Yesterday, the S&P/ASX 200 Index (ASX: XJO) hit its highest closing level since 11 March at 5,615.6 points after a healthy 2.16% gain for the day. Today, the ASX 200 is pushing even higher – up another 1.41% at the time of writing to 5,694.7 points.

The ASX blue chips that have the heaviest weighting in the ASX 200 are behind this surge. The big 4 ASX banks (with the exception of Commonwealth Bank of Australia (ASX: CBA)) were all up over 2% yesterday and another 1% this morning. Telstra Corporation Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) are powering ahead today as well.

Afterpay Ltd (ASX: APT) is also contributing, making a new all-time high this morning of over $50 per share.

So what’s next for the ASX 200? Onwards and upwards?

On the contrary, here are 3 reasons I think the ASX 200 is getting into overvalued territory at these levels

1) US markets are wagging the ASX 200 dog

‘If America sneezes, the world catches a cold’ is how the old saying goes. As much as we would like to think otherwise, what happens in the United States pretty much dictates what happens on the ASX 200. And over in the US, the Federal Reserve is pumping a mind-boggling amount of cash into the financial system.

Here’s something to ponder: The US S&P 500 Index is only down 9.28% year to date. Really? Is the coronavirus pandemic and accompanying economic destruction only worth 9.28% in 2020?

Something strange is happening to the US markets (in my very humble opinion) and it has a lot to do with the massive Fed interventions.

This artificial inflation of the share market over there is spilling into the ASX in my view.

2) The markets are dislocating from reality

As a consequence of interest rates being a cut above zero, I think the markets have become distorted. There are no other options left for investors these days. Bonds, term deposits and other debt instruments have lost their potency as investments, which means a large section of the investing community is being pushed into ASX 200 shares.

This strong buying pressure is drawing attention away from the fact that corporate earnings are going to be hit hard in 2020 and possibly further into the future. We have entire businesses like Qantas Airways Limited (ASX: QAN) and Webjet Limited (ASX: WEB) in the deep freezer, commercially speaking.

Is this reflected in the current market? Not in my opinion. On the contrary, ASX travel shares like Qantas and Webjet are among today’s biggest gainers. Go figure.

3) FOMO has taken over the ASX 200

Investing greats like Warren Buffett and Benjamin Graham have said that the market is driven by 2 emotions: fear and greed. We saw a lot of fear in the ASX 200 back in March, and I think the current rally is being emotionally driven by greed. Once a market starts putting runs on the board, it attracts investors who might have ’gone to cash’ and are waiting to jump back in on fear of missing out (FOMO). This effect then snowballs as markets are pushed even higher.

It doesn’t matter what fundamentals actually underpin the markets in this type of situation, it slowly becomes a game of musical chairs. It can go on for a while, but eventually, the music stops. It’s hard to know whether this is happening, but it sure is starting to feel like it for this writer.

Foolish takeaway

I’m not trying to elicit panic here and I enjoy watching the value of my ASX 200 shares rise as much as the next investor. However, I like to ‘hope for the best, but prepare for the worst’ with my investing, and I see a lot of reasons why this market might be becoming overvalued.

The solution? Well, I’m not one to try and time the markets, but I am getting as much cash together as possible. That way, I always have one foot in both camps.

More reading

• What ASX investors can do before 30 June to save tax
• The ASX 200 stocks in the tax-loss selling firing line
• 2 unbelievable ASX 200 value shares to buy today
• Why didn’t Warren Buffett buy more shares in the recent bear market?
• ASX 200 up 1.8%: Big four banks jump higher, Flight Centre and Webjet rocket again

Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Webjet Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, Wesfarmers Limited, and Woolworths Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory appeared first on Motley Fool Australia.

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It’s nearly June, so S&P/ASX 200 Index (ASX: XJO) investors should start considering their tax affairs for FY20. Given death and taxes are the only certainties in life, it’s worth considering them. A tax outcome should rarely, if ever, dictate your investment decisions, but paying the right amount of tax can add thousands to your wealth over time.

Here are a few things that you can do to prepare for tax time and ensure that you are paying the right amount.

Sell some investments

There are a million reasons to sell an investment, but the main ones should be because your thesis is broken or your portfolio allocations need adjusting. I’ve only ever sold a few investments, but Telstra Corporation Ltd (ASX: TLS) was one of them, because my thesis was broken.

