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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi Peter,
I went over your replies with respect to CRH. RBC increased the target price. I would have expected shares to stay the same or go higher. Hence, is this just profit taking by institutions and if so, they basically control the market. What is a retail investor to do? Last week, cRH was hitting new highs and now all of a sudden drops due to RBC's call. Can you please advise on how a retail investor should react? I am thinking just stay put given CRH is doing well(based on last earnings ) and it was not a really a downgrade on the target price. Please advise.
Read Answer Asked by umedali on November 28, 2016
Q: I realize this is a question you've already answered, but seriously, CRH is down over 15% today on a moderate downgrade to perform from outperform? I've never seen a single downgrade, even one that downgraded a stock to sell affect a stock this severely. Is it possible there's more at work here? Is this stock mainly held by timid retail investors who are simply following its momentum (which it no longer has)? Are there institutional investors involved in this stock, perhaps one which is trying to leave quickly?
Read Answer Asked by John on November 28, 2016
Q: A new investment strategy, based in Paris, has developed TOBAM (Think Out of the Box Active Management), which is a new anti-benchmark strategy of investing with a goal of minimizing volatility swings in the markets. Whereas the TSX has a 35.64% weighting in financials and a 20.58% weighting in Energy, TOBAM's strategy limits financials to 22.1% and energy to 9.1%. Consumer Staples, on the other hand, are weighted at only 4.16% on the TSX, while TOBAM gives that sector a weighing of 14.4%. While the strategy is fairly new, when you back-test data to 2001, it does seem to be working. Mackenzie Financial has a number of ETF's utilizing this strategy. I am interested in three of them... the Mackenzie Maximum Diversification Canada Index (MKC on the TSX), the Mackenzie Maximum Diversification U.S. Index (MUS on the TSX), and the Mackenzie Maximum Diversification Developed World ex North America Index (MXU on the TSX). All three are traded fairly thinly. The first two are currently at their highs, the last is currently at its low. Your insight please.
Read Answer Asked by Paul W on November 28, 2016
Q: Hello,
Which one of these is a better buy and why? Purchase it in RSP or investment account? It appears that mrg.un is cheaper from a P/B value point. THANKS.
Read Answer Asked by Tabho on November 28, 2016
Q: Hi 5i: I have two questions - please charge as appropriate.
(1) I have been holding CU in a dividend reinvestment account for about three years. The account focusses on stocks that provide a good dividend that is increased regularly (the usual Canadian suspects). CU has consistently underperformed the other stocks, and I'm wondering what the future holds, in particular given the changes in Alberta's approach to coal-based electricity generation.
(2) Could you give me data on dividend growth rates for EMA and BEP.UN?
Many thanks for your great advice and service.
Read Answer Asked by Roland on November 28, 2016
Q: Although I am using CRH in the heading this question is really applicable to any number of situations where a share price drops on an analyst's "downgrade", especially when there is no material news on the company e.g. - management malfeasance, loss of a contract etc.

I am not particularly concerned here about the company's future and fully expect the share price to go back to where it was relatively soon, especially in light of the fact that the target price is higher that what it was trading at and that the consensus price is much lower that the new target.


But I am left wondering why this or any other stock would have dropped so much. Is it because it was an RBC analyst and as a matter of course, all RBC brokers are instructed to put in sell orders (their clients are probably all up given the recent share price increases) to show clients the value of their firm's research (and then start buying it back when the price drops) or are there trading programs that always sell on downgrades or is this a particularly "good" analyst with a wide following or am I just being too cynical?

As I said, this isn't just about CRH and RBC. Or is every situation so different that you can't generalize and this is just "noise" that should be taken with a grain of salt?

Appreciate your insight?

Paul F.
Read Answer Asked by Paul on November 28, 2016
Q: Hi great team!
Know you do not cover US stocks specifically but you may be able to assist me.
I have a 4 yr. old grandson leaving in the US. His Mom would like to have me help her start a long term saving investment plan along the lines of the "Lazy Investor", with mthly contributions ( not too large) in preparation for his future education.
Would you have any suggestions as to the stocks she should invest in,those having a DRIP and OCP and with good history of dividends. This would be done in the US so no complications re Canada.
Many thanks for this and all the great work you do for us!

Casey
Read Answer Asked by Harold on November 28, 2016
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