A preface to the newsletter: It was good week for both the stock and the bond markets. Optimism around strong company earnings and a better-than-expected jobs report kept animal spirits roaring upward. Although fear and uncertainty dominated the markets barely six weeks ago, investors seem to have largely forgotten about the U.S.-Iran conflict and are instead focused on the positive.
In this week's newsletter I touch on the recent jobs report and strong first quarter company earnings. I explain the tricky spot that the Fed (and Kevin Warsh in particular) find themselves in regarding setting interest rates in today's Presidential policy driven inflationary environment. I also cover a problem that many of my clients find themselves in: managing taxes from significant unrealized capital gains (it's a good problem to have). And in this week's Longevity Science Foundation spotlight, I summarize an article concerning Neurodegenerative Diseases in Women and why we need to invest more in researching the symptoms and causes affecting women.
As always, please don't be shy about sharing any feedback, and please feel free to forward this on to anyone else who may find it interesting.
Kevin
P.S. And a special Happy Mother-to-be Day to my wife Mikaela!
Stocks
Stocks had a solid week, with the S&P 500 bouncing to a new all-time high and the tech-heavy Nasdaq climbing even more sharply. Strong company earnings were the main fuel, and markets seem to be favorably digesting some mixed economic signals.
Bonds
Bonds were relatively steady and the 10-year U.S. Treasury yield finished the week around 4.38%. Yields edged up slightly after Friday's jobs report came in stronger than expected, which is a good sign for the economy
Oil
Oil prices remained a wild card. Crude oil prices swung up and down all week, hovering around $95–$101 per barrel, as headlines about U.S.–Iran tensions shifted back and forth.
The April jobs report surprised almost everyone...in a good way
Employers added 115,000 jobs last month, more than double what many forecasters expected, but still less than the 185,000 jobs added in March. The unemployment rate held steady at 4.3%, which is good news, it shows that the economy is still creating jobs even while dealing with higher oil prices and global uncertainty. However I'm keeping an eye on wage growth, which came in a bit softer (though counterintuitively that actually helps with inflation). A labor market that's solid but not overheating is close to ideal for long-term investors.
The U.S.–Iran situation stayed tense, but the ceasefire held (mostly)
There were military exchanges near the Strait of Hormuz, and oil prices jumped and dipped accordingly. Despite the drama, stocks climbed higher through most of the week. Markets have become somewhat inured to the US-Iran conflict headlines.
Company earnings reports kept beating expectations
With roughly half of S&P 500 companies having reported so far, more than 80% have topped analyst estimates. Technology companies in particular, especially those tied to artificial intelligence, saw strong results and lifted the whole market. While this may seem like a reason to pile into tech stocks, it's important to remember that great earnings are already "priced in" by the market. Don't make the same mistake many investors made by going all-in on dot-com stocks in 1999...it took the Nasdaq fifteen years to rebound from the 2000 bubble. The discipline of staying diversified across sectors and asset types is what protects you over the long run.
"We’ve been above the 2% Fed target for five years now. We stopped making progress last year, and now the last three months, it’s going up instead of down...we’ve got to just keep an eye on this, because if everybody starts presuming that inflation rates are going back to something like what they were a few years ago, we would be in a in a bit of a pickle as a central bank." - Austan Goolsbee, president of the Chicago Fed
The Federal Reserve has a target of keeping inflation at 2% per year. That's considered the sweet spot; low enough that everyday prices feel stable, high enough to avoid the economic stagnation that comes with near-zero inflation. However since the Covid Crisis of 2020, inflation has been running above that 2% goal. The Fed spent much of 2022–2024 aggressively raising interest rates to bring it back down, and for a while, it was working. But then progress stalled. Inflation stopped declining and plateaued last year still above 2%. Then, more recently, it started rising again, moving in the wrong direction over the last three months. With oil prices elevated due to the U.S.–Iran conflict, that's not surprising, but it's still concerning.
Here's why that matters so much: if workers expect prices to keep rising, they demand higher wages. If businesses expect costs to rise, they raise prices preemptively. Those behaviors create a the very inflation people are expecting, it becomes self-fulfilling. The "pickle" Goolsbee is describing is this: if people start assuming inflation is going to drift back up, then the Fed would face enormous pressure to raise interest rates aggressively again to break that psychology. Higher rates mean higher mortgage rates, tighter credit, slower growth, and potential job losses. That could be painful.
Capital Gains: More Money, More Problems
When you sell an investment for more than you paid for it, the profit is called a capital gain. The price you originally paid is called your cost basis. Simple math:
Sale price − cost basis = capital gain
You only owe tax on a gain when you sell. An investment can be up 50% on paper and you owe nothing, that's an unrealized gain. The moment you sell though, it becomes realized, and that's when the IRS gets interested.
Short-term vs. long-term
How much tax you pay depends almost entirely on how long you held the investment:
That difference is enormous. On a $50,000 gain, the difference between short-term and long-term treatment could easily be $10,000–$15,000 in extra taxes. Holding an investment just one day past the one-year mark can matter significantly.
How do realized gains affect your income taxes?
Capital gains get added to your adjusted gross income (AGI). That higher AGI can push you into a higher tax bracket, trigger the 3.8% Net Investment Income Tax, reduce deductions and credits that phase out at higher incomes, and increase Medicare premiums. Higher income from gains can also cause more of your Social Security benefits to become taxable; up to 85% of your Social Security income can be subject to taxes if your AGI crosses certain thresholds. This affects your taxes at the state level too. California, for example, taxes all capital gains as ordinary income with no preferential rate.
How much should someone realize in a given year?
