The Wisdom Wall

“I'll see someone with their very first liquidity, the very, very first liquidity, they take it and instead of doing something a little bit safe in case there's a rainy day, they turn around and they go put it in a bunch of like very early stage startups. Often referred to by their friends, right? And you just sort of…”

“where I find that people have difficulty is you hire attorneys, right, and they're going to tell you everything about, or CPAs, about these trusts, but they're not going to have the knowledge To compare that and contrast that to an investment strategy that generates loss. The real challenge I think for people is how do…”

“wealth managers, asset managers, It's very self-serving for them to say, hey, you should liquidate everything because, um, obviously they can't, they're not going to charge you fees on your, your, your concentrate position. It's your stock. You brought it to the table, but they will charge you fees if they build you a…”

“History has shown that hanging onto your stock Generally speaking, not always. There are counter examples, of course, to everything. Uh, generally, you know, that stock that got you to the liquidity point will probably continue to do pretty well.”

“But I'd say the vast majority of people should keep it for a while, uh, at least as long as they're engaged in the company, right?”

“So you see things L one, L two, you even see L three nested structures each time you're further and further away from the stock. And so there's more and more risks that you don't get, You know, what you thought you would, right? Because who's to say that the original person that started the very first, um, company…”

“If it's for a very young person, it's okay to have 80, 9000% alternatives, because they don't need the cash immediately. So let the stuff grow, you know, at the highest risk possible.”

“You just have to look at the underlying pieces and understand them, except that there's the additional complexity. How did they get this thing? Is it through an SPV? Is it through an L two SPV? What did they pay for that? How much of the sort of return is going to be Taken away along the way from the carries and the…”

“If structured properly, you can offset Almost all the income from the property. And then because of something called a step up in basis, a death, uh, when you sell that asset after you pass away, you don't owe tax on that either. So you, along the way, all the income you get from the asset doesn't pay tax because you…”

“most of these firms, the independent firms have spun out of banks and the banks themselves, uh, don't train people to be professional investors, right? These people are trained to be service providers. They're trained to be responsive. They're trained to be helpful, but the actual investment acumen when you're at a…”

“if you're trying to build a multi-asset class portfolio, global multi-asset class portfolio, you're going to hire a bunch of these sort of professional investors I mentioned. I don't know, you need five, six, seven of them, different asset classes. You've got, you know, you've got fixed income, obviously, stocks, which…”

“A lot of, again, firms will present you alternatives. They'll say you can do this, or you could do that. You tell me what you want. And they're doing this for various reasons. One, they may not actually have a strong opinion. Two, uh, it's liability. If I tell you do this and you do it, and then you're not happy, well,…”

“So you can create several trusts. Each of those trusts gets the now fifteen million dollar exemption before it was 10. So you can, you can do that. Married couples now can get both.”

“If you don't have those basic things thought out, trying to structure the trust itself is not the difficult bit. It's, it's these things you define inside a very difficult bit.”

“whenever you're doing a private investment, the contract, uh, you know, you're, you're sort of excluded from the regulatory oversight by saying that it's a special contract only for qualified people that don't, that meet certain income thresholds. So those, those contracts are custom. There's no, it might strike you as…”

“some evergreen structures have what's called this sort of semi-liquid character, so that every quarter, the company that's running this structure will say, hey, if five percent of the total investors redeem, we'll meet that, but if it's more than that, we won't. And often, even the five percent is subject to our…”

“in London though, uh, when they sort of got rid of the expat sort of benefits and a hundred percent of your wealth could come under the 40% inheritance tax they have in the UK, that caused the problem because the entire balance sheet of someone's life or worth would be affected. Whereas when you're taxing individual…”

“the, the, the flat fee arrangement You know, means that people do not invest in building out these alternative teams. It's a lot of work, it's a lot of effort, and it's a lot of expense. And if you make the same 40, 50, 60 bips doing that, or just buying stocks and bonds, you're going to buy stocks and bonds, right?”

“their pensions, endowments, foundations, sovereign wealth funds, all these people don't pay tax. So they are not at all focused on the taxable element. And if you're an individual, uh, you're paying, especially in this state, uh, you're paying 50 plus percent tax. So the easiest alpha to use a, you know, investment…”

“The, the principle of the family is signing up really to be a manager of an asset management company. That's really what they're, they're signing up for. I don't think many of them actually realize that's what they're signing up for, and I don't think they want to do that, right? So they don't want to manage me Uh, you…”

“Part of their strategy should be to diversify, but part of it should be to hold on to that stock long term and think about how to maybe even monetize the volatility. So we've, we've built some options programs and things like that for people here to monetize. These stocks are volatile by nature. And so you can monetize…”

“once you've picked the person, The odds of them moving again are extremely low, right? And so that's where the, all the competition happens.”

“the way to use a loss is inside a fund vehicle that generates its own gains that can be offset by its own losses. Then you don't have to worry about extracting the losses and putting them on your personal balance sheet and not being a user.”

“They said, we don't, uh, hire people for lack of flaws. We hire people for their, their sort of their skills.”

“If there's like a slowdown in the economy and less excitement About these companies, that's when they're going to be maybe more forced to IPO because the private capital then won't be available.”

“I think of private investing, there's like this two by two matrix, which is like, it's access and it's diligence.”

“So there's kind of three elements To preparing yourself for a liquidity event, right? Structuring your trust and estate, thinking about how to sort of make key investments that help offset taxes to some degree, and then donating into a donor advice fund or some other charity. Those three are kind of the nexus of how to…”

“the beauty of the donor advised fund is that you can sort of detach your decision when to give with your decision of when to sort of tax optimize, right? So you can donate things into a DAF and immediately get a tax benefit, but if you're young and still working, people aren't necessarily ready to dedicate their lives…”

“Leaving your house here, your main house and moving to Texas or Florida for, for a year or two with the intent of coming back, it doesn't qualify. If you do come back after a couple of years, the tax authorities here will say, look, you never sold your house. You never had the intent of leaving the state. So you owe us…”