Many investors will have heard of capital gains tax (CGT) loss selling. This is where you sell an investment at a capital loss, because you want to use the capital loss now or in the future. If you know that you are going to have a capital gain on other investments in FY20, it may be possible to reduce these gains from carried forward capital losses or capital losses you make in the same year. Be careful when you do this, however, as there are tax avoidance rules about selling and buying back the same shares. As always, you shouldn’t do this just for tax reasons.

Less investors will have thought about CGT gains selling. If you have been thinking about selling some of your investments that are in a gain position, before 30 June may be the time to do it. With COVID-19 impacting many people’s livelihood, taking profits may be a good idea if you are going to be in a lower margin tax rate than normal.

Speak to your trusted business advisor

Like investing, tax planning is based on your personal circumstances. If you don’t want to read through pages of the ATO website and legislation, your registered tax agent and accountant will be best positioned to understand your financial position and what is available to you. You should speak to them about the above and any other options available to you.

Foolish takeaway

Tax shouldn’t be what drives your investment decisions, but it should be a consideration. ASX investors should target outperforming the ASX 200 index return, after fees and taxes. Legally lowering your average lifetime tax rate can significantly increase your annualised growth rate and wealth over time.

More reading

• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• The ASX 200 stocks in the tax-loss selling firing line
• 2 unbelievable ASX 200 value shares to buy today
• Why didn’t Warren Buffett buy more shares in the recent bear market?
• ASX 200 up 1.8%: Big four banks jump higher, Flight Centre and Webjet rocket again

Motley Fool contributor Lloyd Prout has no position in any of the stocks mentioned and expresses his own opinions. The Motley Fool Australia owns shares of and has recommended Telstra Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post What ASX investors can do before 30 June to save tax appeared first on Motley Fool Australia.

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The LiveHire Ltd (ASX: LVH) share price is rocketing higher today on the back of a new contract win. After being up by as much as 22.73% in early trade, LiveHire shares have pulled back somewhat to sit at an 11.36% gain for the day at the time of writing.

About LiveHire

LiveHire is a recruitment platform that enables employers to keep digital track of candidates within one ecosystem. According to LiveHire, its platform can help save its enterprise clients time and money by streamlining the recruitment process and potentially even cutting out recruiters’ sky-high fees. 

LiveHire was founded in 2011 in Melbourne and went on to publicly list on the ASX in 2016 at an initial public offering price of 20 cents per share. The company’s client base includes leading brands like Vodafone, Asics, Nissan, and Xero Limited (ASX: XRO).

What did LiveHire announce?

Shortly before market open this morning, LiveHire revealed it has won a contract with the Victorian State Government to provide technology to help deploy staff into critical areas of need.

More specifically, the state government will use LiveHire’s platform to profile, match, and engage current employees in order to transition them into critical roles across the state government.

According to the announcement, the Victorian government contract is approximately 8 times the average annualised recurring revenue per client across LiveHire clients. 

The initial term of the contract is 12 months, and the state government has the option to extend the term for a further 12 months.

Commenting on the contract win, CEO Christy Forest said:

“LiveHire has unique capabilities in search, match, skills profiling and personal communications, making our solution highly suitable for organisations which are now increasingly required to bring a more agile approach to workforce mobility.”

“Similar to our work for other Australian State Governments, we will leverage our platform to assign well-fitted, available employees to in-demand roles from a newly created Talent Community for Victoria’s Jobs and Skills Exchange,” she added.

While today’s announcement was welcome news for investors, it’s important to note that LiveHire is on the smaller end of the ASX in terms of market capitalisation. Factoring in the 11.36% share price rise at the time of writing, LiveHire shares have a market capitalisation of just $74 million.

More reading

• The ASX 200 just hit an 11-week high. Here are 3 reasons we might be in overvalued territory
• What ASX investors can do before 30 June to save tax
• The ASX 200 stocks in the tax-loss selling firing line
• 2 unbelievable ASX 200 value shares to buy today
• Why didn’t Warren Buffett buy more shares in the recent bear market?

Cathryn Goh owns shares of Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Small-cap ASX tech share rockets 23% higher on government contract win appeared first on Motley Fool Australia.

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