In today’s issue:

• Weekly Wisdom - Benjamin Graham on what markets are…

• Market Musings - How do we tell a short-term panic from a change in market cycle?

• Financial Planning Hack - 3 slick tricks billionaires use to slash their tax bills…

WISDOM

MARKET MUSING

So, what do the 2020 COVID crash and the 2025 Trade War have in common?

They were both big crises that dominated the headlines and social media.

In both cases, markets overreacted to the actual problems.

And the market has rebounded quickly both times.

Why?

After all, aren’t tariffs a bad thing? Wasn’t COVID a major disruption to commerce?

Both are true, but as Benjamin Graham reminds us: “In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

Then how do you tell when the market is on the verge of collapse versus a short-term drop?

On one hand, if you are a perma-bear like Peter Schiff, you’re wrong 9 years out of 10, which is why his fund has underperformed the S&P 500 by 5% per year since forever.

If you’re a perma-bull, you have just as big of a problem because crisis events like the 2008 GFC and the 2000 tech bubble crash do occur.

How do you find signal from the noise?

Step 1: Ignore Social Media and the Headlines

A Shrewd Investor knows the financial press is Wall Street’s PR agency.

It’s a corrupt system where most of the people you see on CNBC are paying to be there.

That billboard in Times Square — also pay-to-play.

If you’re thinking that’s corrupt, you’re right.

It’s a game to trick you into making dumb mistakes that make other people rich.

Step 2: Dig Deeper

Everything the Federal Reserve writes and publishes is public record, so it’s available to you.

Those quarterly conference calls with the leadership of all publicly traded companies are right there ready to download from their website.

At a minimum, listen to Chairman Powell’s public statements and the Q&A.

You’ll learn more in 20 minutes than hours of CNBC prognosticators.

Step 3: Watch Price Action

Price don’t lie.

The sum total of all market participant’s beliefs about the markets are wrapped up in one number: price

Not Wall Street’s hyperbole.

Not your uncle who’s had a few too many at Thanksgiving dinner’s predictions.

The average of the people with skin in the game.

The Game Plan

As the Trade War winds down and we find ourselves in a more normal market regime, here’s what Shrewd Investors are doing instead of over-trading.

✅  Digging into tax-efficient structures for their portfolios

✅  Double-checking their advisors fees and performance

✅  Subscribing to the Federal Reserve YouTube Channel

✅  Look at the 10 biggest holdings in your portfolio and listen to their latest conference call

So that when crisis comes, you’ll be ready…

FINANCIAL PLANNING HACK

The Tax Shields Billionaires Use

That Your CPA Ignores Until It’s Too Late

How the Wealthy Legally Pay 0%

Let’s get one thing straight:

The wealthy don’t hate taxes.

They just hate paying more than they have to.

That’s why they play a different game.

One of their favorite tools?

Depreciation.

It sounds like accounting homework. But for those in the know, it’s the cheat code that turns big profits into zero-dollar tax bills.

Here’s the play:

A founder I worked with once faced a $900K tax bill after selling his company.

With the right structure and a smart property move, he cut it to under $80K.

All legal. All by design.

That could easily be someone reading this.

Let’s say you buy a $1 million commercial building.

Even though the property may rise in value, the IRS lets you “depreciate” it—essentially claiming it's losing value over time.

That loss becomes a tax deduction. On paper, you’re making less. In reality, you’re keeping more.

Now layer on bonus depreciation, which lets you write off a huge portion of qualifying purchases (like property components, machinery, vehicles, and improvements) upfront.

That’s how someone can:

• Make $500K in income

• Take $500K in deductions

• Pay $0 in federal income tax

This isn’t theory. It’s the law. And it’s used aggressively by people who know what they’re doing.

Think bonus depreciation is gone?

Not yet.

It’s being reduced each year, but a bill in Congress could bring back the full 100% deduction.

If it passes, this could be a major opportunity, especially for investors who are ready to move fast.

The Key: Structure Before Strategy

Most CPAs are tax historians; they look backward and file your return.

The wealthy use tax strategists who think forward.

They choose the right entity structure:

S-Corp, partnership, or C-Corp, depending on income, ownership, and exits.

They know when to accelerate depreciation.

And they use tools like cost segregation studies to maximize it.

More importantly, they build their tax plan before the money hits the account, not after.

Capital Gains? There’s a Loophole for That Too

There’s a way to pay 0% capital gains tax on up to $10M in qualified stock sales.

It’s called QSBS—Qualified Small Business Stock.

If your company meets certain rules (C-Corp, under $50M in assets, held for 5+ years), the IRS lets you sell and exclude the gain.

Sell a business for $10M?

Pay $0 in capital gains?

It’s possible. And it’s completely legal.

Also worth knowing: Opportunity Zones offer similar tax breaks for investors who reinvest gains into qualified real estate projects.

Why You’ve Never Heard This from Your CPA

Because most CPAs don’t play offense.

They file. They patch. They don’t design.

The system is built for those who plan.

The ones who don’t? They overpay.

The ones who do? They reinvest those savings, compound wealth, and play the next level of the game.

Final Thought

You don’t need to be a billionaire to use these tools.

But you do need to think like one.

Right now, if bonus depreciation gets fully reinstated, it could be the best tax planning window we’ve had in years.

Ask yourself:

• Am I structured to maximize deductions?

• Is my income protected by the strategy, or just hoping my CPA catches something?

• Am I using the same rules the wealthy use?

If not, it might be time to fix that.

Strategies like this don’t last forever.

If Congress brings 100% bonus depreciation back, it could be the best wealth-building window we’ve had since 2017.

The prepared will move. The rest will pay.

P.S. 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.

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