In today’s issue:

• Weekly Wisdom - Buffet’s advice on fees…

• Market Minute - Open source AI is here…

• Deep Dive - The estate opportunity that ends this year…

First time reading? Sign up at https://shrewdinvestor.com

WISDOM

SHREWD INSIGHTS

What the Wealthy Are Reading…

📈 MARKET INTEL

Big Pharma’s Rust Belt Revival…

Johnson & Johnson just dropped a $5.5 billion bombshell—reinvesting in U.S. manufacturing to dodge the looming threat of Chinese tariffs. Translation: the reshoring megatrend is real, and smart money is betting on American steel over offshore deals.

💰 SMART MONEY PLAYBOOK

Startup? No Financials, No Thanks…

An investor on r/fatFIRE got pitched a startup with zero financials and no plan to share them—just vibes and a pitch deck. Reminder: due diligence isn't optional when you're playing with real money. Shrewd investors walk away from red flags, not into them.

🪖 TAX WARFARE

Roads Aren’t Free, Folks…

Only 7 states fund their roads mostly through gas taxes and user fees—everyone else’s highways are subsidized by general taxes. Translation: even if you don’t drive, you’re still footing the bill. Shrewd investors spot hidden taxes where others see pavement.

🤖 POWER TOOLS

The AI Revolution Goes Open Source…

OpenAI just released the source code for ChatGPT-2, the model that kicked off the AI boom. It’s like handing out the blueprint to the printing press—expect a flood of copycats, niche models, and yes, more noise. Shrewd investors know: when tools go public, value shifts to who wields them best.

 💎 THE GOOD LIFE

Mic Check = Respect Check…

Turns out, bad audio makes you sound less trustworthy and less competent, according to Scientific American. In a remote world, your mic is your first impression. Shrewd investors know: details like sound quality quietly build—or kill—credibility.

DEEP DIVE

LIFE INSURANCE WAS THIS MILLIONAIRE'S BIGGEST REGRET

The Counter-Intuitive Truth About Wealth Preservation Nobody Talks About

Your wealth took decades to build. But it can vanish in an instant with one bad decision. The difference? Knowing which advice to take – and which to ignore.

THE $1 MILLION MISTAKE ONE RETIREE ALMOST MADE

Jack was worried. At 77 years old, with $33 million in investments and a loving family to protect, he wanted to make sure his money would pass smoothly to his two daughters and grandson after he was gone.

Like many wealthy individuals, Jack turned to his team of advisors for help. His CPA suggested a solution that seemed perfect: buy a massive life insurance policy to cover estate taxes.

It sounded smart. Jack took out a $10 million policy with a promised $16 million death benefit. Problem solved, right?

Wrong.

Four years later, Jack found himself sitting at his kitchen table, hands trembling as he reviewed his portfolio statement. The stocks he'd carefully selected over decades – companies he believed in – were being sold off one by one just to feed the hungry beast of insurance premiums. The policy was costing him $322,000 per year, and the investments inside it were seriously underperforming the market.

"I felt sick to my stomach," Jack told me. "Like I'd been taken for a ride. All that money down the drain, and for what? A solution to a problem I could have solved in simpler ways."

Now Jack faced a painful choice:

• Pay $358,000 to cancel the policy and cut his losses

• Continue paying $322,000 every year for a product that wasn't serving him well

Either way, he was looking at nearly $1 million down the drain.

THE HIDDEN DANGERS OF FINANCIAL ADVICE

Jack's story reveals a truth many wealthy families learn too late: not all financial advice is created equal.

Here's what went wrong:

1. Jack took estate planning advice from his CPA, who likely knew tax rules but not the full picture of estate strategies

2. He trusted investment recommendations from an insurance agent whose primary job is selling insurance - not maximizing investment returns

3. He missed having a true estate planning attorney on his team - the one professional who specializes in exactly what Jack needed

This isn't just about bad advice. It's about understanding who should give what kind of advice.

THE REFERRAL NETWORK SECRET

Why would trusted professionals give advice outside their expertise? One word: commissions.

Many financial professionals belong to referral networks where they must pass clients back and forth to remain members. Your CPA refers you to their insurance friend, who refers you to their investment buddy, and so on.

This system works great for them - but what about for you?

When I first started in wealth management, I was shocked to discover how these referral networks operate. At one industry dinner, I watched advisors literally trading client names on napkins. That moment changed how I approach financial planning forever. Now I always ask myself: "Who benefits most from this recommendation?"

WHAT JACK COULD HAVE DONE INSTEAD

With $33 million mostly in stocks (including $13 million in Apple shares), Jack's estate was already easy to liquidate. He didn't need an expensive insurance policy designed for people with hard-to-sell assets like private businesses or large real estate holdings.

