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For those folks who have accounts with us, you may now go to: www.aacesonline.com and fill out the account information and view your accounts online. If you have trouble filling out the form, or in getting online, call and we will help you with the process. NASD regulations require the aacesonline site to be secure. Thus your password must be changed every ninety days. You will be prompted to make this change when needed.

For those clients of LY& Co and other interested persons the Quarterly Report on the routing of customer orders under SEC Rule11Ac1-6.
For Quarter Ending March 31, 2003 For Quarter Ending December 31, 2002 For Quarter Ending September 30, 2002
For Quarter Ending June 30, 2003

29 August 2003 - Comment

7:15am and as we return from vacation we are happy for Lauren Slavik to announce that she has moved on to the floor of the CBOE to further her adventures in the world of finance. We enjoyed having her with us but our office is a little boring for a young intelligent woman. We three remaining Lemley group members have had our adventures and to us boring is comforting. We wish Lauren well in the future and know that success will be hers.

Today marks the end of August for accounting purposes and so we would ascribe yesterday's late day run up in the DJIA and S&P 500 to the month end mark up phenomenon. The NASDAQ was also strong yesterday as speculative juices continue to flow and folks reenter the stock markets to recover their losses of the last few years. The gurus we read also ascribe much of the recent runup to the decimation of the bears by a new found bull confidence. That could be true but there are some bears like us who don't short stocks and who by judiciously trading from the long side have been able to prosper in the three year bear market. We continue to believe that a pullback is coming although we are aware that there are good reasons that this autumn period may not be as devastating to portfolios as the last three have been. Time will tell.

US Stock funds took in $28 billion in July while bond funds suffered withdrawals. June inflows to stock funds were $18 billion. Which reinforces the maxim that as markets rise more folks want to invest money.

Today also marks the end of our once a day posts and on Tuesday we will resume our normal twice a day routine.

Monday is the Labor Day Holiday and the stock and bond markets are closed.

When will the conspiracy buffs start asking questions about first New York, then London blacked out by transformer failures? OK we'll ask the question?

An Israeli warplane fired a missile yesterday that killed a Hamas militant riding on a donkey cart. The image of that action poignantly reflects the clash of cultures and disparity in resources of the conflict in the Middle East.

We learned yesterday at www.theinquirer.net that the Republican Party is using call centers in India to raise funds. As the article states,

“Young people at the call centers are helping robots to phone American citizens to enlist their support and money for the political party, with plans to extend the scheme if they whip up enough donations.”

And these actions are being taken by the folks who the first to cry, “America, Love it or leave it.”

And tomorrow is another day.

28 August 2003 - Last Day of Vacation Comment

8:07am and sad but true we will be manning the phones tomorrow so that Sharon and Kathy may have a long weekend. It is our hope that all our clients will be enjoying a long holiday and so be too busy to call.

Overnight we learned that Richard Grasso has been earning $10 million dollars a year running the NYSE and that he had a pretty nice contract that will result in a $140 million lump sum payment this year as a new contract takes the place of the old one. We guess if the NYSE folks want to pay him that kind of money that's their business but the amount does explain why Grasso always looked so cheerful even during the bear market of the last three years when NYSE firms were firing thousands of employees. Moreover Grasso’s lump sum payment will be in cash and it turns out that the money was set aside for his retirement was not invested in stocks. Rather Grasso was guaranteed an 8% return and we surmise that he considered that a better deal than trying to build his capital by investing in common stocks. Too bad he didn't share that non-stock investment philosophy with the public.

The stocks markets were lower yesterday in light trading and bonds were also weak. We presume that trading and interest in the markets will be muted today and tomorrow. We will be around to watch the action and answer the phones. We are thinking of buying some SBC which is down 20% from where it traded last month and has a 4.8% yield. We have traded SBC a few times this year without much gain but as we said the other day we are in the process of rebuilding the portfolios slowly with solid stocks not for trading but for longer term holding in mind. SBC has a dividend yield of 4.8% and is scheduled to find out on October 15 whether the regulatory authorities will allow it to offer long distance services in the former Ameritech states like Illinois and Wisconsin. One problem SBC has is that a Daley is president of the company and since he is a Democrat we presume that the Tom DeLays of the Washington world are putting pressure on the Justice Department to deny approval. But we also think that eventually approval will be given after some judicious contributions have been made.

Yes, we think things in Washington are that political and debased.

