Improving Portfolio Quality: Recommended stock switches

Bell Potter


Against the backdrop of heightened share market volatility and the recent end of the profit reporting season, it is timely to examine some sensible stock switches to help improve the quality of equity portfolios. In theory, an exercise like this urges clients to sell stocks with an analyst Sell rating and then reinvest the proceeds into stocks with an analyst Buy rating within the same broadly defined sector. However, there are always “shades of grey”— in particular, analyst Neutral ratings sometimes appear to downplay important negative or positive thematic issues underlying the much more obvious investment arithmetic. This tendency to sometimes gloss over the “bigger picture outlook” needs to be taken into account when recommending stock switches and we will address it as appropriate in our following comments.

Bell Potter Securities is a leading Australian stockbroking, investment and financial advisory firm that provides a comprehensive offering of financial services to a diversified client base that includes individuals, institutions and corporations.

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