Here's what would have worked better:

Low-Hanging Fruit:

• Gift $18,000 annually to each daughter and grandchild ($108,000/year potential tax savings)

• Fully fund a 529 college plan for his grandchild

• Consider establishing a family foundation if charitable giving is important to him

Fixing the Problem:

• Create a Spousal Lifetime Access Trust (SLAT) or Intentionally Defective Grantor Trust (IDGT) to move assets outside his estate

• Take action before 2026, when the estate tax exemption drops from $13.61 million to about $7 million per person

• Work with an estate planning attorney to make these trusts "spouse-proof" (protected in case of divorce)

THE TICKING TAX CLOCK

Jack's biggest threat isn't bad investments - it's time. If he doesn't act before 2026:

• Only $14 million of his estate can pass tax-free (assuming he's married)

• The remaining $19 million could face a 40% tax hit

• His family could lose nearly $8 million to taxes

Think of your wealth like an ice sculpture at an outdoor wedding. It looks solid and permanent, but the sun (taxes and poor advice) is constantly melting it away. Your job isn't just to create the sculpture – it's to protect it from melting before your loved ones can enjoy its full beauty.

BE YOUR OWN QUARTERBACK

The most important lesson from Jack's story? You must lead your own financial team.

Your advisors are specialists, not generals. The CPA understands taxes, the insurance agent knows policies, and the investment advisor understands markets - but only YOU understand your entire financial picture.

WHAT YOU SHOULD DO NOW

1. Review your advisory team – Make sure you have the right specialists for your specific wealth situation

2. Identify 2026 tax vulnerabilities – Calculate how much of your estate exceeds the coming $7M per person exemption

3. Explore trusts and gifting strategies – Begin the process now as these structures take time to implement properly

4. Schedule a family wealth meeting – Ensure your heirs understand your legacy plans and intentions

5. Create your own "referral filter" – Before taking advice, ask: "Is this person qualified to advise on this specific matter?"

COMMON ESTATE MISTAKES

Using life insurance for liquid assets. When your wealth is already in easy-to-sell investments like stocks, expensive insurance policies can drain over $300K annually in premiums.

• Better Alternative: Implement strategic gifting and trusts that accomplish the same goal without the ongoing costs.

Waiting until retirement to plan. Delaying wealth transfer planning until your 60s or 70s can result in a devastating 40% tax on assets exceeding exemption limits.

• Better Alternative: Start planning early so your assets have time to grow outside your taxable estate.

Taking advice from the wrong expert. Allowing professionals to advise outside their specialty can cost you potentially millions in lost opportunities and unnecessary expenses.

• Better Alternative: Build a comprehensive advisory team where each member sticks to their area of expertise.

Failing to update plans after law changes. Tax laws change regularly, and outdated strategies based on old rules can cost your family millions in preventable taxes.

• Better Alternative: Schedule annual estate plan reviews to adjust your strategy based on current laws.

Ignoring annual gift exclusions. Overlooking the $18K per recipient annual gift allowance means throwing away one of the simplest tax-reduction strategies available.

• Better Alternative: Implement a systematic gifting strategy that maximizes these exclusions every year.

ESTATE PLANNING CHEAT SHEET

□ Identify your net worth and potential estate tax exposure

□ Assemble your ideal advisory team (wealth advisor, estate attorney, CPA)

□ Create or update your will and trusts

□ Implement a strategic gifting plan

□ Establish necessary trusts before 2026 tax changes

□ Set up 529 plans for grandchildren

□ Consider charitable giving structures

□ Document your wealth transfer intentions

□ Review beneficiary designations on all accounts

□ Schedule quarterly advisory team meetings

P.S. We've created a comprehensive "2024 Year-End Tax Playbook" that walks you through exactly what you could be doing right now to save on next year's taxes. Get it free at: https://newsletter.shrewdinvestor.com/p/2024-year-end-tax-playbook

If you’d like us to break down your portfolio or ask a question, submit yours here: https://shrewdinvestor.com/roastme

If you are interested in sponsoring a future issue, send an email to: [email protected]

The content provided in this newsletter is for informational purposes only and should not be considered as specific advice for any specific individual. The information is prepared by knowledgeable individuals and is not written by certified tax professionals or investment advisors. For personalized advice tailored to your unique financial situation, consult with a qualified tax professional, financial advisor, or attorney.

STILL WANT MORE?

Share With a Friend and Get Shrewd SWAG

How to Get a Deep Dive?

Want honest feedback on your investment strategy? Submit your portfolio or question to Shrewd Investor and get expert insights in our weekly 'DEEP DIVE' feature.

Ready for More Shrewd Investor?

Join us on Friday’s at noon MT for our weekly office hours, where we’ll discuss strategies like these…

👉 Reply with the words OFFICE HOURS to get the link…