And tomorrow is another day.

27 August 2003 - Vacation Comment

8:15am and with a houseful of nice folks we are a little late with our post. The stock markets rebounded in the last hour yesterday, just as they had done the day before. Gurus are ascribing the rebounds to more committed bulls vanquishing disheartened bears. There is even talk that the usual negative seasonal bias that occurs in the September/October period may not happen this year because it is so widely expected.

We can't get our arms around the arguments because on the one hand bulls are winning and on the other hand too many folks are bearish. As we suggested yesterday we think that the plethora of negative news has numbed folks to the point where the live one day at a time philosophy has given rise to a fairly strong rally. Moreover after some shakiness a few weeks ago the stock markets have lately shown no interest in rolling over.

Of course, making judgments in thin trading during the last week of vacation season can be dangerous to one's pocketbook. But we do sense an “it's getting better and I don't want to miss the ride” air of optimism infecting the talking heads.

Our resolve is to wait and watch and buy individual stocks that become cheap. We of course are always open to changing our mind but that event will not occur this week.

In our reading yesterday we noticed that the CBO said the deficit for the 2004 fiscal year would be $480 billion. Last March the CBO estimated that the 2004 deficit would be $246 billion in 2004 but then after that the deficits on a yearly basis would begin moving back towards surplus, with an accumulated surplus in the 2004-2013 period of $891 billion. That projection is now non-operative. Oops.

Democrats on the CBO are suggesting that the deficit for the 2004-2013 periods will be $3.7 trillion and if the Social Security Surplus is excluded the deficit will be $6.3 trillion.

Finally, the CBO numbers don't include $1.2 billion from tax cuts scheduled to expire that may be made permanent.

New home sales dropped in July to a 1.14 million unit's annualized basis.

Consumer Confidence rose 5 points to 81.4 in August.

Yesterday we directed folks to the GW Bush Action Figure Doll. The following letter was originally posted on the Kansas City Star.

Bush toy was not much fun

By MATT LITTLE Special to The Star

Dear Blue Box:

With great disappointment, I am returning the George W. Bush “action figure,” which you will find enclosed in this package. I am seeking a full refund for this defective toy for the following reasons:

• Despite its billing as an action figure to pair up with my GI Joes, it was obviously not made to be a soldier. Never mind the lack of any scar on its face. The bigger problem is that I cannot find any weapons of mass destruction anywhere in the box. Heck, I can't find any weapons at all!

• When I pull the string to make it talk, the results are muffled and unintelligible or make no sense at all. Is this supposed to be some kind of rotten joke on your customers?

• Every time I turn the doll upside down and shake it, white powder comes out. What's with that?

• Even worse, my GI Joe dolls don't seem to like this one at all, and I'm beginning to understand why:

All last week, during the grueling sandbox battles in my backyard between my GI Joes and the hideous armies of Grog, the GW Bush doll was missing. I thought it was lost for good. But then, after my GI Joes won the day and made the sandbox safe again, there the Bush doll was, front and center, looking splendid and unruffled in pristine army fatigues. Evidently it'd been playing dress-up all week with my sister's Ken doll but was right there to take the credit for the GI Joe's victory.

My GI Joes are all saying that the GW Bush doll is stealing money out of their pockets and giving it to my sister's Ken and Barbie dolls. I didn't believe this at first, but this afternoon I spied a nice, new dollhouse in my sister's room and now I'm thinking it must be so.

I'm certain you can understand my desire to return this toy to you. Your quality control supervisor must be asleep on the job. Frankly, I don't know why you even produced this doll in the first place. If you value your reputation at all, you will recall it immediately.

All this is terrible, but the worst part of all is that this is not the doll I originally ordered! I carefully filled out the order form, yet the toy I received was not the one I expected. I wonder how many other customers ended up with a different “action figure” than the one they requested. I hope the rumor that you cannot correct this error for two more years is untrue.

Please either send me the action figure I ordered or refund my money. Thank you for your prompt attention to this matter.

Matt Little is a marketing, communications and design consultant who lives in Overland Park.

The following website has an interesting take on the cost of the war in Iraq versus what could be done with the money in the U.S. www.costofwar.com.

And finally, we received another message from our utility consultant that we would like to share.

As you would expect, I'm still pondering the blackout here -- or, as my Greenwich Village sister calls it, "the most boring crisis I was ever in." (Given that her baseline of comparison is 9/11, I suppose she can be forgiven for her attitude.) Most of my colleagues seem to think that the blackout will spark long-term change in the electric system. I am less sure.

