The Spiral Starecase
- Joe Cardello
- Jun 3
- 10 min read
May 28, 2025
Do what you are supposed to do; there is no need to worry about anything else.
“I love you more today than yesterday, but not as much as tomorrow.”
- Pat Upton, Spiral Starecase
The song: More Today Than Yesterday was released in 1969. It was perhaps made more famous by Sony and Cher, but Pat Upton deserves his due.
That song popped into my head during my meditation this morning. I never know why certain thoughts come into my head; especially something seemingly as silly as this (watch the video link on YouTube at the end of the piece if you want to have a laugh (especially the outfits).
What I do know is that sitting in quiet contemplation often crystallizes all the moments, memories, interactions, pain, joy, and thoughts that are swirling around in my head and body. This crystallization can often tell me clearly what I am supposed to do.
On a professional level, many macro hedge fund portfolio managers will understand what I'm talking about. Sometimes days and weeks can go by where we feel lost, and clueless about what the next trade or theme will be that will lead us to make money. It can feel demoralizing, thinking we are wasting our time, and then seemingly in an instant we know exactly what we are supposed to do. Instinctively we know the course of action we need to take, and it seems so simple and easy to make a profit. All the work and research, and discussions with market participants leads to somewhere, and it illuminates in an instant.
Faith is required to realize that sometimes not knowing where you’re headed is alright; it will all work out in the end if we are open minded, if we trust our process, and do what we are supposed to do.
This entire piece flowed out after a morning meditation; I recited it into a document in a few minutes. But the work that went into it was months and probably years in the making.
So, what am I supposed to do?
My whole life can be boiled down to simply answering that one question. I'm supposed to improve the lives of others. In whatever way I can both small and large. I am here to use whatever gifts I’ve been given to bring more happiness and ease the burdens of those I love and even those I do not. This can provide more peace. I know this because it’s taken me a long time of trial and error, mistakes, thought, contemplation, and life lessons to figure it out. This way of attaining peace is true for us all, whether we want to acknowledge it or not.
So, what was important about that song popping into my head? I suppose it suggests the way to serve others. To effectively lead my team at August Wealth, I must serve them well. For the team to effectively serve you and your family well, we could do worse than following the lyrics to this song.
Serve you better today than yesterday, but even better tomorrow.
We don't have all the answers, but we will always look for simple and efficient solutions that we believe are in line with what you're trying to achieve.
If you have insights or solutions into how we can provide better services or believe there are tools we're not utilizing, your input is valuable to us. We'll thoroughly explore your suggestions to see if they offer a good solution.
Meat or Fish?
We know we don't have all the answers, but we are open-minded and willing and able to provide a bespoke solution that works in your best interest. One of our wisest and largest clients often compares the August Wealth team to the larger brand name private banks in the wealth advisory business and to other family offices. He says those firms give me meat when I want fish. That business model works well for them, but it doesn't serve the best interest of the family. With August wealth, if I want fish, you deliver me fish. Thank you, S.R.
We live in a time where the technological solutions available are greater than they have ever been, and they continually improve at an increasing rate. There are generally less staff, money, and resources required. For effective solutions: listening, understanding, solving, and creating are important.
Having an organization with knowledge, experience and a willingness to provide a high level of care coupled with a lack of bureaucratic constraints allows us to utilize new tools to find creative solutions for the families we serve. New tools are developed daily both externally and internally which assist us in new ways to create solutions more efficiently and quickly.
K.I.S.S.
One of my old bosses was fond of this acronym: Keep It Simple Stupid. It was advice he gave to himself because he knows it works, and he also knows people tend to overcomplicate solutions to problems.
I fortunately learned from him and other luminaries earlier in my career that approached financial market solutions in a similar way. I think much of it has rubbed off on me, and hopefully you recognize it in our investment approach and in my previous writing.
I know where I have an edge, and I know some of what is knowable. But, more importantly, I acknowledge what I do not know. Many amateurs, professionals, and ordinary people cannot embrace uncertainty and accept that life is often in chaos and ever changing. The status quo only looks stable, but under the surface the tectonic plates are always shifting. I spend energy on what is within our control; I do not spend energy on attempting to control or predict the unknowable.
The first half of 2025:
Half the year is almost completed, and it’s been a wild ride. Trump has purposefully injected uncertainty into domestic and global systems, and this has created substantial volatility. We may blame 100% of it on Trump, but it may be that Trump is just reflecting that the status quo is unsustainable. I won’t argue his methods, but I must figure out how best to navigate them.
This year has required an enormous amount of focus and attention. Trying to distill fact and substance from anger, upset, and storytelling takes a good deal of energy. But opportunity exists in chaos and change, and I want to find those opportunities that could help increase wealth potential. The market keeps score, and I love the intellectual puzzle.
Pointing out what may have helped us this year:
Staying away from private equity and hedge funds and other illiquid investments. I’ve mentioned many times that the advertised returns are not that attractive when factoring in the illiquidity risk (inability to change your mind), leverage, and fees on many funds. This allowed us to reduce risk at the start of the year and take advantage of volatility as the year progressed. K.I.S.S.
Sticking with our process of:
Diversification
Purchasing companies at reasonable prices for their cash flow and growth.
Utilizing short-term price movements and emotion as an opportunity for investment entry and exit.
Tax harvesting losses while maintaining overall portfolio investment strategy.
Being open-minded and flexible as new information arises.
Having faith in the rule of law, particularly the U.S. Constitution, what it stands for, and the ability and desire of U.S. Citizens to fight for it. The opportunities for investment growth in countries with legal systems that protect the rights of novel ideas and universal truths. Where no one person is more important than the system.
