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Lemley Yarling Management Co
15624 Lemley Drive
Soldiers Grove, Wi 54655
Bud: 1-800 BLEMLEY (253-6539)       Kathy: 1-800-793-3665

January 23, 2015

Model Portfolio Value As of 23 January 2015

$ 746,228


Comment on Model Portfolio activity

The markets continue to be volatile with the major averages finally turning positive for the year on Thursday before going negative again on Friday afternoon. We have been taking our lumps with KBH blowing up on us last week and continuing under pressure this week. We decided to switch at a not nice loss to BankAmerica. BAC has been under pressure recently but is more conservative vehicle with which we hope to recoup the KBH losses. We also switched Athena Retail at a loss to American Eagle for the same reason. And to complete a dismal week for us in Friday DreamWorks dropped 10% on several analyst downgrades. we are maintaining since we still expect the company to be sold and with the profits we made last year we are still positive on the holding. We added General Electric, Fifth Third Bank, and Huntington Bank to portfolios as conservator purchases for the eventual higher move in markets.

At least the January thaw continues.
*****

January 16, 2015

Model Portfolio Value As of 16 January 2015

$ 745,008


Comment on Model Portfolio activity

Ugh!! The correction is upon us for real as the Swiss Franc blowup which has led to some currency trading houses going broke coupled with the continued drop in the price of oil and all things oil related have pressured markets. The big boys and girls are of course enjoying the volatility- or at least trading it- and we have no idea how low markets will go or how long it will last.

Our guess, a guess seasoned by 45 years in the business, is that there are some large losses lurking at large banks around the world. The Swiss had kept the exchange rate with the euro fixed for three years and computer programs for the big boys and girls most probably had factored in a continuation of that fix or only a slight change. Since computers run the trading world - and the big boys and girls like to trade in the billions to make pennies per trade - small moves can lead to big losses. A large unforeseen move like that of the last two days in currency markets can lead to humongous losses. The Big whale trade at JP Morgan involved over $100 billion of assets to capture 1% or less moves. The leverage is needed to make the trades worthwhile. 20 to 50 times leverage in currencies are often used.

For peace of mind until all the news is out, we sold AT&T and Verizon today for small losses (we did capture a dividend) to raises cash in accounts and also eliminated Deutsch Bank at a 10% Loss. While we were taking our lumps we switched U.S. Steel to Fifth Third Bank at a large loss to lessen our exposure to the oil patch to our investment in Marathon which we plan on holding. Our oil venture X for an after year end pop obviously didnít work and we will lick our wounds while awaiting better opportunities.

We donít like taking losses but these sales have raised sufficient capital while not threatening the upside by much should the current correction run its course since the stocks we continue to hold will be more volatile to the upside than the ones we sold.

The losses come early in the year coupled with a small profit in American Eagle which we also sold this week and so we have 12 months to recover.

On the bright side this correction seems to have engendered more fear than the ones in October and December last. But it is surely painful as are all pullbacks and being more fully invested than usual for a New Year pop did not help. But the stocks we own are cheap, the economy is good and this too shall pass- -eventually.

Keep the faith and enjoy the January thaw.


*****

January 09, 2015

Model Portfolio Value As of 09 January 2015

$ 767,863


Comment on Model Portfolio activity

We thought the markets would rise in the New Year and then correct but this week they did the opposite swooning 4% in the first two days only to bounce back to up on the year by Friday.

What this means we have no idea. We remain as fully invested as we want to be. Doing the week we traded Ford for a wash and placed the proceeds in more Marathon Oil. We have enough exposure to the auto industry and wanted to increase our oil exposure as the price continues to drop. The oil companies seemed to have stabilized at lowered levels and our guess is that a drop below $40 would be needed to cause a more substantial sell off.


*****

January 02, 2015

Model Portfolio Value As of 02 January 2015

$ 774,302


Comment on Model Portfolio activity

The Model Portfolio ended the year up 3.8% versus up 7.5% on the DJIA and almost 12% on the S&P 500. We usually lag on the upside and outperform in down markets. Our large cash position through most of the year was more a function of not having any stocks we wanted to own than great fear that the markets would tank.

We did get fully invested at year end as Tax loss selling and name avoidance by the big boys and girls presented more stocks with value versus share price. We will use any sustained rally into March to lighten positions which is our usual action in markets that are behaving normally. As we keep saying the economy continues to improve and while there are excesses in some of the no/slight earningís concept stocks most major stocks are at most only slightly over priced.

During the week our only new addition was to repurchase KB Homes.

And let the fun begin again.
*****


Happy New Year


Bud, Katie, Kelle, Gerald, Abby, Dave, Tyler, Lisa, Katie, Bud - 2014

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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15624 Lemley Drive Soldiers Grove, Wi 54655 1-800-793-3665
The factual statements herein have been taken from sources we believe to be reliable but such statements are made without any representation as to accuracy or completeness or otherwise. From time to time the Lemley Letter, or one or more of its officers or employees, may buy and sell as agent the securities referred to herein or options relating thereto, and may have a long or short position in such securities or options. This report should not be construed as a solicitation or offer of the purchase or sale of securities. Prices shown are approximate. Past performance is no indication of future performance.