Voluntary action on the part of individual utilities or by industry organizations seems insufficient. And, after reading of 5,000 (if you believe the French government) or 10,000 (if you believe the undertakers) dead in France from the heat, I am not convinced that the blackout does qualify as a crisis with the ongoing human interest to keep the pressure on Congress.

There is a tremendous amount of inertia in DC after two years of arguing over an energy package. I think there is also a lot of "lobby fatigue," in that staffers and members of Congress have become immune to the yammering of the interest groups.

I do expect some legislation -- ideally a Sarbanes-Oxley sort of package with a minimum of irrelevant crap in it ("fix the transmission system by drilling for oil in the Arctic!"). But I don't expect a drastic rationalization of how the system is managed, largely because the Southeast and Northwest states want to protect their cheap power (paid for with Federal money by and large, but they don't remember that). And I don't expect anyone to pony up the $100 billion that the Electric Power Research Institute says is necessary to modernize the transmission infrastructure. But there could be some less universal but still positive change, and I'm all for positive change...

And tomorrow is another day.

26 August 2003 - End of summer vacation in five days Comment

7:21am and we had another bit of rain last night so the grass should start greening today. And weather reports suggest the heat will break tonight. Coupled with the arrival of our younger daughter Kelle, who passed her Ph.D. prelims and is now a full fledged Ph.D. candidate we are looking forward to a pleasant week.

The stock and bond markets are also acting kindly for most owners of stocks and bonds and the respite from the three year sell off has emboldened Wall Street. We are hearing and reading many more positive reports. Coupled with anecdotal comments from friends about their business we detect a pick up in the belief that economic activity is growing. We are not blind to this thought but we remain bearish for now at least.

That's because today the CBO will forecast a plus $500 billion budget deficit for next year and we are of the opinion that the Federal deficit will create a demand for money that will raise interest rates for all. Treasury bond yields have already increased 25% in the last two months, albeit from ridiculously low levels. Even at the current yields we are not inclined to be buyers of maturities of any length since we expect much higher rates within the next year. Also, we believe there will be trading opportunities soon with much greater return potential as well as investment opportunities in stocks like SGP.

We ascribe the current pickup in retail sales to the tax cut child credit checks. We also feel that there is a psychology of buying till one is out of cash and credit that is permeating society as a result of the governments' similar philosophy. We think that 9/11, the Black Out, the Iraq imbroglio, the jobless numbers and the California recall are all combining to encourage folks to live each day and not worry about the future since they can't control it anyway.

Durable goods were just announced at up 1.7% which is the third month in a row of positive numbers. That is a plus for the bulls but we remain unconvinced that firing people to increase productivity and trading the dollar for profit is a sustainable means for true economic growth in the country and true profit growth for companies.

But, hey, that's enough thought stuff on a beautiful summer day. Our basic reason for holding cash right now is that our gut tells us there will be better opportunities at lower prices within the next few months.

And so we watch and wait.

And tomorrow is another day.

25 August 2003 - Last week of vacation, really, Comment

6:15am and this comment will posted a little late today because brother computer guru is on his way to the farm to virus proof and clean up the computers that we use every day. The virus scare has been a boon to computer guru business and in the back of our minds the thought percolates that maybe the computer security companies can’t be too unhappy with this virus epidemic.

This is the last week of summer with the Labor Day holiday coming next Monday and so we would expect an even more lethargic week that the one just past. For the record, the DJIA is up 12.1% for the year this morning, the S&P 500 is up 12.9% and the NASDAQ is up 32%.

The Model Portfolio is up 12.8% and again owns one stock. We purchased Schering Plough at $14.80 on Friday when the company cut its dividend and the stock opened 10% lower. We had been waiting to take a position in the shares when the dividend was cut. We know we mentioned the $13 per share number as an entry point but we decided to buy the $14.80 eight year low in the stock. We did not buy as a short term trade and hope to build on positions like this over the next few months. SGP has problems that won’t be solved overnight but either the problems will be solved or the company sold. And we would expect that over the next two years we would be able to realize a 50% gain on the stock should the economy and stock markets recover. If the markets and economy continue to flail we are comfortable owning the shares at this price and adding more shares at lower levels. As our clients know we have been trading this stock for the past few years as it has moved lower from the $40 level and we have been able to trade it profitably by being quick on the trigger. Our plan is to hold at these levels but a quick run to $17 or $18 per share over the next month would test our resolve. We will hope for such a dilemma.

