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Lemley Yarling Management Co
15624 Lemley Drive
Soldiers Grove, Wi 54655
Bud: 312-925-5248       Kathy: 630-323-8422

April 27, 2012

Model Portfolio Value As of 27 April 2012

$ 606,382


Comment on Model Portfolio activity

There was no activity again this week. We haven’t made a trade since the last week of February and doubt that we will in the near future without a 10% correction or some major news that turns us bullish.

The S&P 500 and DJIA regained highs seen in February as economic numbers were muted but Apple and many other major companies exceeded earnings/revenue expectations.
*****

Hoover lives on:

GDP growth is the first quarter was a respectable 2.2%. It would have been much better but:

Real federal government consumption expenditures and gross investment decreased 5.6 percent quarter, compared with a decrease of 6.9 percent in the fourth.

National defense decreased 8.1 percent, compared with a decrease of 12.1 percent.

Nondefense decreased 0.6 percent, in contrast to an increase of 4.5 percent.

Real state and local government consumption expenditures and gross investment decreased 1.2 percent, compared with a decrease of 2.2 percent.

Britain has slipped into recession as decreased government spending and lower taxes fail to stimulate the economy. Duh!!

Unemployment in Spain has risen to 24.4% in the first quarter of this year. It's an increase on 22.9% in the last three months of 2011.

BERLIN (Reuters) - German Chancellor Angela Merkel has ruled out any renegotiation of the fiscal pact on budget discipline agreed by 25 European Union governments and rejected criticism that the bloc was not focusing on growth.
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April 20, 2012

Model Portfolio Value As of 20 April 2012

$ 606,376


Comment on Model Portfolio activity

We did nothing this week. Below is Sheila Bair’s (former Chairperson of the FDIC: bio http://en.wikipedia.org/wiki/Sheila_Bair ) tongue in cheek with many grains of salt solution to the economic crisis.

http://www.washingtonpost.com/opinions/fix-income-inequality-with-10-million-loans-for-everyone/2012/04/13/gIQATUQAFT_story.html

Fix income inequality with $10 million loans for everyone!

By Sheila Bair, Published: April 13

Are you concerned about growing income inequality in America? Are you resentful of all that wealth concentrated in the 1 percent? I’ve got the perfect solution, a modest proposal that involves just a small adjustment in the Federal Reserve’s easy monetary policy. Best of all, it will mean that none of us have to work for a living anymore.

For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them. So why not let everyone participate?

Under my plan, each American household could borrow $10 million from the Fed at zero interest. The more conservative among us can take that money and buy 10-year Treasury bonds. At the current 2 percent annual interest rate, we can pocket a nice $200,000 a year to live on. The more adventuresome can buy 10-year Greek debt at 21 percent, for an annual income of $2.1 million. Or if Greece is a little too risky for you, go with Portugal, at about 12 percent, or $1.2 million dollars a year. (No sense in getting greedy.)

Think of what we can do with all that money. We can pay off our underwater mortgages and replenish our retirement accounts without spending one day schlepping into the office. With a few quick keystrokes, we’ll be golden for the next 10 years.

Of course, we will have to persuade Congress to pass a law authorizing all this Fed lending, but that shouldn’t be hard. Congress is really good at spending money, so long as lawmakers don’t have to come up with a way to pay for it. Just look at the way the Democrats agreed to extend the Bush tax cuts if the Republicans agreed to cut Social Security taxes and extend unemployment benefits. Who says bipartisanship is dead?

And while that deal blew bigger holes in the deficit, my proposal won’t cost taxpayers anything because the Fed is just going to print the money. All we need is about $1,200 trillion, or $10 million for 120 million households. We will all cross our hearts and promise to pay the money back in full after 10 years so the Fed won’t lose any dough. It can hold our Portuguese debt as collateral just to make sure.

Because we will be making money in basically the same way as hedge fund managers, we should have to pay only 15 percent in taxes, just like they do. And since we will be earning money through investments, not work, we won’t have to pay Social Security taxes or Medicare premiums. That means no more money will go into these programs, but so what? No one will need them anymore, with all the cash we’ll be raking in thanks to our cheap loans from the Fed.

Come to think of it, by getting rid of work, we can eliminate a lot of government programs. For instance, who needs unemployment benefits and job retraining when everyone has joined the investor class? And forget the trade deficit. Heck, we want those foreign workers to keep providing us with goods and services.

We can stop worrying about education, too. Who needs to understand the value of pi or the history of civilization when all you have to do to make a living is order up a few trades? Let the kids stay home with us. They can play video games while we pop bonbons and watch the soaps and talk shows. The liberals will love this plan because it reduces income inequality; the conservatives will love it because it promotes family time.

I’m really excited! This is the best American financial innovation since liar loans and pick-a-payment mortgages. I can’t wait to get my super PAC started to help candidates who support this important cause. I think I will call my proposal the “Get Rid of Employment and Education Directive.”

Some may worry about inflation and long-term stability under my proposal. I say they lack faith in our country. So what if it cost 50 billion marks to mail a letter when the German central bank tried printing money to pay idle workers in 1923?

That couldn’t happen here. This is America. Why should hedge funds and big financial institutions get all the goodies?

Look out 1 percent, here we come.
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April 13, 2012

Model Portfolio Value As of 13 April 2012

$ 606,382


Comment on Model Portfolio activity

Corrections are a process and we are of the opinion that the process has begun. The sell off early in the week was a reaction to the disappointing Employment Report of last Friday. FED talk led to rallies on Wednesday and a big bump on Thursday. Friday the 13th was a wash with China growth numbers a bit less that the whisper number and European financial problems again on traders’ minds. Austerity in the UK and Spain and Italy and Portugal is not going to solve any problems.

The U.S. economy is slowly recovering, autos are selling but auto stocks lag, and traders are enamored of concept stocks where P/E doesn’t matter. We remain on the sidelines.
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