500 Lake Cook Road | Suite 210 | Deerfield, IL 60015 TEL 847.282.4225 FAX 312.962.3899 hightoweradvisors.

com

Securities offered through HighTower Securities, LLC | Member FINRA/SIPC/MSRB | HighTower Advisors, LLC is a SEC registered investment advisor



July 31, 2014


Dear Friends,

On December 5, 1996 Alan Greenspan characterized the then current stock market as being in a
state of irrational exuberance. The S&P Index rose by approximately 100 per cent over the
previous four years, and the implication of Greenspans remarks were clear: the market could fall
sharply. And the market did fall as Greenspan predicted, but not for another four years. During
this four year interval, the S&P Index again rose by approximately 100 percent.

No one describes todays market as being in a state of irrational exuberance. Many may caution
that interest rates are low, stock prices have increased, and political conditions around the world
are uncertain. It would not be surprising if they share their views with you that the market may
fall. However, mergers and acquisitions are proceeding at a rapid pace. The U.S. economy
captured the winter slowdown in this years first quarter data, and a surge of stronger economic
data is now being reported. A year ago the Federal Reserve was driving home the idea that a
highly accommodative monetary policy was necessary. This is no longer the case.

We agree with the current market critics that the market can drop and that sometime in the future the
S&P could be less than it now is. The question however remains How much higher will the market
rise before such a drop takes place? The answer, of course, is that no one knows. We reached the
conclusion a long time ago that our clients do not expect us to be able to predict the future.

Clients really want only three things from us: (1) dont lose their money, (2) earn a steady return, and
(3) invest so their assets increase in value over time as much as the market appreciates. Once we
came to understand this truth, our management approach changed. We cut back our single focus
approach of finding companies that represented a deep value opportunity and began to implement
our current portfolio management style. This approach has three different components:

(1) The first component holds Growth Stocks, i.e. individual securities which we
believe have the potential to generate relatively high returns. These securities are
then continuously monitored, and when we believe the fortunes of a holding begin
to deteriorate, it is sold and replaced.

(2) The second component holds individual Corporate and Municipal Bonds. These
securities produce a steady stream of income that gives clients the option to deposit
an agreed upon amount of money each month in their bank accounts for them to
spend as they see fit.


500 Lake Cook Road | Suite 210 | Deerfield, IL 60015 TEL 847.282.4225 FAX 312.962.3899 hightoweradvisors.com

Securities offered through HighTower Securities, LLC | Member FINRA/SIPC/MSRB | HighTower Advisors, LLC is a SEC registered investment advisor



(3) The third component holds Equity Income stocks. These are securities that pay a
relatively high yield and also have the potential for a modest price appreciation.
AT&T, for example, is in our Equity Income component. It has a current dividend
yield of approximately 5 percent; it pays an annual dividend of $1.84 per share and
sold in the $35 a share price range. We do not expect the price of the stock to either
increase or fall sharply from its current level; however, if the market continues to
believe that AT&T is likely to raise its annual dividend, its market price could
increase even more.

Before we manage a clients money, we try to hold a meeting and ascertain their cash flow
requirements. Once we know how much money each client would like to receive each month, we
can estimate the size of the bond and equity income component they need to generate their desired
cash flow. The remaining funds can then be allocated to the more volatile Growth component of
the portfolio and their current cash flow needs need not be jeopardized.

We began this letter to you by posing a question that is on the minds of many investors: Given the
high level of uncertainty that is prevalent in the market today, how should they allocate their funds?
We assume no client wants to lose, wants to receive a steady cash stream and wants to participate in
the growth of the market should it continues to rise. Each client owns their own separately managed
account, and no two clients hold precisely the same individual stocks or bonds.

Please call us and schedule an appointment if you would like to discuss how well your current
allocation meets your personal needs and what changes you would like to see us make.

Sincerely,




Eugene Lerner
Managing Director, Partner

The Lerner Group is a group of investment professionals registered with HighTower Securities, LLC, member FINRA, MSRB and SIPC, and with HighTower Advisors, LLC, a
registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities
referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced
herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this
research is provided as general market commentary, it does not constitute investment advice. The Lerner Group and HighTower shall not in any way be liable for claims, and
make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in
or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are
subject to change without notice.

This document was created for informational purposes only; the opinions expressed are solely those of The Lerner Group and do not represent those of HighTower Advisors,
LLC, or any of its affiliates.