We are taking it easy this week and should be well rested as September rolls around. We spent a tad of money on the SGP and we have other stocks we are watching but most are 20% to 30% higher than the levels at which we are interested. The financials were weak last week while the home builders and retailers and big cyclicals rallied. The tech area has been strong all year, and especially so recently, but even at 1750 the NASDAQ is well below the bubble high of 5000 that it made several years ago. That may be a positive in that it shows the Index and underlying stocks have a lot of room to move. But it also may mean nothing since the prices many of the NASDAQ stocks saw in that mania will never be seen again. We continue to view most tech stocks as over valued and are happy for the profits we made early in the year in them, even though we left money on the table in most of or sales, as we usually do.

And so we will be on a watching and waiting schedule for the week. Luckily we had a one inch plus rain this morning which while not breaking the drought we are suffering will relieve us of any need to water our tomatoes today.

We conclude today with a few political selections so those of our readers with a conservative bent or averse to political mischief can stop right here.

And tomorrow is another day.

For those who want to have the latest action figure toy for their grandchildren we offer the following. http://www.kbtoys.com/ And no it isn’t Arnold What’shisname.

And from the Hartford Advocate we present a portion of a column about the cut in pay for troops serving in Iraq to keep the U.S. Deficit down. The full story is at http://hartfordadvocate.com/

In the midst of Bush's month-long AWOL from his duties as president during wartime (and crises like the worst blackout in U.S. history), the Department of Defense announced last week it intended to cut the pay of the 148,000 U.S. troops in Iraq and the 9,000 still in Afghanistan. These troops were to receive increases in imminent danger pay (from $150 to $225 a month) and family separation allowance (from $100 to $250). Sen. John Kerry, who did not go AWOL during the Vietnam War, sounded presidential when he told an Iowa audience: "The Bush Administration says they just can't afford it. Well if they can't afford to pay our soldiers in harm's way, and support the families they left behind, then they better get their priorities straight ... The Bush Administration questions the patriotism of those who ask questions about how you win a war, but I know no deeper violation of patriotism than dishonoring those who wear the uniform of our nation ....”

22 August 2003 - Crawford County Fair Day

7:15 am and today we take our nephew, the banker and his wife the nurse practitioner and their five children to the Crawford County Fair. Usually "Fair weekend" guarantees rain which would be well received by all this year, but it looks like there will be nary a cloud in the sky which will suit the children if not the adults just fine.

The Philadelphia Fed released a report yesterday that gurus interpreted as bullish and the stock markets rallied for a while even as Treasuries moved lower. But the lateness of the month and lack of volume and folks around weakened the rally and at the close the DJIA was only up 25 points. We would surmise that with today being an August Friday that volume will be light and just about anything might happen.

The market activity remains bullish and both the NYSE and NASDAQ had over 300 new highs yesterday with lows in the single digits so the up trend remains in force. There is some silliness in the markets with E Bay trading at 100 times earnings and many stocks exhibiting V shaped rising share price patterns.

Earnings warning season is about to begin and we still have no inclination to enter the fray. Schering Plough cut its dividend today but we have a feeling the stock will rally on that news since the cut has been anticipated. SGP sells for 2.4 times sales while the Pfizers of the world trade at 5 times sales.

We have a continuing interest in the stock and have traded it for the past few years on its way down from $40. We've made a few dollars in the process and we are interested at these levels ($17). The action in the stocks reminds of Syntex in the early 1990s which eventually sold at $13 per share and so we have that number in our mind. We didn't trade Syntex nearly as well as we have traded SGP and so we are not going to press our bets here. But this discussion will demonstrate that we are not sleeping and we are watching for opportunities. The problem for us is that we don't foresee an economic recovery and we don't feel that the current time frame is conducive to trading profitable. And so we are sidelined.

And tomorrow is another day.

21 August 2003 - Vacation Thursday Comment

7:20am and we are pleased to report that we shot a sizzling 110 at golf yesterday which matched the heat/humidity index and convinced us that we should hang up our clubs for another year.

