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Thursday, December 14, 2017

FIFO Rule Removed from GOP Tax Plan Says Larry Kudlow

This is really great news for us small investors if it makes it through to the final legislation.

This photo of my TV screen tuned to CNBC this morning highlights the provisions of the GOP tax plan that both the Senate and the House of Representatives are getting close to an agreement on.

The GOP plan wanted to raise money to offset lowering taxes on the wealthy by forcing small investors like me to sell our oldest shares first  when taking profits.    Even if you just bought the SPY exchange traded index fund and reinvested dividends and wanted to take some profits, then the rule would have forced you to into a backdoor higher capital gain tax by forcing you to sell the old shares at much lower prices before you could sell the new shares reinvested near the market top!

Last week, as part of "rebalancing" and "taking profits," I sold all my reinvested SPY dividends in a taxable account just in case this rule passes.  This made a big tax hit so this week I've sold shares in some stocks that are down to offset SOME of these gains.  

If you sold stock using the GOP's proposed FIFO (First In First Out) rule, then it would be insane to reinvest dividends in taxable accounts.  That would have been bad for the markets as many might spend the money rather than reinvest.

Why it matters:

Let's say you bought Intel (INTC) 20 years ago and reinvested dividends.  Under current rules, investors can "take profits" by selling the higher priced reinvested dividend shares before they have to sell the much cheaper original shares.

Although I am not looking forward to other states subsidizing most of the high taxes I pay in California with the new GOP tax plan, I am happy to learn that for now the FIFO rule is out.

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Wednesday, December 13, 2017

FNSR Finisar VCSELs - A Billion Dollar Opportunity With Apple's Investment to Speed it Along

Finisar (FNSR charts) VCSELs represent a ONE Billion Dollar opportunity now backed by Apple's (AAPL) investment to speed it along.

Loading up during this period of weakness, especially while under $20, worked out great for me and my subscribers! 

It is nice when one sends an email from his phone when the market opened saying he's pleased with the buy at $17.55 earlier this month (when I had a buy at $17.50 that I used cash in my ROTH to fund.) 

From Apple: Apple awards Finisar $390 million from its Advanced Manufacturing Fund
  • Award Will Create 500 High-Skill Jobs at Sherman, Texas Facility
  • “VCSELs power some of the most sophisticated technology we’ve ever developed and we’re thrilled to partner with Finisar over the next several years to push the boundaries of VCSEL technology and the applications they enable,” said Jeff Williams, Apple’s chief operating officer. “Technology is only as good as the people behind it, and Finisar is a company with a long history of putting its employees first and supporting the community it’s a part of. We’re extremely proud that our involvement will help transform another American community into a manufacturing powerhouse.”
This is a very similar deal to how Apple gives money to Foxcon to make their iPhones. 

To me, I believe Apple wanted a PR win with President Trump to show it is investing in manufacturing in the US and not just China.

Finisar is building in Texas to keep the technology in the US but in a low tax state not in the Silicon Valley where its headquarters is located.  If CA didn't have such high taxes, we might see this plant built up near Redding CA, just below the Shasta Dam where getting low cost renewable electricity would be easier than in Texas.

Market measured in Billions of Dollars:

Simon Leopold - with Raymond James:
The other thing I wanted to ask about is really from an industry perspective, your view of the addressable opportunity for the 3D sensing. So, not specific to what you think you are necessarily going ship but help us understand how you are sizing the market opportunity in 2018? And presumably, I want to ask about 2019, since given the timing of the ramp of the new facility, I have to imagine you are thinking about 2019 already.
Jerry Rawls - Finisar Chairman and CEO:
3D sensing is essentially gigantic. If all the customers and the consumer space and the automotive space really build systems and deploy them as they are -- they have indicated to us recently, then, no matter how big this building is that we just bought, and fill it full of equipment, it’s unlikely that we can supply all of the demand that we’ll need to supply. So, I mean, it’s measured in billions of dollars and it’s really hard to project today that how many of these applications are people really going to field. But, I’ll just tell you, we are building arrays for a lot of different people in both mobile and in automotive, some of them are quite small arrays and some of them are gigantic arrays, so.
Source:  Dec. 7th Earnings Conference Call Transcript

Recent (earlier this month) emailed BUY ALERT to subscribers:

My best buy was near the very bottom of the worst bear market since the Great Depression:

Kirk Lindstrom's Investment Letter
 Subscribe NOW and get the December 2017 Issue for FREE!!!
(My SPECIAL ALERT emails will begin immediately plus access to all past issues while your 1 year, 12 issue subscription will start with the December issue.

Update 12/13/17 at 11:38AM PST:  SEC FORM 8-K
Item 8.01 Other Events. Questions have arisen regarding news reports of Apple Inc.’s (“Apple”) announcement this morning regarding a $390 million award to Finisar Corporation (“Finisar”). Apple has not made a debt or equity investment in Finisar. The amount referred to by Apple represents anticipated future business between the companies over a period of time.

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