First Quarter Letter To Clients {Conclusion}

Conclusion

Our crystal ball, cloudy on its best days, is saying that the markets will not be as easy a place this year as 2009. We believe there is a strong likelihood that the trends we experienced since last March are changing. We believe that a trading scenario similar to what we experience between 2004-2006 is a more likely place to review for profitable investment strategies. We also think that stocks still have the potential to experience attractive returns this year given what we currently know about the market and the economy.

Based on a current S&P 500 earnings estimate of $78 per share, its current P/E ratio currently stands around 14, well below its 16.7 average since 1962. The trailing earnings yield (the inverse of the P/E ratio) is currently near 7%.* Investors are still being paid to own stocks, especially when viewed against the current anemic money market rates and bond yields.

We have said before that no investment thesis should be written in stone. There are many variables that could render our valuation scenario moot. We would then adapt them to current facts. However, we believe our analysis is plausible and indicates that stocks are a better buy once the parameters of this current correction are understood.

Investors have been through not only a lost decade as far as the equity markets but have experienced a roller coaster effect these past three years. We therefore understand their concern when stocks correct.

Thank you for reading our letter and letting us serve your investment needs. Please remember to check us out on the web! We have so much more timely content there. We try to post every day and it is designed to be read in less than five minutes each day. It is also the easiest way to give you an insight into our current thoughts. Again You can find us at: http://lumencapital.blogspot.com/ .

Christopher R. English is the President and founder of Lumen Capital Management, LLC.-a Registered Investment Advisor regulated by the State of Illinois. A copy of our ADV Part II is available upon request. We manage portfolios for private investors and also manage a private investment partnership. The information derived in these reports is taken from sources deemed reliable but cannot be guaranteed. Mr. English may, from time to time, write about stocks in which he has an investment. In such cases appropriate discloser is made. Lumen Capital Management, LLC provides investment advice or recommendations only for its clientele. As such the information contained herein is designed solely for the clients or contacts of Lumen Capital Management, LLC and is not meant to be considered general investment advice. Mr. English may be reached at Lumencapital@hotmail.com.

*Long ETFs related to the S&P 500 at the time of this writing in client accounts.