Time for a cleanout and off-market transfers

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Question: Charlie Aitken in the latest Switzer Super Report advises us before May to sell off high PE stocks such as Ramsay RHC, Orora ORA, CSL, which are in your investment portfolios, plus a few others that I had regarded as pretty safe such as Seek, Navitas, G8 Education and others. What are you planning to do with your growth and income portfolios? Will you be making any changes? I am finding it pretty hard this year to know what to do, so I value your advice.

Answer (By Paul Rickard): I absolutely agree with Charlie that some of the stocks he mentioned are way over priced and very vulnerable to valuation change, and that for the market to advance, it needs to be led by the top 20 stocks.

We are in 100% agreement, that is why I have been warning about stocks like Xero for some weeks – and our portfolios (particularly the income portfolio) are overweight top 20 stocks.

Orora is not one of the stocks mentioned by Charlie – he included CSL, Ramsay, Brambles and Amcor. I am not too worried about the valuations of these stocks – I am more concerned about the Australian dollar, as each of these stocks was included in part to position for a weaker Australian dollar. So far, this is not happening.

At the moment, I am not planning to make any changes to the portfolio. However, it is constantly under review and if we do propose to make some changes, we will let you know.

Question 2: I have been purchasing a small portfolio of shares [16 companies] – $25,000 for my grandchildren. I have purchased these in my own name. My husband and I have a family trust that currently “owns” a capital loss that will not be used in the short term. I want to transfer the shares to the family trust without incurring a sizable fee; do you have any suggestions as to what I can do at minimum cost please?

Answer 2 (By Paul Rickard): You will need to do an ‘off-market’ transfer for each share. Most brokers will process these transactions for you for a fee – typically around $55 per share. Also, check directly with the main registries (Computershare and Link Market Services) to see whether they offer the service – and at what price.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.

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