1. QUARTERLY
An exclusive newsletter from Mark J. Krygier, LL.B., CFP
Vice President & Portfolio Manager
Stocks for the long run? ABSOLUTELY!
As 2011 is winding down, investors are in some cases once again experiencing a
sense of angst. What started off on a positive note, following a second positive year
in the markets, ended up in as much fear as we have felt since the dark days in 2008,
when Lehman Brothers’ demise led a near-collapse of the U.S. financial system.
Several famed hedge fund managers have since quit the business, the United States
credit rating has been downgraded, and concern over the American consumer,
housing market and high unemployment rate, is only overshadowed by the concern
for all of these issues from our European counterparts. Europe has found itself
December 2011 divided between Germany’s demands for fiscal prudence and French and Italian
Volume 14, Issue 4 demands for provision of fiscal liquidity at all costs. Neither solution is perfect, and
while it is possible, it is hard to believe the Europeans will allow a “Lehman”
experience to occur in their own back yard. Fool me once, shame on you, but fool
“A community that says, me twice shame on me! As the Polish finance minister recently said in a visit to
regardless of what happens in
Germany, the consequence of German inaction scares him the most.
the rest of the world, that it can
never again change its ground After such a year, and a return to the 2000s volatility, why would anyone
rules, simply can’t survive.” consider owning stocks anymore? The answer is valuation, inflation, and taxation.
German Chancellor As noted in the “Did you know?” section, only stocks (and real estate) have
Angela Merkel provided significant longer-term after-tax or “real” returns - not bonds, not treasury
(“T”) bills, not even gold, the past decade’s darling. Going into the 2000s, many
stocks, led by the tech industry, were trading at abnormally high valuations, virtually
Did you know? guaranteeing subpar returns in the coming years. Today, in particular in the context
In “Stocks for the long run”, Jeremy of historically low interest rates, which are indicated to stay “lower for longer”,
Siegel lists the after-tax returns for many stocks appear very reasonably valued. For instance, the average five-year
investments from 1871-2006, and bank issued GIC in Canada yields a miserly 2.5%, whereas the stock dividends from
for most 20-year periods, as being: the same Canadian bank’s average 4.4%. As dividends are taxed at about half the
Stocks 6.7% rate of GIC interest, the “real” after-tax yield of the banks’ dividends is more than
Bonds 2.8% double that of their own GICs. It appears some investors have figured this out, as
T-Bills 1.7%
near the end of November, high dividend-paying stocks have on average risen this
Gold 0.4%
CPI (inflation) 2.1% year while world markets were down on average 9%.
Consider how this information fits Bottom line – be realistic about your longer-term needs and plan accordingly.
with your investment strategies! Owning dividend-paying companies is a simple means of owning the historically
best way to beat inflation and taxation and to get paid to wait for long-term growth.
CAPITAL MARKET HIGHLIGHTS
 The Federal Reserve and five other Central Banks including Canada announced a coordinated effort to keep the
banking system liquid, reducing fears of a repeat of a 2008 banking crisis occurring in Europe.
 European markets continue to wait for a consensus on a potential “Euro-bond” to back its weaker members.
 Housing figures in the U.S. may be stabilizing and the U.S. consumer wowed retailers on “Black Friday”.
WHAT TO DO NOW?
 Patience and fortitude are necessary attributes of the successful investor. Panic will only convert temporary declines
into permanent losses. Review, be realistic, and make changes necessary to stay focused on your goals.
Mark J. Krygier: T : 416-512-6441 E : mark.krygier@td.com Avital Pearlston: T : 416-512-6674 E: avital.pearlston@td.com
4950 Yonge St., 16th Floor, Toronto, ON M2N 6K1 Toll-Free 1-800-382-4964

2. FINANCIAL SUCCESS SOLUTION$ - More Lessons My Father Taught Me.
During my youth I worked in construction several summers alongside my father. One principle he taught me, which I
usually remember only after the fact (like the holes I drilled in the wrong spot in a bathroom tile when putting up a
mirror), is the simple notion to always “measure twice and cut once”. It sounds simple enough but I kick myself every
time I forget it, and beyond its practical application in construction, I think it also has applications in the world of finance.
In today’s world of volatile markets and excruciatingly-low interest rates, if you simply “measure once” and assume you
have set your investment planning for life, based on your initial plans or stage in life, you may be in for an
uncomfortable surprise (like those holes in my bathroom tile) when you are getting set to retire.
Consider a second set of “measuring” in planning for one’s retirement, which should include the following steps:
 Update the value of your current investments and assess your ability to add to your retirement pool.
 Project your future retirement income based on current interest rates (five-year GICs now yield about 2.5%).
 Be realistic about your time frame for investing – NOT the years before retiring, but the years to draw income.
 Recognize that being too conservative in your investment strategies may result in you outliving your money.
 Ignore short-term volatility – it is really irrelevant to your long-term planning.
If you are unsure of how to review your retirement planning or your investment strategies call us for a review.
GLOBAL BENCHMARKS
STOCK WATCH ETFs TO WATCH (In Canadian Dollars to November 30, 2011)
CANADA BMO Covered Call Banks ETF
– ZWB -TSX): $13.11
Fortis Inc. - FTS (TSX) - $33.36 Asset Class YTD 3-Year
Year High: $35.45 Low: $28.24 In Brief: This ETF offers a low cost S&P 500 (USA) 3.1% 6.9%
way of running a covered call
 FTS is a diversified holding strategy on the Canadian banks NASDAQ 0.8% 11.9%
company with holdings in TSX 60 (Canada) -7.5% 10.3%
Some of the benefits of this ETF:
electric and gas utilities.
 Enhanced income from the MSCI Europe -13.8% -1.1%
 Has a real estate and hotel premiums of call option sales MSCI EAFE -15.3% -1.1%
subsidiary.
 ETFs are bought like a stock China Shanghai -15.3% 1.8%
 FTS has a history of so pricing is transparent.
consistent and predictable Brazil Bovespa -25.8% 16.2%
 Income is from dividends and
financial results. capital gains from the call MSCI World -8.9% 1.7%
Risks: operational disruptions premium sales 3-mo. CDN T-Bill 0.9% 0.7%
and regulatory changes. In summary: This ETF is suitable 5-yr GOC Bonds 7.6% 5.2%
for those believing the banks will
make insignificant gains and who U.S.$/CDN$@1.0182 2.0% -6.4%
U.S./ INTERNATIONAL (% change)
wish to collect extra income from
Emerson Electric an equity-based portfolio.
EMR (NYSE) U.S. $49.10
Year High: $62.24 Low: $39.50
WHAT AM I UP TO?
 Designs and manufactures
wide range of electrical and
MY THANKS: I attended a lecture by Jeremy Siegel,
famed author of “Stocks for the Long
electronic products. Run”, and Professor of Finance at
 Process management has To Maya G. and Gabor R. for
Wharton. He presented a refreshing
continued to be strong. referring my services. If you know
longer-term view of capital markets
 A high dividend and a low someone - family, friends or
beyond today’s panic-stricken
colleagues - who may be able to
valuation make this an headlines. For anyone nervous about
use some assistance with their
interesting opportunity. the stock markets ability to provide
investment planning and you think
that I can be of some help, contact good returns, I highly recommend
Risks: A prolonged economic reading his book to get a realistic
slow-down could affect capital me and I would be pleased to call
and meet with them personally. understanding of investment returns.
spending and product demand.
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