Mo Al Adham

Founder and CEO of Frec. Reach me at [email protected]

Frec disclosures:

[Mo Al Adham @maladham]

Yesterday, our managed strategies traded a record $250m in equities as the market corrected.

Our portfolio management engine was rebalancing our Direct indexing, Long short, and Diversify portfolios. Here's what that looked like for one customer.

A few weeks ago, they put a ~$2m NVDA position into a 200/100 Diversify strategy, with the goal of diversifying tax-efficiently into the Russell 1000 direct index.

At the time, we built a portfolio around their NVDA shares: a long extension to buy the index exposures they were missing, and a short extension to help mitigate the risks of being concentrated in NVDA.

Yesterday, NVDA fell over 9%, but their Diversify portfolio fell just over 4% net of fees. The portfolio’s benchmark, the Russell 1000, also fell just over 4%. The long and short extensions helped cushion the drop: the customer’s return was roughly five percentage points higher than if they’d held NVDA alone 💪

We also used harvested losses to offset gains from selling some of their NVDA shares, then reinvested the proceeds into other stocks in the index while the market was down.

So even on a rough day for the market, this customer made progress toward a more diversified portfolio.

That’s how @frecfinance's Diversify is designed to keep chipping away at a concentrated position: harvesting losses, using them to offset gains from stock sales, and bringing the portfolio closer to the target index over time.

I’m proud of our team for bringing this product, traditionally offered by some expensive private banks, to more investors at lower minimums. You can get started today with as low as $50,000 in concentrated stock.

[Mo Al Adham @maladham]

This is for informational purposes only and is not investment advice. Diversify strategies use leverage, margin and short selling. These can magnify losses, involve margin interest and borrowing costs, and can lead to losses greater than the amount invested. Tax-loss harvesting results depend on individual circumstances and market conditions and are not guaranteed. Individual results will vary, and the experience of any one client is not representative of the results other clients may achieve. Past performance does not guarantee future results. All investing involves risk, including loss of principal.

[Mo Al Adham @maladham]

Yesterday, our managed strategies traded a record $250m in equities as the market corrected.

Our portfolio management engine was rebalancing our Direct indexing, Long short, and Diversify portfolios. Here's what that looked like for one customer.

A few weeks ago, they put a ~$2m NVDA position into a 200/100 Diversify strategy, with the goal of diversifying tax-efficiently into the Russell 1000 direct index.

At the time, we built a portfolio around their NVDA shares: a long extension to buy the index exposures they were missing, and a short extension to help mitigate the risks of being concentrated in NVDA.

Yesterday, NVDA fell over 9%, but their Diversify portfolio fell just over 4% net of fees. The portfolio’s benchmark, the Russell 1000, also fell just over 4%. The long and short extensions helped cushion the drop: the customer’s return was roughly five percentage points higher than if they’d held NVDA alone 💪

We also used harvested losses to offset gains from selling some of their NVDA shares, then reinvested the proceeds into other stocks in the index while the market was down.

So even on a rough day for the market, this customer made progress toward a more diversified portfolio.

That’s how @frecfinance's Diversify is designed to keep chipping away at a concentrated position: harvesting losses, using them to offset gains from stock sales, and bringing the portfolio closer to the target index over time.

I’m proud of our team for bringing this product, traditionally offered by some expensive private banks, to more investors at lower minimums. You can get started today with as low as $50,000 in concentrated stock.

[Mo Al Adham @maladham]

Full announcement: https://t.co/03fXtwhlV8

[Mo Al Adham @maladham]

While some managers are raising their minimums, we’re lowering ours. You can now start direct indexing on @frecfinance with as little as $5,000! 

We’ve lowered the investment minimums across several of our strategies:

• $5,000 for the S&P 500®, Nasdaq-100®, S&P 500 Information Technology, and other popular indices (down from $20,000)
• $20,000 for indices with more symbols including the Russell 3000, Russell 2000, and Morningstar US Total Market (down from $50,000)
• $50,000 for the 140/40 S&P 500® versions of Long short direct indexing and Diversify (down from $100,000)

Since launching Frec, we’ve kept improving how we build and manage portfolios, including how we use risk models. Our latest upgrade gave us the confidence to lower these minimums and make our strategies available to more people. 

