Monster Gains? What’s Next
How to lock in a big win by New Year’s Eve
After a big win, my lacrosse coach used to scowl at me and say, “gentlemen, act like you’ve been here before.” Celebrations were tolerated but only briefly. Get some champagne. My last purchase was a Maurice Grumier Blanc de Venteuil retailing for $90 at 44% off to $50 then $50 off with this link. Then five bottles of Masottina Collezione to practice sabrage, my favorite party trick of hacking the cork off with a saber. So celebrate… briefly. Next year begins in a few days then you’re once again just as dumb as the next guy until you prove otherwise.
If your epic win/wins are in a business account, load up on any 2025 expenses that you can book in 2024. I’m opening up to new Special Purpose Research subscribers for a few days so you can squeeze the bill into this calendar year. It cost $5k with the hope and expectation that its return on investment will swamp that cost.
Lock in the win. Protect it. Cautionary tales abound of people who make and lose fortunes through unforced errors. In particular protect your wins from theft, taxes, and yourself.
Prepare for thieves. Anonymity is the best security. Win. Then shut up about it. No new friends. Try to maximize the ratio of wealth to fame. It can be hard, especially if the win required some level of public awareness. Get professional security such as GDBA and a concealed carry license so that you can protect yourself when they’re not with you. Upgrade your home and office reactive lighting and cameras. If you have something valuable, someone will try to take it from you. Don’t let them.
Prepare for taxes. Strategically sell for tax losses. A lot of people have a lot of taxable gains in 2024, so look for bargains that you can buy by year end from tax loss sellers. They appear to be selling aggressively this month. For example, SHF (SHFS) is a tiny cannabis focused fintech company that has lost over 70% of its market value this year. Some of the recent selling could be to generate tax losses. Once that abates, it could pop in the new year. It could be worth anywhere from $0 to $5 but $0 is unusually unlikely because their creditors are aligned related parties with exogenous incentives to keep it as a going concern. It wouldn’t take much for them to restructure their balance sheet and have the stock double or triple in the new year.
Something you can do yourself: max out your tax advantaged accounts from your IRA to 401(k) and 529. Anything short of putting every allowable dollar in each steals from yourself. Eventually harvesting decades of tax advantaged compounding in a 529 will be a fun and easy lark. You can easily qualify as a student — half-time community college status is only 6 hours of classes costing $1k and online options cost far less than that in order to withdraw over $20k of room and board costs.
For protecting larger blocks of capital from taxes, private banks can help structure intentionally defective grantor trusts (IDGT), Opportunity Zone (OZ) investments, and Private placement life insurance (PPLI). Another tax advantaged tool is direct indexing; I like Frec (you can get $250 for funding one here). It is the smartest way to get broad equity market exposure while harvesting tax losses on an ongoing basis.
Prepare yourself and your family. Windfalls can feel like all the money in the world. They aren’t. After taxes and prudent expenses, $1 million isn’t enough to buy a supercar. $10 million isn’t enough for a megayacht. $100 million isn’t enough for a premium jet. $1 billion isn’t enough for a major sports franchise. Elon Musk is worth almost half a trillion dollars yet money is tight relative to the task of colonizing Mars. So everyone has constrained resources even after a windfall.
Wait one full year for any lifestyle change. Get bored by the new money. Get used to it. Make a plan, but don’t act on it yet. Many things will be the same. Any mistaken hope that everything will be different will lead to disappointment and misery. You still have all of the same obligations when it comes to fitness and family. And as for family, share as little detail as possible save one: a zero tolerance policy for bickering over money. Make an estate plan but cap inheritance at $1 for anyone who unsuccessfully contests any of its provisions.
