The Albatross

Covered calls are in the single-stock management canon, but not because they meaningfully hedge risk.Roy Haya, Partner and Head of Derivative Solutions at Fort Point Capital Partners, tells us covered call writing means income today, truncated upside, and often just a small premium for downside cushion. For some clients covered call writing is simply a disciplined way to exit a stock.We talk about the straddle rules, structuring the call to reach Qualified Covered Call status so straddle loss deferral falls away, and why dividends might lose their preferential tax treatment. We close by considering how all of this applies to bitcoin.

Antti Petajisto and I talk about concentration drag resulting from the many, many, many public companies that go bust, and the tiny slice of the market that vastly outperforms. These two phenomena expand the chasm between a simple equal-weight fund and picking individual stocks, resulting in concentration drag, which Antti measures in his research.

The biggest criticism of Qualified Opportunity Funds is that the tax tail is wagging the dog so hard that investors completely lose sight of investment viability.Nick Rosenthal, co-CEO of Griffin Capital Company, thinks that if investors do due diligence on QOFs as they would without the tax incentives, the program can be an important tool in the single-stock de-risking playbook.

Paul Bouchey is the Editor of the Journal of Wealth Management, Managing Director of Applied Research at Morgan Stanley, and the former Chief Investment Officer at Parametric Portfolio Associates. He tells us how Parametric went from active manager in the 1980s to $600 billion AUM passive powerhouse in the 2000s, about the new interest in taxable investment management driven by long/short strategies, and when long/short may and may not be the best solution.

The Albatross is about navigating concentrated wealth.Markets are at all-time highs, and founders, executives, early employees, and investors have become rich... but highly concentrated. Many are unable or unwilling to diversify. Solutions exist: selling, hedging, tax-loss harvesting, partnerships, charitable strategies, and more.Every week, Brent Sullivan speaks with experts on single-stock concentration, the risks of inaction, and exiting thoughtfully.