Some of our clients asked the perfectly legitimate question to us: “How will you navigate this new and uncertain world?” Although it might not be what they wanted to hear, the answer was simply: “The same way we always navigate, by executing on our process.” For us, this is a constant, and when people make decisions based on emotion or what they “think” they know, we are likely to find new opportunities.
I know I repeat myself a great deal in my monthly writings, but that is good. It means I’m doing the same things repeatedly just with new information and opportunities.
If we can exploit opportunities which allow us to derive asset price appreciation and income and dividend payments, inevitably, we also must discuss the importance of tax. Most of us want to pay as little tax as possible, but it isn’t my place to make moral judgements about tax. My job is to help manage your wealth and look for growth opportunities, and that includes paying as little tax as possible, subject to the risks involved.
In 2022, there were several opportunities to harvest tax losses with most portfolios dropping in value. Because 2023 and 2024 were years where investment returns were mainly positive, there were taxes to pay in 2025. Few people like getting a tax bill, but most people appreciate being wealthier. To a degree, there is usually a tax to be paid when you make money, but not always.
Lower your tax bill but be mindful of the risks!
Let’s tackle some of the popular themes that people inquire about regarding tax mitigation from an investment perspective. We will leave aside the trust and estate tools, and we will leave aside aggressive tax techniques which may run afoul of IRS rules.
We spend a good deal of time at August Wealth seeking ways to reduce tax, but we also understand there are tradeoffs with decisions: such as risks, rewards, and potential opportunity costs.
This topic of discussion was sparked by a Certified Public Accountant that moonlights as an investment advisor suggesting we put one family’s investments producing ordinary income into qualified (non or deferred tax) accounts. This is obviously something that needs to be considered, but our view is that it’s not straightforward. Let’s look at an example below:
Scenario A:
You have no tax bill and your happy about that.
Scenario B:
You get hit with a $250k tax bill and your unhappy.
What’s better? As with most things, it depends!
I manage my family money mostly in the same investments as I manage for the clients we serve. I must consider the top rate of income tax and living in a relatively high tax state. Use a combination of qualified and non-qualified accounts.
If you focus solely on tax, you will save in tax. But consider:
Will you have higher portfolio risk?
Will you have higher opportunity cost?
Will your portfolio be sub-optimal for your needs and goals?
Two questions to ask:
Would you rather make more money and pay more tax, or would you rather pay less tax by making less money?
Is it always best to put high yielding dividend investments into tax-deferred or exempt accounts?
This is a serious question, and here is just one example of what to consider.
We have clients in New York City where the top rate of tax on ordinary income is over 50% (Federal, State and City). We will describe a hypothetical example, but it actually occurred in many accounts. The name of the company is not important, but similar situations arise.
We purchased a share in a company for $240 in August of 2024 because we felt the company was undervalued. By March of 2025 (7 months later), this company was trading at $350; an unrealized gain of almost 50%. At a price of $350, our analysis suggested that the company was fairly valued, and we would not purchase it at the current price. Generally, if we no longer would purchase a company, we should think strongly about selling the investment.
On a hypothetical $100,000 position. The Unrealized Profit = $50,000
In qualified (tax-exempt or deferred accounts like IRA’s) we sold this and realized a short-term gain of $50,000 and owed NO tax (because it was in a tax-exempt account). This should demonstrate the benefit of having both income producing AND growth opportunities in qualified accounts. The opportunity to realize gains without tax is substantial.
We decided to sell only in qualified accounts because we didn’t want to pay potentially as high as a 50% marginal tax rate on a short-term gain of $50,000 (on the same hypothetical $100k purchase). Had we sold, the tax could have been up to $25k, and the net gain on the investment would only be $25k (or 25%).
One could argue that it’s a positive result that you didn’t pay $25k in tax, but it’s negative that the shares traded back to $240 (a gain of ZERO).
In hindsight, I wish we sold the company in ALL accounts, and we would have had the opportunity to repurchase the shares.
It’s easy to see the benefit of lower tax liability, but you would have been better off with a higher tax liability and a higher return in this instance. Additionally, your risk would (potentially) have been reduced because you reduced your equity (stock market) exposure.
This is just one of the many examples of tax strategy that is not straightforward and as simple as an advisor, or an accountant may suggest it to be.
Most of the time (but not all), we will practice K.I.S.S. as the most appropriate solution. We will try and explain what and why we are implementing a specific strategy for you. We want you to understand that we are exploring as many possible solutions as possible, but often it is the simple one that makes the most sense.
Direct indexing and similar strategies seem very topical currently. We are exploring these products, but they are not without cost nor are they without risks.
But because most of our portfolios at August Wealth utilize tailor made diversified solutions to help achieve your goals, it is rare that ALL investments and companies go up at the same time. When certain investments decline in value, we are often able to harvest tax losses while maintaining your overall investment strategy.
Perhaps we should label this your personal direct indexing portfolio? Through technology we can target specific investments that can produce tax loss on your behalf.
As with all topics, if you would like to learn more about this, please contact us. The better you understand how we are working for you, the easier it is for us to execute on your behalf.
Thank you, and I hope you enjoy the YouTube video below.
Joe
More Today Than Yesterday - Spiral Starecase {1969}
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i Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor. Stratos Wealth Advisors, LLC and August Wealth Advisors are separate entities. There is no guarantee that tax-loss harvesting saves tax dollars. Stratos or August Wealth Advisors does not provide tax or legal services. Please consult legal or tax professionals for specific information regarding your individual situation.
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