The jobless claims number was reported at 386,000 for the week ending August 15 which was a drop of 17,000 claims from the upwardly revised previous week number of 403,000. A big deal was made last week that the jobless claims number had come in under 400,000 at a 393,000 number. So we guess last weeks big deal must roll forward to this week's number since last week's number wasn't actually under 400,000. This week's number may not be either but it is the number for the markets to trade on today whether or not it is correct.

The stock markets closed boringly lower yesterday and this morning look like they want to try and recover that loss. The S&P 500 is up 13.7% and the DJIA is up 12.7% for the year while the Model Portfolio remains fixed at up 12.8% and 100% cash. There is not much occurring in the daily noise of trading and we expect the markets to continue to mark time till September. Then as folks return from vacations and the third quarter earnings warning season begins the true test of this recent rally will also commence.

Till then its watch and wait and water the new grass and pray for rain for us up here in the boondocks of Wisconsin.

And tomorrow is another day.

20 August 2003 - Golf Day Comment

7:05am and we are off to golf today, something we do about once a year. The markets continued their rise yesterday although only with a last minute low volume rally. We continue to avoid any commitments.

We were reading an excerpt from Joe Conason's new book "Big Lies" and we would like to share a paragraph.

There is a meaningful way to calculate the average effects of the Bush (tax) plan: The fortunate 1 percent at the top will receive an average annual tax cut of about $45,000. The less fortunate 20 percent in the middle of the income distribution will have their taxes cut by an average of $265. The least fortunate 60 percent at the bottom will get an average annual tax cut of $95.

The bombing of the UN building in Baghdad had no effect on stock market activity yesterday. One assumption might be that the stock markets have priced in continued conflagration in Iraq. A U.S. soldier continues to be killed almost every day but the news media has decided that these occurrences are old news and most mention the deaths on inside pages. And the killings in Israel were mentioned by one TV market commentator as a reason for the late day rally yesterday. We couldn't understand that statement. We view the twin attacks as very negative harbingers.

Interestingly by occupying Iraq the Bush folks have made it easier for terrorists to attack American interests by placing American soldiers and America's reputation in the terrorists' back yard.

On CNBC this morning the talking heads interviewed the CEO of Bayer which is introducing Levitra, the male impotence drug of the National Football League. One talking head made the point that between the three drug companies offering male impotence drugs $1.5 billion will be spent on advertising and promotion of the drug. These are the same folks who are trying to get the Republican Congress to help them prevent grandpa and grandma from saving a few dollars by buying drugs in Canada at lower prices.

Hewlett Packard missed its number last night which is no surprise and the stock markets are going to open a bit lower today. Bonds were stronger yesterday and will probably continue their oversold rally for another day or two. After the recent move up a pullback will be no big deal. The Nikkei 225 was up another 100 plus points last night and is through 10000 on the upside for the first time in a year. So maybe the DJIA and Nikkei will start matching each other. The Nikkei has been a bit more volatile in the last month and has risen 8%.

We view this activity as noise and not real market action although it would have been nice to capture some of the gain. We are off to play golf and look for a neutral session today with a slightly lower close.

And tomorrow is another day.

19 August 2003 - Continuing Vacation Comment

8:08am and we have certainly missed the stealth rally underway in stocks that blossomed into a full fledged pop higher yesterday. Blackouts, bombs in Afghanistan, and high oil prices be damned, stocks are moving higher on the back of good retail sales and higher housing starts. In fact July housing starts were the highest in 17 years at an annualized rate and June was revised to up 5.7% from up 3.5%.

So all is well in stock land and we have missed a nice move in the stock market. The DJIA made a 54 week high yesterday and the S&P 500 is making a valiant attempt to move up through 1000.

Last night we were thinking that at this time of year we usually are trying to figure out how to recover from being down for the year and hoping for a year end rally. Even with our total cash position, the DJIA which is up 12.8% is now only even with the performance of the Model Portfolio and the S&P 500, up 13.6%, is ahead of the Model Portfolios performance by less than 1% for the year. The S&P 500 is still behind the Model Portfolio by 100% for the last five years and so we are taking the current rally with some grains of salt.

We always worry that at some point we will lose our market touch, and we are constantly reevaluating our outlook but we don't have any desire to venture into stocks at this time. We are content with our performance this year and will await a more substantial correction to consider re-entering the markets.

And tomorrow is another day.

18 August 2003 - Semi-Vacation Comment

7:31am and since it seems that the markets are going to continue their dog days of summer till after Labor Day And because we will be maintaining our cash position at least until then we have decided to continue our semi-vacation and will only be writing one comment a day.