There is a modest tradeoff: smaller portfolios generally have higher tracking error, meaning their returns can vary more from the index. In some of our S&P 500 studies, starting with $5,000 instead of $20,000 increased tracking error by about + or - 0.30% annually. 

Our mission at Frec has always been to democratize access to sophisticated investment strategies. I’m excited that the work we’ve put into the platform is making it possible to get started with less.

[Mo Al Adham @maladham]

@brot15 Apex Clearing

[Mo Al Adham @maladham]

Sources:
https://t.co/K1kk37su0L
https://t.co/yHibPRwKmd
https://t.co/VCes8Cins1
https://t.co/YMvCuRaExS
https://t.co/HdYkaf8Jti
https://t.co/Q57cjEPlZP
https://t.co/1szWdV8Jyw

[Aries @Aries]

WE JUST RAISED MONEY

Announcing our $7m Seed Round led by Thomas Peterffy with participation from @kleinerperkins, @collision, John Paulson, 638 of our users, and a few amazing others.

Aries is building the stock trading platform of the future

We just launched Aries Infinite your own infinite trading canvas, built widget by widget or by asking AI

Open an account today at https://t.co/fD6BMlCIQr to experience premium market access and get one free share of stock worth up to $500!

[Mo Al Adham @maladham]

I just came back from @money2020, and the energy in the room made it very clear: fintech is not dead. Not even close.

Ribbit Capital, one of fintech’s leading investment firms, put it this way: “Fintech, as we’ve known it for the past decade, is dead.” Its investor presentation featured a tombstone: “Fintech, 2012–2023.” I learned about this while listening to the recent Invest Like the Best episode featuring Nubank founder David Vélez.

Ribbit’s point was that the first wave of fintech has matured. That wave made banking, payments, and investing easier to access through better digital products. In their view, the leading companies now have the scale and brands to keep winning, leaving less room for new entrants.

From where I sit as a founder, there’s still plenty of room for new companies to serve customers whose needs aren’t being met. The next generation of winners is still being built.

History is a good reminder of how much opportunity can remain in markets that seem mature:

• 2004: Bessemer passed on Facebook. In the firm’s own telling: “Kid, haven't you heard of Friendster? Move on. It's over!” 

• 2007: Paul Graham published “Microsoft is Dead.” Azure alone passed $75 billion in annual revenue in 2025. 

• 2014: Fred Wilson wrote that “the social media phase of the Internet ended.” TikTok later reached a billion monthly users.

• 2015: Bill Gurley questioned Instacart’s economics. Today, it’s a publicly traded company worth roughly $12.5 billion.

Even the best investors can underestimate what teams will build and customers will adopt. 

Particularly in consumer fintech, we are nowhere near done democratizing access.

At @frecfinance, we’re making sophisticated investment strategies accessible to more people. We started with direct indexing and borrowing. Now customers are asking for new strategies they've heard about but can't easily access.

Elsewhere, there are interesting companies working to make estate planning and tax preparation simpler and more accessible. There’s room for new approaches, too. Look at Silo Markets bringing rewards points to stock portfolios.

Even Thomas Peterffy , the founder of Interactive Brokers, recently led a $7 million seed round for @Aries, a new trading app. 

AI could make personalized financial advice accessible to far more people. And I believe that will create entirely new apps where people manage their finances, not just new features inside today’s established platforms.

There’s still so much to do to make people’s financial lives better. Our job is to solve real problems and give people products they love. 

Customers will decide who wins.

[Mo Al Adham @maladham]

@RenoHemonc Just added you to our list. I’ll ping you ahead of a future fundraise. And no, we don’t do 351’s. Just good old capital loss harvesting.

Thanks for being a customer!

[Mo Al Adham @maladham]

My sister messaged our family group: “Mo are you aware of this?? Frec is in a Netflix documentary!”

I had no idea.

Sure enough, our Market St. billboard—“Is your wealth concentrated in company stock? Meet Frec”—shows up in the first minute of Netflix's Instadocs: AI Gone Wild.

The documentary opens with the line: “There’s this saying, the future happens first in San Francisco.” The camera pans past a Waymo, then Frec’s billboard.

The billboard was part of our first experiment with outdoor advertising. The ROI is hard to measure, but I’m counting our unexpected cameo in a Netflix documentary as a win.

