easiest ways to improve after-tax wealth. Brent, this has been a fascinating conversation. Thanks so much for joining us. Yeah, the pleasure's mine. And that's everything you need to know to take on your week. This show is produced by Alexis Moore and Michael LaValle. Michael LaValle is our sound designer. He also wrote our theme music. Aisha Al-Muslim is our development producer. And Chris Zinsley is our deputy editor. For even more, head to WSJ.com. I'm Talis Demos. And I'm Miriam Gottfried. Until next time. And you also host conferences on this topic. And I saw that you might be doing one in New York, which I'm excited about. I hope I can come if you do. Yeah. I mean, yes. You guys will be first in line. As soon as the check clears, you can be there.