We received the following e-mail from our utility industry consultant as an addendum to our diatribe on Friday following the East Coast and Canada Black Out:

I love it when you talk about the utility industry.

You write that "utilities were regulated monopolies for a reason and that reason was to assure that they provided cheap and reliable power day after day, year after year." Well, yes and no. That was certainly part of the ongoing rationale for keeping the industry regulated. But the rationale for regulating it in the first place was more interesting.

In fact, the utility industry, led by Samuel Insull, actively sought regulation early in the 20th century. First, many utility managers viewed state regulation as a permanent defense against municipalization of utility assets by Progressive and reformist city governments, who had grown frustrated not only with service and price problems, but also with the role of utilities in general in urban corruption. Second, regulation was seen as a way to legitimize utility securities for investors. I think this pattern of motivations for regulation can be seen in other industries, too -- I'm thinking of the Securities and Exchange Commission, for instance.

Obviously, regulation worked at keeping service up and prices down (declining, in fact), at least until the 1970s. Or rather, it worked, as long as you had the Rural Electrification Administration to finance electrification of areas the investor-owned utilities wouldn't serve, and as long as you had an immensely fertile trend of innovation to steadily improve thermal efficiencies in your power plants and therefore justify continual capacity additions, and so on.

But don't forget that rate-of-return regulation gave us a gold-plated system that benefited investors at the expense of consumer because the only way for utilities to earn money was to build more stuff, whether or not it was needed. And it produced the biggest environmental transgressor on the planet, with the possible exception of the auto industry.

And, while I agree that utilities have not built up the transmission system as necessary, I don't think that is because they were too interested in their Brazilian ventures. Frankly, I think it has a lot more to do with the near-impossibility of siting and permitting a transmission corridor today, given the chokehold that state commissions, country authorities and property owners have over the permitting process.

Mind you, I don't think that is necessarily a bad thing; I'd like to see Wisconsin utilities do a lot more energy efficiency to manage demand and local renewable energy generation before they build new power lines to import more power from out of state. But I think Wisconsin probably does need that power line, and the difficulties that ATC is having in building it are matched across the country. In short, blaming the blackout on deregulation seems like only part of the answer...

From the NYT on Saturday, August 16, 2003, we like the following quote:

David Freeman, chairman of the California Power Authority, said after talking about how the Black Out may help Gray Davis in California since there never were any Black Outs during the California crisis several years ago and the current crisis gives new perspective to the California experience:

"What's lacking in this deregulated world is someone to take responsibility," he said. "No one is responsible for beefing up the system or building power plants. We're talking about the lifeblood of our economy, and there has to be a sense of legal responsibility for keeping the lights on, and that's what we lost with deregulation."

And that is our final take on the Black Out since we are sure that Mindless media will drive discussion of this issue until the next Kobe Bryant story.

We do think that the Black Out will slow trading through the end of the month as investors decide to continue their vacations from the marketplace and enjoy what is left of summer. On Friday stocks closed basically unchanged and Treasuries continued their rally from oversold territory that began Thursday afternoon when the Black Out first occurred.

One final thought and it comes from Josh Marshall at www.talkingpointsmemo.com:

Back in April Congress raised the extra allowances soldiers, sailors, airmen and marines get for being in combat zones and for family separation. The former got bumped to $225 from $150 a month; the latter to $250 from $100. The administration says this increase will cost $300 million per year. And that's too much. They want to go back to the old rates. The administration says that amount can't be balanced with our other priorities.

And tomorrow is another day with cash remaining king.

15 August 2003 - Vacation Comment

7:32am and today is double witching as well as the day after the lights went out in NYC and much of the East. As pundits and politicians search for the reason for the electricity shutdown they need look no further than deregulation and mismanagement by FERC.

Deregulation of the utility industry allowed bean counters and linemen to become overseas entrepreneurs. Upon deregulation, electric and gas utilities CEOs sold facilities, traded energy, invested in new plants in Bora Bora and were wined and dined by New York investment bankers. That's pretty heady stuff for folks from Metroplis and for the last many years the boring transmission lines and infrastructure which aren't sexy and swallow dollars have been neglected and under funded.

This thought is not a new one for us. We have mentioned the fact that utilities were regulated monopolies for a reason and that reason was to assure that they provided cheap and reliable power day after day, year after year. Every time there is a blackout folks remember how vital utility power is. And then after the news conferences and Congressional hearings and crocodile tears nothing happens.

