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WARNING: PAST RETURNS ARE NO INDICATION…I have been observing an interesting dichotomy for the past two years between our managed Growth portfolios and our Income portfolios. Traditionally, as investors aged, the standard advice was to slowly increase one’s bond exposure while simultaneously reducing one’s stock exposure so that in one’s early years one would hold mainly stocks and at retirement one would hold primarily bonds or GICs. Younger growth oriented investors would therefore generally have better returns

from their primarily stock-based portfolios than older investors from their primarily bond-based portfolios. However, the times they are a changin’, and with bond and GIC yields seemingly going lower every other day, many income-oriented clients increasingly demand or require high-yielding dividend-paying stock exposure in order to meet their income needs. As a TD Bank 5-year GIC currently yields about 2.5% in the form of interest, while the shares of TD Bank yield 3.3% in the form of a dividend, and considering that dividends are taxed at about half the rate of interest, it’s not hard to see why this is an attractive strategy! After all, it’s the financial stability of the same institution that’s backing both sources of income (beyond the CDIC coverage of the first $100,000 in GICs). While this approach has turned traditional investing on its head, the interesting phenomenon I have witnessed is that while both of our portfolios have fortunately done quite well, the better performance is coming from the income-oriented portfolios! I believe the cause of this phenomenon is twofold: firstly, we are in the midst of a slow growth environment so that growth rates are below historical levels, and secondly, that low interest rates are inducing investors to buy higher-yielding instruments, thereby pushing up the prices of those products.

If we are to look for the direction of future interest rates and levels of economic growth, look not to the upcoming Congressional elections which will certainly place more constraints on the Obama Administration’s policies. Instead look to the announcement the following day from Mr. Bernanke, the head of the U.S. Central Bank (the “Fed”) regarding the extent of intervention it will inject into the U.S. economy through “Quantitative Easing” or “QE” (the purchasing of existing U.S. government debt by the U.S. Treasury). Their hope is to stimulate some inflation and to avoid at all costs a Japanese-style deflationary environment. The fear is both, that too much stimulus will create hyper-inflation, and that not enough stimulus will not create any significant inflation and the economy will be stagnant at best and deflationary at worst. Bill Gross of PIMCO, the world’s largest bond fund manager, said recently that he and his team are simply “not sure” whether or not it will work.

Bottom line – investors globally should stay tuned to the upcoming U.S. events of November, as the QE question in particular will have major implications for future investing and perhaps, as Bill Gross suggests, on “our future prosperity.”

Asset Class 1-Month YTD 1 Year Asset Class 1-Month YTD 1 YearS&P/TSX 60 (Canada) 2.1% 7.3% 15.5% US$/CDN$ (1.0213) -0.7% -3.0% -5.6%S&P 500 (US) 3.0% 4.6% 10.0% 10-year GOC Bond -0.2% 9.1% 8.1%MSCI Europe 3.5% -1.9% -0.6% 5-year GOC Bond 0.4% 7.3% 7.3%MSCI Emerging Mkts 2.1% 8.4% 14.2% 3-Month CDN T-Bill 0.1% 0.3% 0.3%MSCI World 2.9% 1.4% 4.3%

Mark J. Krygier: T : 416-512-6441 E : mark.krygier@td.com Avital Pearlston: T : 416-512-6674 E: avital.pearlston@td.com4950 Yonge St., 16th Floor, Toronto, ON M2N 6K1

GLOBAL BENCHMARKS – To October 31, 2010 (Canadian $) – sourced from TD PAIR

MARKET COMMENTARYAn exclusive newsletter from

Mark J. Krygier, LL.B., CFP, Vice President & Portfolio Manager

November 2010Volume 11, Issue 8