In an era of sudden market swings, volatility has become part of the investment landscape. For John Young, founder of Young Global Wealth Strategies, the conversation isn’t about chasing the next surge. It’s about managing risk thoughtfully, especially when wealth is tied up in a single stock.
“The market definitely has a volatile tilt to it currently,” Young says. After several strong years that inflated asset prices, combined with disruptive forces like artificial intelligence and an unsettled political backdrop, “there are lots of components in this stew that make it very interesting.”
That “interesting” environment can be especially unnerving for investors holding concentrated positions, whether from equity compensation, a long-held tech stock, or the sale of a business. Even when a company feels like a sure thing, concentration carries real risk.
“If you look historically, you’re more likely to pick a loser than a winner,” Young explains. And even winners don’t rise forever. A steep decline can be difficult to recover from. “If you lose 50% of that stock, it requires a 100% gain to break even.” For long-term goals, that kind of imbalance can be disruptive.
One lesser-known strategy Young discusses with clients is a 351 exchange into a self-funded ETF. In simple terms, it allows an investor to contribute appreciated stock into a newly created exchange-traded fund structure, alongside other assets, to diversify without immediately triggering a taxable event.
“You’re contributing that appreciated stock and, in exchange, you’re able to diversify inside the ETF with other holdings,” Young says. “Your cost basis carries into those other positions, so you’re not triggering a taxable gain at that contribution.”
The structure cannot be built entirely around a single stock; the appreciated position can represent only a portion of the portfolio. The remainder is filled with other assets, creating immediate diversification. From a lifestyle perspective, Young sees flexibility as one of the primary advantages.
“You can reflect the values or where you want to diversify your portfolio,” he says. Investors can emphasize certain sectors, avoid others, or lean into themes that align with their outlook—all while avoiding the potential shock of a large capital gains bill that might accompany an outright sale.
Another tool in the toolkit: long-short strategies. Often associated with hedge funds, long-short funds can offer a way to participate in market movements while managing downside exposure.
“The long position would lose value, but the short position could potentially gain value,” Young explains. In volatile markets, that dual structure can provide a measure of balance. Certain strategies may also generate losses that can offset gains elsewhere in a portfolio, creating additional tax efficiency.
Young is quick to emphasize that these strategies aren’t about speculation; they’re about alignment. “We try to marry risk with allocations and portfolios,” Young says. The focus is on understanding a client’s time horizon, goals, and overall exposure, then selecting tools—whether a 351 structure, a long-short fund, or other approaches—that smooth the ride.
Looking ahead, he sees a broader shift among sophisticated investors. Tax management is no longer just a year-end exercise. More active ETF structures and ongoing adjustments can create what he calls “tax alpha,” using volatility itself to capture gains and losses strategically.
Ultimately, the 351 exchange and long-short funds are simply tools; ones many investors may not know exist. But in a market defined by rapid change, having more ways to diversify thoughtfully can make all the difference between reacting to volatility and navigating it with intention.
For more information and to contact Young Global Wealth Strategies, visit YoungGlobalWealth.com.