There's no easy answer, but the goal is generally to manage the amount rather than letting it happen randomly. A few guiding principles:
Stay within your current bracket: For most retirees, the goal is to realize gains up to, but not beyond, the top of the 15% long-term capital gains bracket, or even the 0% bracket if your income is low enough. In 2025, the 0% long-term gains tax bracket was under $48,350 (single) or $96,700 (married filing jointly). Gains within that range are completely tax-free, a powerful opportunity many people miss.
Coordinate with your other income: Required Minimum Distributions (RMDs) from IRAs, Social Security, pension income, and interest/dividends all factor in. A year with a large amount of income may be a bad year to also realize a large capital gain, however years with lower income, such as post-retirement but before Social Security begins, would be ideal.
Don't let the tax tail wag the investment dog: Avoiding a gain shouldn't be your primary reason for holding an investment. If something no longer belongs in your portfolio, the right move is usually to sell it and pay the tax consequence. That is usually the lesser evil compared to losing the gain if the investment retreats from its high-water mark.
Strategies for managing capital gains
Fortunately, there are several strategies for managing capital gains, you don't always have to bite the bullet on the taxes. Here are some of the more common approaches:
Tax-loss harvesting: Sell investments that are down in value to generate a loss, which can be used to offsets gains elsewhere. If you have $20,000 in gains and $8,000 in losses, you only pay tax on the net $12,000. Losses can even be carried forward to future years if you can't use them all at once, so losses in the portfolio can sometimes be a blessing in disguise.
Asset location: Keep tax-inefficient investments (those that generate lots of gains or income) inside tax-advantaged accounts like IRAs, and hold more tax-efficient investments in taxable accounts. This is often overlooked but can save meaningful money over time.
Spread gains across years: Rather than selling a large position all at once, selling it in pieces across multiple tax years is a method to stay within a lower bracket each year.
Gifting appreciated shares: If you're charitably inclined, donating appreciated stock directly to a charity (rather than selling it first) means you avoid the capital gain entirely and still get the full deduction. This is one of the most tax-efficient moves available.
Gifting to family members in lower brackets: Giving appreciated assets to children or grandchildren who have lower income can shift the gain to someone who might pay 0% or 15% rather than your higher rate. Watch out though, there are rules around this (the "kiddie tax"), so it needs to be done carefully.
Stepped-up basis at death: Assets held until death receive a "step-up" in cost basis to their value on the date of death, effectively wiping out any embedded gain. For very large, highly appreciated positions, this is sometimes a deliberate part of an estate plan. It's a significant benefit that is periodically debated in Congress, so it's worth keeping an eye on whether the rules change down the road.
Roth conversions in low-income years: Converting traditional IRA money to a Roth during a year when your income (and thus your tax rate) is lower reduces future RMDs, which in turn gives you more control over capital gains in later years.
Complex strategies involving options or other financial instruments: These strategies are usually employed by investors with very large single stock positions, such as company founders or people who have held a stock for decades. They can be very complex and involve unique risks, costs, and tax rules. Consult your financial advisor if you feel that the other more simplistic strategies aren't sufficient to solve your capital gains problem.
The bottom line
Capital gains management is really about timing and coordination; making intentional decisions about when to realize income and gains rather than letting it happen by default. It's one of the areas where working with a financial advisor and a tax professional together tends to pay for itself many times over.
A different way to think about agency in long term health & philanthropy
Neurodegenerative Diseases in Women
Women are significantly more affected by neurodegenerative diseases than is commonly recognized, and not just because they live longer.
Alzheimer's strikes women at nearly twice the rate of men. Hormonal shifts, genetics, and immune system differences all contribute. Women tend to show earlier memory and language problems, while men more often struggle with navigation. Once diagnosed, women also decline faster, and current research hasn't adequately addressed why that is the case.
Parkinson's is more common in men, but women experience it differently. Tremors tend to be the first symptom for women, while men more often present with stiffness and walking difficulties. Women also report more non-motor symptoms like depression, fatigue, and pain - which can delay diagnosis because these symptoms are easier to dismiss or misattribute.
Multiple sclerosis affects women at three times the rate of men, driven by hormones, genetics, and lifestyle factors. Women are more likely to have the relapsing-remitting form (flare-ups followed by recovery periods), while men tend toward a more steadily progressive form.
It's important to recognize the warning signs and seek treatment early (changes in memory, movement, or mood). Also prioritize brain-healthy habits (exercise, sleep, nutrition, social connection), and share this awareness widely.
The common thread across all three conditions is that symptoms in women are frequently misinterpreted or understudied because much of the foundational research was conducted primarily in male populations. That gap costs women time, and in neurodegenerative disease, early intervention matters enormously.
Women's biology is distinct, and medicine needs to reflect that. Better sex-specific research doesn't just help women, it makes the science better for everyone.
To learn more, go to: Neurodegenerative Diseases in Women
The economy continues to soldier on despite the on-again-off-again nature of the U.S.-Iran conflict. Although oil prices have remained elevated and those costs will inevitably ripple through to other sectors, consumers still haven't lost their appetite for spending, and have kept company earnings above expectations. Job losses from AI aren't significant (at least not yet) and AI optimism is driving share prices higher. Overall things aren't great, but we haven't seen the doom-and-gloom of stagflation materialize yet either, so they could be a lot worse.
The market has rebounded from the March lows to achieve new highs and many investors are now wondering if it's a good time to diversify their portfolios. The simple answer is yes, it's always a good time to make a good decision, but the difficulty for many is managing the capital gain taxes. If you fall into that category, then consider some of the strategies for managing income/gains taxes and put together a plan now rather than waiting for the next crisis and regretting not doing so sooner. When it comes to managing a portfolio, tax strategies can be just as important as investment strategies - making money is easy, keeping it is the hard part.
Have a nice week ahead!
Kevin