Ask the Experts

What is the definition of Blue Chip Shares? Is there a 'list' of blue chip shares available to an investor? Is Harvey Norman blue chip?

Blue Chip Shares are normally the largest companies listed on a stock exchange. Blue Chip Shares, so the theory goes, are relatively safe businesses to invest in because they have dominant franchises and market shares. But sometimes it's a case of the bigger they are, the harder they fall, which is why big shouldn't be confused with safe. A large margin of safety can only be found when a stock trades at a large discount to its intrinsic value, regardless of size.

Harvey Norman is certainly a Blue Chip and you will find that the All Ordinaries Index and the S&P ASX 200 Index are pregnant with Blue Chip Shares. Most popular daily newspapers will have a business section that shows certain information on these shares.

Please let me know which is the preferred investment between stocks/property/fixed income and how have they performed over the years?

What you prefer depends on your aims and risk tolerance, so it's not the same for each person. Most financial planners would suggest that you maintain a mix of these different assets over the long term, however. This link is an ASX commissioned report into how these various asset classes have performed over time (1.6MB file).

Can shares be transferred between family members without incurring stamp duties?

My understanding is that there is no stamp duty payable on listed share transactions at all, whether between family members or not. You should however check this with the office of state revenue in your state.

I bought some Agrium Inc (AGU) shares since the market was doing good. Suddenly I saw prices dropping down. It was my first time investing in the share market. Should I hold this share or sell it? I am a little worried I am going to lose more money. I bought it when it was $93 and now it is $84. Please advise. Also, is it a good idea to buy VISA share now?

Unfortunately your query constitutes personal investing advice, which we are unable to provide due to license restrictions. The Intelligent Investor only provides general advice on stocks listed on the Australian Stock Exchange.

I have recently heard of Wealth Within and their Diploma in Share Trading. They are asking a fair bit for the 6-month Diploma. Whats your view? Could one become good in trading shares without having to pay so much?

We're not familiar with the Wealth Within course but both the best and the cheapest way to become a good value investor, distinct from a share trader, is to read books, such as The Intelligent Investor by Benjamin Graham. Warren Buffett's letters to Berkshire Hathaway shareholders are also a must-read. If you are prepared to invest the time to read at minimal financial expense, and work your way through our Investor's College articles (start from issue 80), which are also free, then you will be well on your way to becoming a decent investor. You don't have to be a great investor to get decent returns, but you do need to have the right psychology. Often good investing requires you to do nothing for years at a time and many people are unable to do this, they need 'action'. Value investing is all about getting rich slowly.

I have invested in Deutsche Asset Management listed property trusts (paladin property trusts and the global property trusts). Please let me know how you think the listed property trusts sector may perform.

Although things have deteriorated significantly recently, it is still worth reading this feature article we wrote in July 2008, titled Panic in property. It's not a crystal ball unfortunately, but it does cover some key reasons that help explain the current carnage.

I want to be able to buy individual shares in overseas markets. While I am signed up with E*Trade for Australian shares (and limited overseas funds), and with OptionsXpress for US stuff, I also want to be able to buy European and Asian, and anything else basically. I want to be able to do it all online as well. I don't need a full service broker. Are there certain markets that I, as an Australian, cannot invest in without a full service broker?

It's worth calling the various Australian online brokers to see what countries they provide a service to. This isn't a recommendation, but Commsec have an international online broking service called Pershing. It certainly allows you to trade in Europe and Asia, but it's worth making a few phone calls to make sure you get the best brokerage rates and ensure good reliability and service on your trades.

Can you please tell me how long it takes to sell shares on-line here in Australia. In the US with Ameritrade they assure you a 9 second sell if I'm correct. Is it similar here also?

I'm not sure what the exact duration here is but with my own service the trade hits the market almost instantaneously. So I would expect most services would at least be somewhere around the Ameritrade promise - although I haven't seen any Australian service promise this and on the busiest days, one particular service, which shall remain nameless, actually fell over and couldn't process any trades. I guess that's why there's no gurantees, at least that I know of. It's well worth asking the broker, though, before signing up.

I am an Indian citizen staying and studying in Australia. I am interested in Australian shares and I have a bank account here too. Is it possible for me to invest in shares? Which documents will be required, where should i go and please let me know about the procedure.

Australia's major banks all have a share trading division as well. The easiest thing to do is inform your bank that want to trade Australian shares and they will put you through to the appropriate person. You will then need to link your bank account to your share trading account to settle trades. Any other information or restrictions that might apply to you should be raised by the application process. Alternatively jump on to the website of your Australian bank and you can find the application forms for share trading on there.

Hello, can you tell me what will be the paper trail for purchasing private company stock, i.e., what documents do the buyer and seller end up with after the transaction?

We wouldn't normally recommend the services of a lawyer but this may be one instance where it could pay to have someone read the fine print on your behalf. In these types of transactions the devil is often in the detail and you want to be very sure of what you are entitled to and what obligations both parties to the transaction have. You want to be dead sure of these issues before you hand over your hard earned money.