As for the episode’s narrative, I see things differently. I believe society will figure out the right guardrails to make AI work for us, helping individuals and organizations become more productive. I’m optimistic those benefits will reach every corner of the economy, creating more wealth and opportunity than we’ve ever seen before.

And as AI creates a new wave of wealth, Frec will be here to help people manage it effectively so they can focus on building the future.

We’re flattered to make the cut. Thanks, Netflix!

[Mo Al Adham @maladham]

Source: IRS Notice 2026-62. See Section 2.03 for the exchange-fund transactions discussed, and Section 3.01 (pages 16–17) for the acknowledgment of established loss-harvesting techniques.https://t.co/pcloApfnzd

[Mo Al Adham @maladham]

The Treasury and the IRS just put some ETF-conversion strategies involving Exchange Funds under scrutiny, as outlined in Notice 2026-62.

In the same notice, they acknowledged that traditional capital loss harvesting can reduce taxes in a manner “consistent with the intent of Congress.” 

Frec Diversify is built around capital loss harvesting, not ETF conversions. It’s a scalable alternative to Exchange Funds, designed to gradually diversify concentrated stock through capital loss harvesting. Instead of contributing your shares to a pooled fund, you keep ownership of them in your own Frec account. 

We build a long extension that fills in the rest of your chosen index. A short extension helps hedge some of the risk from your concentrated position. 

With those extensions in place, capital losses are generated as we rebalance the portfolio. Those losses can offset gains as we gradually sell down your concentrated position, working toward its target weight in the index. 

You choose your index and can customize your holdings. There’s no seven-year holding requirement and no waiting for a fund to assemble the right mix of other investors’ contributions. The portfolio is built around your preferences - not around what a pooled fund happens to need.

[Mo Al Adham @maladham]

A friend in Canada texted me asking what tax-loss harvesting was. Then he told me something I had to look up to believe.

In Canada, you can use investment losses to recover taxes you paid on capital gains in previous years. Net capital losses can be carried back up to three tax years, or forward indefinitely.

Here’s a simple example. You realize a C$100,000 capital gain in 2024 and pay tax on it. In 2026, you realize C$100,000 in capital losses, with no capital gains that year.

You can apply those losses against the earlier gain and potentially get the tax you paid on it refunded.

For individual stock investors in the US, unused capital losses carry forward. You can’t carry them backward to offset gains from previous years.

My friend told me he’d used losses after Covid to recover taxes on gains he’d realized during Covid.

I thought this was fascinating. More of a reason to use direct indexing in 🇨🇦!

[Mo Al Adham @maladham]

Apollo bank run report: https://t.co/QxlWcwH5CN

Frec white paper on direct indexing benefits extending into retirement: https://t.co/5airEhu8tt

This is not tax advice; consult your tax advisor about your situation. Direct indexing may involve account minimums.

[Mo Al Adham @maladham]

What happens to ETF inflows when AI agents start managing our money?

This weekend, I read Apollo Global Management, Inc. Chief Economist Torsten Slok's note on a potential “agentic bank run.” Once people trust agents to move money, idle cash could shift from low-yield checking accounts into higher-yield alternatives.

Could a similar shift happen in investing from index ETFs toward direct indexing in taxable accounts?

Owning the underlying stocks opens up more opportunities to harvest capital losses, which can be used to offset capital gains, with unused losses carried forward. You can also customize holdings and vote your shares.

Switching from one index ETF to another in a taxable account means realizing any embedded gains in the shares you sell. With direct indexing, you can retain overlapping stocks and adjust the rest, potentially reducing the tax cost of switching indices.

The tax benefits can extend into retirement withdrawals, too: unused losses can offset gains as you sell investments to fund spending.

For many investors, ETFs are the default. A trusted agent could weigh the tradeoffs and put the next dollar into direct indexing.

[Mo Al Adham @maladham]

Link to the demo account: https://t.co/qyVHw8QQIe

This strategy uses margin and short positions, which add risk beyond a traditional long-only investment - see Frec's Margin Disclosure before borrowing. Past performance does not guarantee future results, and this account's results may not be representative of other clients' experiences, as timing, deposits, factor tilt, leverage, benchmark, and customizations vary. Frec does not provide tax advice and tax outcomes will vary by client.

