October 31, 2013

Dear Friends, Before John Maynard Keynes became recognized as one of the worlds great economists, he managed Cambridge Universitys endowment fund. When asked why he sold a security he had recently purchased Keynes responded When the facts change, I change my opinion. What do you do, sir? In this regard all of us at the Lerner Group are Keynesians. Every recommendation we make to buy or sell as security is based upon a careful evaluation of current facts about the security. It is also an implicit prediction of what we believe the securitys future price movements are likely to be. Predictions, however, are not guarantees; we therefore consider every recommendation as tentative and subject to reversal. Our goal, which has not changed since we first began to manage your money, is to preserve and enhance your wealth. Like Keynes, we believe we should respond to the changes constantly taking place in your needs as well as in market opportunities and make appropriate adjustments in your holdings. To help us in this decision making process, we classify your portfolio assets into three major buckets: growth-oriented equities, high dividend paying equities, and bonds. We then concentrate on two critical questions. Which specific securities should you now hold in each bucket? And what proportion of your total portfolio should you hold in each bucket? Let me illustrate two recent adjustments we made. (1) Large Cap growth stocks appreciated more rapidly than other growth oriented equity groups earlier this year. At that time we recommended that Large Cap stocks have a heavy weight in your growth stock bucket. During the last few months, however, the returns of many Mid, Small and Micro cap stocks began to exceed those of several Large Cap companies. We believe this trend can continue and therefore have begun to make equity adjustments in favor of smaller companies. (2) A few years ago, corporate bond yields were relatively high, and bond portfolios generated generous returns. Today current bond yields are relatively low, inflationary pressures are strong, and long term bond prices are starting to fall. We are therefore encouraging clients to reduce the percentage of bonds they hold in their total portfolio, and increase the proportion of holdings in high dividend paying common stocks. Market facts and personal needs are constantly changing. We try to make careful evaluations and thoughtful responses to these changes as they occur. We not only want to keep you satisfied as a client, but as many of you know, we also try to hold in our personal accounts every security we recommend to any client. Thank you for your continued loyalty and trust. Please call to give us your correct e-mail address to receive these monthly letters electronically. Sincerely,

Eugene Lerner Managing Director, Partner

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

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