1. QUARTERLY
An exclusive newsletter from Mark J. Krygier, LL.B., CFP
Vice President & Portfolio Manager
September 2011
Volume 14, Issue 3
“The fact that we are here today
Shhh…want some “insider information”?
to debate raising America’s debt With the ghosts of 2008 rising again, August was a month to forget. I do not ever
limit is a sign of leadership recall a week like the second week of August in which the markets fluctuated so
failure.” dramatically, following the down-to-the-wire U.S. Congress vote to extend the debt
limit. Four hundred points down, then up, then down, then up again – literally on a
Senator Barack Obama day-to-day basis. With the 2008 subprime credit crisis still very much a part of
March 2006
investor consciousness it was not surprising that some investors had concerns about
the sustainability of our financial system. I also do not recall a time period in which
Did you know? “Joe Public” was so focused on macro-economic issues, such as the level of debt to
GDP of the U.S. vs. England, or the spread between Greek and German bonds.
According to The Nikkei Weekly and Peter Lynch, the famed Portfolio Manager of the 70s and 80s used to say, “If you
the BP Statistical Review of World
Energy, as of the end of 2010 the spend 14 minutes a year studying economics you’ve wasted 13 minutes of your
main sources of global energy are: time.” Mr. Lynch managed the Magellan fund – the world’s largest mutual fund - in
Crude Oil 34% an era of hyper-inflation, real estate bubbles and the beginning of Central Bank
Coal 30% manipulation of interest rates. Based on his success it may be worth considering
Natural Gas 24% whether or not the time spent worrying about economics is worth the effort.
Hydro Electricity 6%
Nuclear Energy 5% Beyond macroeconomic forecasts there are other means of trying to figure out
Renewable Energy 1% the direction of markets and individual securities. Bond yields, for instance, are at
That means 88% of the world’s historical lows, indicating no expectations for inflation. Another method worthy of
energy still comes from fossil fuels! consideration is the spending habits of CEOs and other insiders of public companies,
To reach me: which are recorded publically by law. There may be various reasons why an insider
would sell his or her shares, such as estate planning or diversification, but only one
T: 416-512-6441 reason why an insider would buy the shares of the company for which he or she
mark.krygier@td.com works – because they believe the shares are cheap and are going to rise.
Or call: Interestingly, during the past volatile month, with investor fear at a peak, insider
Avital Pearlston, CFP purchases on U.S. markets were at the highest level since March 2009 – in what
Associate Investment Advisor turned out to be the bottom of the credit crisis. Very strong insider buying has also
T: 416-512-6674 been recorded on the Canadian TSX index, as the number of insider buying-only to
avital.pearlston@td.com selling-only hit a 52-week high, suggesting many Canadian companies are
considered undervalued by the people who know the companies the best.
The Madison Centre
4950 Yonge St., 16th Floor Bottom line – economic statistics are not pretty and suggest a potential recession.
Toronto, Ontario M2N 6K1 However, when investing look beyond just the headline economic numbers as
1-800-382-4964 sometimes a little “insider information” may turn up hidden value.
CAPITAL MARKET HIGHLIGHTS
 QE III? Recently U.S. Fed Chief Ben Bernanke indicated more stimulus for the U.S. economy may be on it way.
 U.S. interest rates are not expected to rise until at least 2013, and in Canada not until at least mid-2012.
 European markets are awaiting a consensus on a potential “Euro-bond” to back its weaker members.
 The soon-to-be new Japanese PM is reviewing the decision to abandon Japanese use of nuclear power.
WHAT TO DO NOW?
 In an era of lower economic growth and historically low interest rates, consider focusing on high-yielding securities
which continue to perform well versus the markets.

2. FINANCIAL SUCCESS SOLUTION$ - Lessons my father taught me.
About 30 years ago my father taught me how to drive a car. We drove a stick-shift and I was jealous of the fancier cars
with automatic transmissions and all the bells and whistles. In response, my father taught me a principle that I think
applies very well to investing – the more complex something is, the harder it is to discover the problems in it, and the
more expensive it is to fix those problems when they invariably occur. In light of the recent Sino-Forest debacle, and
the advent of ETFs, mutual funds, hedge funds, and now collateralized debt obligations, mortgage-backed securities,
etc., it would seem prudent for investors to have some rules to protect their hard-earned capital.
Consider my father’s philosophy of keeping things simple by asking yourself the following questions:
 Do you understand the risks entailed in each of the individual investments you own?
 Do you understand the internal costs of the investments or “who is compensated for doing what”?
 Do you understand how a particular investment will perform in various economic settings – not just in “good times”?
 In a worst case scenario, do you recognize what the loss of an investment will mean to your overall financial well-being?
If you don’t have an answer to one or more of these questions, call us to set-up a review of your portfolio.
STOCK WATCH ETFs TO WATCH GLOBAL BENCHMARKS
(In Canadian Dollars to August 31, 2011)
CANADA
Horizons AlphaPro Enhanced
Open Text – OTC (TSX) - Income ETF – HEX -TSX):$8.74
$58.01 Asset Class YTD 3-Year
Year High: $69.15 Low: $42.99 In Brief: This ETF offers a low S&P 500 (USA) -3.7% -2.2%
cost and liquid way of running a NASDAQ -4.7% 0.1%
 OTC develops, markets, covered call strategy on the TSX
licenses, and supports TSX 60 (Canada) -3.8% -1.2%
collaboration and enterprise Some of the benefits of this ETF: MSCI Europe -9.4% -9.8%
content management  Enhanced income from the
MSCI EAFE -9.9% -8.4%
software. premiums of call option sales
 ETF’s are bought like a stock China Shanghai -7.1% 1.8%
 OTC has a solid base of
recurring revenues and a so pricing is transparent. Brazil Bovespa -16.5% -1.4%
positive outlook for growth.  Income is from dividends and MSCI World -7.2% -6.1%
capital gains from the call 3-mo. CDN T-Bill 0.7% 0.8%
Risks: macro business premium sales
environment is challenging. 5-yr GOC Bonds 6.1% 5.8%
In summary: This ETF is suitable U.S.$/CDN$@0.9785 -2.0% -2.7%
U.S./ INTERNATIONAL for those believing the TSX will (% change)
make insignificant gains and
Bank of America
who wish to collect extra income Diversifying asset classes is the
BAC (NYSE) U.S. $8.17
from an equity based portfolio. first step in managing risk!
Year High: $15.31 Low: $6.01
 One of America’s largest
banks.
 Well positioned to grow when MY THANKS: WHAT AM I UP TO?
U.S. economy rebounds. To Daniel M. and Joe P. for I just read “Endgame – The end of the
 Except consumer real estate referring my services. If you know debt supercycle”, by John Mauldin,
all of its businesses are someone - family, friends or which is a look at the aftermath of the
profitable. colleagues - who may be able to 2008 global credit crisis from a macro-
Risks: A weak housing use some assistance with their economics view. Mauldin forecasts an
investment planning and you think initial deflationary period, which we
recovery and potential liability
that I can be of some help, contact appear to be entering now, followed by
over its purchase of Countrywide
me and I would be pleased to call an inflationary period. Naturally, one’s
Financial may limit its short-term and meet with them personally. investment choices depend on which
upside. scenario one believes in most strongly.
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