The Taxable Investor's Manifesto. Stuart E. Lucas

the information in this book. The information presented does not constitute, and should not be construed as, investment advice or recommendations with respect to markets, asset allocation, funds, securities, or individual investments. Moreover, neither the information nor any opinions expressed constitutes a solicitation for the purchase or sale of any investment or security.

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About the Author

      Stuart E. Lucas is founder, Co-Managing Partner, and Chief Investment Officer of Wealth Strategist Partners, advisor to large complex families across financial, business, and cultural dimensions of their enterprises.

      Stuart designed and is Co-Director of the University of Chicago Booth School of Business's Private Wealth Management continuing education program, which has served over 1,000 wealthy individuals and families in the 12 years since the course's inception. He is a speaker on topics of wealth management around the world. His first book, Wealth: Grow It and Protect It (FT Press), has been published on three continents. He is the author of numerous articles on investing and wealth management, most recently “The 50% Rule” and “Pick Your Battles” (Journal of Wealth Management), co-authored with Alejandro Sanz.

      Stuart is chairman of the Investment Committee of National Public Radio in Washington, D.C., and is involved in various other philanthropic endeavors in education and media.

      Previously, Stuart was the senior managing director of the Ultra-High Net Worth Group within Private Client Services at Bank One (now JP Morgan Chase); director of a multifamily investment office in Paris, France; general manager of European operations of Wellington Management Company in London, England; and assistant portfolio manager of a Forbes Honor Roll mutual fund.

      He has a BA with honors from Dartmouth College, an MBA from Harvard Business School, and is a Chartered Financial Analyst. He has been married for more than 30 years to his wife, Susan, and they have three grown children.

Acknowledgments

      Over the years, in my day job, in academia, in my role as chair of National Public Radio's Investment Committee, I am blessed to have built relationships, some spanning 40 years, with brilliant, committed investors. So much of what I have learned about leadership, about investing, about managing taxable wealth, is the result of shared inquiry and the desire to get better and better at our craft. As a result, my book has few ideas I can justifiably call my own. More powerfully, it is the product of that collective inquiry. Possibly the most original idea is simply to weave the insights of others into a hopefully coherent whole.

      My journey started as a newly minted Dartmouth history major and aspiring equity analyst at Wellington Management Company. My experience at Wellington and three years of preparation to earn the CFA Charter holder designation gave me the conceptual frameworks to do my job well and defined the rigor with which I have approached my career ever since. The ethical precepts and the professional networks exemplified by both organizations are foundations of my investment worldview for which I am eternally grateful.

Those underpinnings and the relationships that developed with them led to over two dozen busy investment professionals, including Seth Masters, Rick Roeding, Bill Poorvu, Howard Marks, David Puth, Trent Sebits, Shirley Spence, David Jones, Gena Estenfelder Todd, Howard Stevenson, and others, graciously taking the time to read and provide detailed feedback on versions of this manifesto, some of you more than once. The value of your wise insights and honest feedback is priceless and the book's content and readability are infinitely improved as a result. I look forward to continuing our thought partnership in the years ahead.

      I have a special group of thought partners that deserve acknowledgment too: my fellow faculty members in the University of Chicago's Private Wealth Management Program. We are now in our thirteenth year and John Heaton, Steven Kaplan, Sara Hamilton, and Howard Helsinger have co-taught every single program with me. I have learned a great deal from you, and a lot of that wisdom has found its way into the book. Steve has been a wise advisor on private equity and venture capital, as well as a personal mentor and advocate. Chapter 5 of this book would not have been written if John Heaton hadn't sensitized me to the power and the math of time horizons. I'd been a long-term investor for decades and understood intuitively the effects of horizon on risk, but John provided the gateway to the statistical analysis. Howard Helsinger's way of teaching estate planning, integrating highly nuanced legal strategies in an envelope of human values and empathy, is extremely impactful. Sara brings to PWM more than 30 years of experience serving family offices through her firm, Family Office Exchange. In the very first PWM program in 2007, I was approached by José Ramón Sanz to develop a parallel curriculum in Spain. Ever since, we have had a wonderful intellectual and business partnership as well as a great friendship that has sprung from teaching and learning from wealthy Spanish-speaking families. It's from José Ramón that I became particularly sensitized to the issues, challenges, and opportunities of being a business-owning family over multiple generations.

      Over the last two decades my clients at Wealth Strategist Partners have trusted me to implement the strategies that are revealed in this book. Of course, working with them, deliberating their insightful questions, managing with them through periods of stress and market volatility, helping them transition through liquidity events and from one generation to the next, have all been great opportunities for me to learn. Numerous private investors and family office executives have provided additional analysis and practical advice born of experience. The lens of learning what works through experience has no replacement; I am grateful for the partnerships that have made that experience possible.

My colleagues and business partners push me every day. To one degree or another you have all contributed to the ideas, the writing, and the editing of this book. You also were patient with me when I have been distracted by the enormity of this project. Thank you.

      Thank you also to competitors and investment managers whom I've reached out to for help. You've given me valuable feedback and helped me to dig up relevant research, encouraging me along this path, and distributing the finished product to your colleagues, clients, and friends.

      Thank you all for sharing the ride with me and contributing to the development of any wisdom that may appear in these pages. This book is as much yours as it is mine, but I will take responsibility for all the points you disagree with and for any factual mistakes. I hope I've done you proud.