[Mo Al Adham @maladham]

Our $100k demo account gained about $19k in roughly a year, net of financing and management fees. It uses a value-tilted 140/40 direct indexing strategy based on the Russell 1000. For comparison, a  $100k investment in a Russell 1000 ETF over the same period would’ve gained about ~$445 less. And here’s the kicker: it also harvested ~$27k in capital losses while appreciating in value. This is a real account, not a backtest - anyone can inspect every position and trade on our website (link in my comment). It’s worth noting that the long short direct index carries a different risk profile and can expect a tracking error of ~1.5%.

We chose a value tilt because many of our customers work in tech and already have significant exposure to growth stocks. We wanted to demonstrate how they could lean into value while maintaining broad market exposure.

Those $27k in harvested losses can offset capital gains elsewhere. Someone selling appreciated company stock, for example, could use $27k of harvested losses to offset that amount in gains. At a combined 30% tax rate, that could defer a ~$8k tax bill, leaving that money invested in the market instead.

We made 140/40 available starting at a $100k minimum, and customers can get started in a few minutes. We also offer 200/100 and 250/150 versions. The additional leverage allows for a stronger factor tilt and creates more opportunities to harvest losses.

[Mo Al Adham @maladham]

QQQ assets. Page 7 here: https://t.co/lftqN1eQ7q

Assets tracked by Nasdaq-100 here:
https://t.co/jXJKjYIkMD

[Mo Al Adham @maladham]

WSJ: https://t.co/MvruE3Mkaq
Tax Notes: https://t.co/1JGqqLlabf
CNBC:
https://t.co/toJ0S05Tz8

[Mo Al Adham @maladham]

Most have heard of tax-loss harvesting. But a different version is attracting the Treasury's attention: ordinary-loss harvesting. It aims to offset ordinary income, like business earnings and, within limits, salary income. Meanwhile, gains can receive more favorable capital gains treatment.

This is different from traditional tax-loss harvesting which uses capital losses to offset capital gains, plus up to $3,000 of ordinary income each year. Frec’s Long short portfolios harvest capital losses too. One high-profile example of capital loss harvesting: The Wall Street Journal reported that President Trump’s investment accounts use direct indexing.

Ordinary-loss harvesting seeks to go much further. Treasury officials have described sales pitches advertising a $300,000 ordinary loss on a $1 million investment.

A new Tax Notes article by NYU law professor @DanielJHemel explains the distinction, using AQR’s TA Delphi Plus fund as an example of ordinary-loss harvesting.

Hemel traces the strategy to a “temporary” Treasury exception from 1988 - still in place 38 years later. It lets investors use ordinary losses from certain funds to offset income from businesses they actively run, even when they don’t help run the fund. His proposed fix is to remove that exception through Treasury’s rulemaking process.

At @frecfinance, our Long short and Diversify strategies harvest capital losses. They do not pursue ordinary-loss harvesting. We’ve worked with tax counsel in structuring these strategies, and we’ll continue monitoring developments.

These distinctions matter in how the topic is covered. CNBC's recent reporting on tax-aware Long short strategies included an “IRS crackdown” section, while noting that officials hadn’t named those long short tax-aware strategies specifically.

We’d love to see coverage make clearer which products and which types of losses are under scrutiny, especially in headlines. That helps investors understand which risks may apply to them.

[Daniel Hemel @DanielJHemel]

Now out in @TaxNotes: How Treasury created "carried interest on steroids" -- a tax strategy that allows high-net-worth investors w/sufficient liquidity to transform potentially unlimited amounts of active business income into long-term capital gain ... 1/

[Mo Al Adham @maladham]

Shorts in general tend to go up with the broad market, which is where a lot of the tax management come from. Performance of the shorts should not be evaluated by themselves because they serve a hedging role in the overall portfolio. In this case, they are supposed to reduce excess systematic risk (e.g., beta, sector, industry, factor exposures) from your concentrated funding stock and bring the overall portfolio closer to the target index.

[Mo Al Adham @maladham]

Frec has crossed $1.5 billion in customer assets. That’s another $500 million since we announced $1 billion just a few months ago 🚀🚀🚀

We’re marking the occasion with @Nasdaq . Thank you to the Nasdaq team for featuring @frecfinance on the tower in Times Square! We’ve also been working together on something new for Frec customers that we’re excited to share soon.

Thank you to our customers for trusting us with their money, and to the Frec team for getting us here!