February 28, 2014 Dear Friends, The broad market averages fell in January and then recovered in February.

Both the Dow Jones and the S&P Indices now stand near their previous peak levels. I believe many of the same strong forces which have been driving the market upward can continue to operate in the future. Unless some radical adverse changes occur, the broad market averages could be ahead of their current level by a double digit figure by year end. Consider five current upward pressures that are now in play: 1. Janet Yellen, Chairman of the Board of Governors of the Federal Reserve System announced that she plans to continue the Feds tapering process for buying bonds. Over the past year, the Fed purchased bonds at the rate of $85 billion per month. The rate then fell to $75 billion, and a $65 billion purchase is contemplated for this month. These purchases have the effect of both lowering interest rates and increasing bank reserves. As banks draw down their now higher reserves to increase their loans, they are likely to add to the upward pressure on the money supply, commodity prices, corporate profits and stock prices. 2. Several measures of macro-economic activity such as gross domestic product (GDP), industrial production, and the total number of people employed are now increasing and contributing to the upward pressure on stock prices. However a new normal may be developing in the amount of upward pressure an increase in employment brings to consumer prices and ultimately stock prices. The percentage of the total labor force now seeking employment is falling. As a consequence, efforts to stimulate employment may be more inflationary in the future than it has been in the past. 3. Many countries around the world are experiencing serious internal political and social problems; their citizens view the United States as a safe haven where they can hold their wealth. Foreigners are now investing heavily in both the real estate of major metropolitan areas as well as in the debt and equity instruments traded on our exchanges. Large capital flows in the future could continue to have a meaningful impact on equity prices. 4. Housing prices have risen rapidly. The effect of this has been to raise the wealth of homeowners, increasing both their risk tolerance as well as their capacity to assume more debt. A portion of the new found wealth of homeowners has spread over into the equity markets and is now contributing to the rising level of stock prices.

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

5. Changes are also taking place within the structure of the market. The number of new issues being brought to the public is beginning to increase. The prices of small and midcap stocks are now increasing at a faster rate than many of the larger and higher dividend paying securities. One needs only to turn to the dozens of small drug company stocks to recognize that the animal spirits that John Maynard Keynes wrote about as contributing to rising markets are alive and well today. Four of the five upward pressures on stock prices cited above span a wide and well recognized range of economic considerations; from current government monetary policy to rising macroeconomic activity; and from foreign investments in our domestic markets to a change in risk tolerance of alternative investment outlets. The fifth draws upon the insightful behavioral finance arguments of a brilliant economist who articulated the glue that is holding our analytic framework together. We plan to continue to monitor these five trends and try to take advantage of opportunities as they arise in the months that lie ahead. Our goal in all of this will be, as always, to preserve and enhance your wealth. I look forward to hearing your comments on this vision statement of what the equity markets have in store for all of us during the upcoming months. Please call if you have any questions. 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.

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