Question: What is the best way to develop an acceptable SMSF Strategy for the taxman. Do you have an example?
Answer (Paul Rickard): There is no right or wrong investment strategy. It is up to the Trustees. You are required by law to have one, and periodically review it to make sure it is appropriate. The ATO won’t inspect it, but your SMSF auditor, when they sign off on your fund, will probably want to cite it and make sure it is current. On our website, you can see an example. Here is the link [1].
Question: I am thinking of buying some shares in Lovisa (LOV) but I am worried about Amazon effecting sales etc. What do you think?
Answer (Paul Rickard): I think you should have a concern about the Amazon affect, although with their business model and opportunity to expand offshore, I am not sure that it will have that much impact. The market doesn’t seem too concerned given the way that the share price has rocketed ahead since their profit report. On valuation, you might like to note that Lovisa (LOV) is trading at quite a material premium to the analysts forecasts. The current broker consensus is $5.10, 14.9% less than the last market price of $6.00.
Question: What are the implications of the class action being taken against CBA by Morris Blackburn on behalf of CBA shareholders? If the case finds in favour of the shareholders, who are the winners and who are the losers? We hold CBA shares and have not taken any action.
Answer (Paul Rickard): This class action will play out over a long time. My guess is that these actions, plus the APRA enquiry/AUSTRAC legal action will keep CBA under pressure and that it will underperform relative to its bank peers. It needs some clear air, and until it announces the appointment of its next CEO, hard to see it getting this.
In regard to the class action, if it succeeds winners will be those that join the action (persons who bought shares in CBA between 2015 and August 2017), losers will be all other CBA shareholders. CBA will have insurance in place, which may indemnify the Directors and may cover some or all of any damages awarded. I have no particular insight into the chances of the class action being successful or not. That said, I am not that worried by it and I am not selling my CBA shares.
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