On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX 200 shares:

Afterpay Ltd (ASX: APT)

According to a note out of UBS, its analysts have retained their sell rating but lifted their price target on this payments company’s shares slightly to a lowly $14.00. The broker made the revision to its price target after factoring in Afterpay’s recent U.S. update this month. While it acknowledges that the pandemic could accelerate positive structural changes for Afterpay, it has warned investors not to extrapolate the magnitude of recent growth in online sales. The Afterpay share price broke through the $50.00 mark earlier today.

Vicinity Centres (ASX: VCX)

Analysts at Morgan Stanley have retained their underweight rating and $1.25 price target on this shopping centre operator’s shares. According to the note, the broker believes that Vicinity will experience a material drop in rent rates once the crisis is over. And while it believes Vicinity has some high quality assets, there are other assets in its portfolio which it is less enamoured with and fears could struggle. The Vicinity share price is trading at $1.67 this afternoon.

Wesfarmers Ltd (ASX: WES)

A note out of Citi reveals that its analysts have retained their sell rating but lifted the price target on this conglomerate’s shares to $36.60. The broker was pleased to see the company take action on its underperforming Target business. And while it has lifted its earnings estimates for FY 2020 and the coming years to reflect stronger than expected sales growth, it still has issues with its current valuation. As a result, it appears to see better value elsewhere and has retained its sell rating. The Wesfarmers share price is fetching $40.27 on Tuesday.

More reading

• 4 reasons the Afterpay share price just hit $50
• 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

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO and Wesfarmers 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 Leading brokers name 3 ASX 200 shares to sell today appeared first on Motley Fool Australia.

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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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