Announcing: Tax-aware long/short working group
Also... do people read books anymore?
Two-day taxable wealth conference
Seattle, WA - May 2026
Week of Jan 12, 2026: Sponsor prospectus released
Announcing: Tax-aware long/short working group
A few weeks ago, I posted a tax-aware long/short diligence framework (for subscribers below).
Tax-aware long/short (e.g., 130/30, 250/150) is possibly the most interesting thing happening in taxable wealth at the moment.
It is an active, alpha-seeking strategy that uses leverage and shorting, which can usually be tuned up or down based on each investor's needs and risk tolerance.
But tax-aware long/short strategies can also generate substantial tax benefits.
For anyone just tuning in, here’s a quick summary of tax-aware long/short versus direct indexing.
Liberman, Joseph, Stanley Krasner, Nathan Sosner, and Pedro Freitas. 2023. “Beyond Direct Indexing: Dynamic Direct Long-Short Investing.” https://www.aqr.com/Insights/Research/Journal-Article/Beyond-Direct-Indexing-Dynamic-Direct-Long-Short-Investing.
AQR has shown simulated losses of around $2.5 for every dollar invested in the five years following inception in a 250/150 implementation.
Liberman, Joseph, Stanley Krasner, Nathan Sosner, and Pedro Freitas. 2023. “Beyond Direct Indexing: Dynamic Direct Long-Short Investing.” https://www.aqr.com/Insights/Research/Journal-Article/Beyond-Direct-Indexing-Dynamic-Direct-Long-Short-Investing. NOTE: This chart shows five years versus ten years shown in the previous chart.
After 5 years, a median 26% cumulative net capital losses for direct indexing vs. a median ~250% cumulative net capital losses for 250/150 long/short (read AQR’s paper for the methodology and additional detail).
Tax-aware long/short is not for everyone. Some people like it. Some people really don’t. But it’s undeniably captured most folks’ interest.
Along with the diligence checklist, I also sent up the bat signal (sorry, I’m not a superhero person), saying I’d like to do something more formal to aid diligence and management of tax-aware long/short strategies in a wealth context.
Several advisers and vendors expressed interest, and I’m pleased to say I’m putting together a working group of folks who would like to collaborate.
Generally, this means we’ll put our heads together, establish goals, and produce a resource that all members of the group can leverage.
Topics include vendor diligence, risk management, selecting the right level of leverage, augmenting leverage over time, transfer planning, household wash-sale and constructive-sale management, and dozens of other related topics.
At Basis Northwest, I’ve already carved out a two-hour breakout session focused on tax-aware long/short that attendees can sign up for during registration (which opens in a few weeks, details forthcoming).
I don’t know what the end product should be. While a book (perhaps something like Fabozzi’s The Handbook of Fixed Income Securities or Kochis’ Managing Concentrated Stock Wealth) seems natural, I’m not sure anyone would actually read it.
There’s really no substitute for putting on your reading glasses, sitting at a desk, and studying something, but everyone is busy, so my instinct is that the content needs to be convenient, entertaining, practical, and delivered in various ways: Video, podcast, infographic, surveys, and anecdotes.
If this sounds like a haul… it is. But that’s the point of a working group.
Reply to this message if you’d like to be included in the working group. There are no commitments at this point.
And now the diligence framework…
