Memo 4/12/10

Memorandum

To: WLM Client Base

From: William L. Meyer, CLU, ChFC

Re: Good News 4/12/10

The economy is growing, given all the stimulus actions taken by our government and others. Statistically, the U.S. economy started growing in the third quarter of last year and was confirmed in February of this year. (source: UMB Bank) The leading indicators, such as manufactures new orders, average weekly hours worked, building permits, money supply, consumer sentiment, and increased shipping irrefutably point to a continued improving economy.

Going forward, I also believe job growth (a lagging indicator) will continue to improve especially as government stimulus peaks in late third quarter of this year, and as corporate earnings increase with companies enjoying some top-line growth too. Up until mid March I had significant cash in your accounts and am now starting to deploy the cash. Some of you have suggested we missed much of the upside, but I believe there is plenty more momentum left, and now with significantly less risk, which is why I am now investing the money—albeit not all of it, because after earnings reports are finished by May, the market will likely pullback and I will use the opportunity to dollar cost average. The investment posture is still going to be 60/40 for most of you with emphasis in preferreds, cash, and municipal bonds on the fixed income side of the investment equation. Many stop losses in place too, because unlike 2009 where the rising tide lifted all boats, this year will be a stock pickers market—the easy money that came with those willing to take large risks is over. Companies that can meet analysts’ expectations will likely continue to rise, while those that disappoint will likely retrace much of their 2009 gains. This is why the economic margin analysis used in selecting most of your securities is so valuable.

In January I said:

US stocks will likely be up modestly in 2010, perhaps 5-8%, similar to what happened in 2004 & 2005 after 2003’s run. In my view it will still be a stock pickers market; US stocks will beat bonds, but will underperform emerging markets. I expect inflation to continue to be well under 4% in 2010, but above that a couple of years out, which I see as a danger area in the future.

Attractive Sectors

Dividend payers—continued recovery also provides for expansion/upside
Industrials and transportation—due to the impact of stimulus programs and unspent money
Consumer Staples & Technology—significant cash is still on the sidelines that may come into the market
Healthcare—Leaner companies may provide for higher earnings
Commodities—increased production to replenish low inventory levels

I have not changed my outlook, and do acknowledge many of your concerns such as:

· Continued high unemployment in the U.S. and the disconnect between Wall Street & Main Street

· Rising interest rates—not bad if due to rising economic activity accompanied by a measured rise—terrible if due to foreigners concern over our nation’s growing debt

· Unsustainable high national debt

· Increasing tolerance towards protectionism which is bad for free trade

· Rising tax rates

· Eventual rising inflationary pressures

But, for the time being and likely most of this year, the nation’s investors continue to be focused on the income side of our economy. As long this continues and I believe the market will grind higher, but not on a straight line up. First quarter earnings will start to be released soon and I expect continued “Good News”. Remember that last year at this time the economy was in shambles and therefore the year over year comparisons will likely show 25-30% corporate earnings growth.

Thanks for your continued confidence, introductions, and business!