296: Understanding Leverage, Short Selling, and Active Trading in Tax-Aware Long-Short Strategies (Part 2 of 2)

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296: Understanding Leverage, Short Selling, and Active Trading in Tax-Aware Long-Short Strategies (Part 2 of 2)

5d ago 23:05

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In our last episode, Hilary pulled back the curtain on tools many investors are taught to fear—like leverage, short selling, and active trading—and how, when used wisely, they can produce tax alpha: higher net returns that come from smart tax planning, not investment performance alone.

If you left part one wondering, “Doesn’t this mean lots of trading and market timing? And hasn’t Hilary always said market timing underperforms index funds?”—this episode is for you.

Because while active trading does often deserve its bad reputation, the “active” in tax-aware long-short is different; it isn’t about chasing headlines, jumping in and out of the market, or guessing what comes next.

It’s a systematic, rules-based process designed to create a small excess return and generate consistent tax benefits—without changing your long-term investment plan.

In this episode, Hilary explains what “active” really means in this context, breaks down how the tax-aware long-short strategy works from the ground up, and shows why, in many cases, it’s the single most powerful tool inside Ultra Tax Efficient Wealth Management℠.

Because for many high-net-worth investors, taxes are your largest lifetime expense. And while taxes are inevitable, here’s what’s not: letting them control your life, your choices, or your financial future.
Here’s what you’ll learn in this week’s episode of Love, your Money:

02:45 Active trading to chase market returns versus its use as a disciplined, rules-based system to harvest tax losses and preserve your core investment plan
05:36 The three building blocks of the tax-aware long-short strategy: the core portfolio, the long overlay, and the short overlay
08:05 The due diligence we went through to vet AQR Capital Management, the custodians, and Flex SMA’s track record before making it available to suitable investors
10:52 The real impact of tax efficiency on your life, and financial scenarios or events that make someone a suitable investor for this approach
13:23 The services we offer within our Ultra Tax Efficient Wealth ManagementSM suite–designed to proactively work to keep your wealth strong, flexible, and protected from unnecessary tax erosion
15:59 The importance of acting now to preserve optionality, protect your wealth, and prevent unnecessary erosion of your financial freedom–and how to get in touch if you want to find out whether UTEWMSM and the tax-aware long-short strategy is right for you

Show Notes
To get access to the full show notes, including all the resources mentioned, visit: https://hendershottwealth.com/podcast/tax-aware-long-short-strategies-part-2
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Hendershott Wealth Management, LLC and Love, your Money do not make specific investment recommendations on Love, your Money or in any public media. Any specific mentions of funds or investments are strictly for illustrative purposes only and should not be taken as investment advice or acted upon by individual investors. The opinions expressed in this episode are those of Hilary Hendershott, CFP®, MBA.

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