Volatility; consider a donor advised fund; Uber

We thought it would be beneficial for the readers to change up the column a bit to address more of the broader issues impacting the financial markets and investors. With the format below, it is possible to provide information and insight on a more timely fashion with the intent of helping you reach more informed decisions regarding your financial future. That said, we welcome your comments at www.faganasset.com.

The recent volatility in the stock market which has left many investors pulling their hair out will most likely be around for a while as President Trump is prone to saying or tweeting almost anything that is unscripted. For instance this past week, one day after White House Press Secretary Sarah Huckabee stated that they had “no specific actions that we’re currently pushing forward or considering taking,” President Trump tweeted “I have stated my concerns with Amazon long before the election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their delivery boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!”

Although Amazon does charge sales tax on sales made directly to its customers in the forty-five states that have a statewide sales tax, it is not obligated to do so on goods sold through third-party sellers, which represents approximately 50% of overall sales.

As noted within the above tweet, Presidents Trump’s dislike of Amazon is well known, especially given the fact that Jeff Bezos, CEO of Amazon acquired the left-leaning Washington Post several years back and which he believes now uses it for anti-Trump rhetoric.

The stock of Amazon as well as other tech leaders had fallen more than fifteen percent before rebounding with the overall market this past Thursday. We did some research and found that many of the companies and industries that the President tweeted negatively about rebounded shortly after their initial drop.

Given the doubling of the standard deduction coupled with the $10,000 limit on State and Local Income Taxes (SALT), many taxpayers will no longer be able to itemize on their federal tax return. This in turn, has increased the interest into the benefits of investing into a Donor Advised Fund (DAF).

Here’s how it works. A taxpayer makes an irrevocable contribution into a DAF and in turn receives an immediate tax deduction allowable by the IRS. The assets within the DAF can be invested and grow tax free prior to it being distributed either in its entirety or periodically to a qualified charity.

For example, let’s assume that you have historically gifted $7,500 to charity annually. However, this gift along with your other deductions on Schedule A may not exceed the new standard deduction thereby eliminating the tax benefit of the donation. However, if you deposited $30,000 into a DAF and over the next four years distributed $7,500 per year to a qualified charity you would potentially reap substantially tax benefits in at least one year, the year the contribution to the DAF was made. One caveat, like anything else related to taxes, first check with your tax advisor.

According to an article published by Reuters recently, “when Uber decided in 2016 to retire its fleet of self-driving Ford Fusion cars in favor of Volvo sport utility vehicles, it also chose to scale back on one notable piece of technology: the safety sensors used to detect objects in the road. That decision resulted in a self-driving vehicle with more blind spots than its own earlier generation of autonomous, as well as those of its rivals, according to interviews with five former employees and four industry experts who spoke for the first time about Uber’s technology switch.”

Our take – we believe the accident will come down to an inadequate number of lidar sensors rather than faulty ones. Please note that all data is for general information purposes only and not meant as specific recommendations. The opinions of the authors are not a recommendation to buy or sell the stock, bond market or any security contained therein. Securities contain risks and fluctuations in principal will occur. Please research any investment thoroughly prior to committing money or consult with your financial advisor. Please note that Fagan Associates, Inc. or related persons buy or sell for itself securities that it also recommends to clients. Consult with your financial advisor prior to making any changes to your portfolio. To contact Fagan Associates, please call 518-279-1044.