We have made the same argument about the Health Care system that was originally created by charities run by nurses to provide care for folks who needed it. Those hospitals were run "not for profit" but to fill a basic human need. Thus the term, Not For Profit. But along came the know it alls who can prove on a piece of paper that capitalism will provide the most efficient system of manufacturing a product and politicians and investment bankers fall all over themselves to be the first on the block to propose free enterprise and profit oriented hospitals.

And now the health system doesn't work because profit is not an essential or even wanted part of health care. But that is a rant for another day brought on by the monthly increase in our health care premium as we received our monthly letter from the insurance company telling us of the doctors who have dropped off their system.

Today the stock and bond markets will be a non event. Whatever occurs, it will take a week or so for the markets to decide what to make of the occurrence. While blackouts happen every twenty years, we think that the reality of the unpredictability of the event is a negative for the current investment psyche.

So today we expect bonds to be firm and stocks to meander. A very large junk bond deal for Charter Co of over $1.5 billion was pulled last night. That is negative.

And tomorrow is another day.

14 August 2003 - Vacation Comment

8:45am and "what should I do with my money?" is the question of the hour, day, month and year. If the Fed and economists are correct and there is no inflation then sitting in cash waiting to see how events and markets react in the next few months will cause no real loss of principal.

Jobless claims were under 400,000 which should cheer the markets even as it is devastating news for the 398,000 folks who lost their means of providing for their families.

It is all well and good to hope for job creation and to meet in Crawford Texas and make nice sounding pronouncements but the reality is that after the child credit tax credit checks are spent in the next two months the quiver is out of arrows.

Bush ruled out more tax cuts in yesterday's pseudo press conference and that is strange since if tax cuts are the panacea he and his folks have been suggesting they are, one would think that the President would be pushing for more and more and more. We presume Bush and his advisors have reached the precise amount of tax cuts that will be the magic pill and cure all problems. We can only hope.

We have no guess on where the markets are going today but as we write the DJIA is down and treasuries are also under pressure.

Many market commentators are writing about the predictive nature of the Treasury sell off. By that we mean that gurus are postulating that Treasuries are selling off because the rise in yields is predicting a rebound in the economy.

Our take is more jaundiced. We just think a whole bunch of young and flashy bond traders got caught the wrong way and are giving back a lot of the gains they made this year and last. Our only data for this theory is the history of the bond markets over the past twenty years.

In closing we present the Bush take on the economy from yesterday's news conference. We presume some of the syntax has been repaired to make it readable. It's not always what Bush says but what his speech writers mean that is important. This transcript is from the real White House web site, www.whitehouse.gov. If you are a Democrat or Liberal and you want to read a fun website you might want to visit www.whitehouse.org. But only visit that website if you are not pleased with the President's performance.

THE PRESIDENT: Let me remind the listeners here about what our country has gone through. The stock market started to change in March of 2000. And there was a precipitous decline in March of 2000. And that began to affect savings and money and attitude. And then the country went into a recession. The first three quarters of 2001 was a recession. And we dealt with that by passing tax relief, which made the recession one of the shallowest in history.

Now, people said, well, maybe you shouldn't have done that, maybe you shouldn't have had tax relief, maybe you should have let the recession run its course. But my attitude about that is, is that a deep recession would have caused more people to lose work. And I'm more worried about families finding a job and putting food on the table than I am about economic theory and economic numbers. And so the recession was shallow.

And as the economy was beginning to recover, the enemy hit us on September the 11th, and that affected our economy in a big way. And then we had corporate scandals which we've dealt with. And then, of course, you remember the "march to war." I've reminded people -- I think this isn't the first time I've said this -- that some would put on their TV screens that we were "marching to war." As a matter of fact, it was a year ago that we began the "march to war." During the August vacation, as I recall, there was the march to war. It's hard to have an upbeat view of the world when you're "marching to war." War is not exactly a positive thought, particularly when it comes to people willing to take risks, and consumer confidence.

But, nevertheless, we dealt with that issue. And so now the economy is -- having overcome those obstacles, is beginning to recover. And, yes, I think people are going to go back to work. And I firmly believe that what we have done was the absolute right course of action in order to help people find a job.

And tomorrow is our last day of vacation. Ours not the President's, he gets a few more weeks.

13 August 2003 - Vacation Comment

7:20am and in a new way to reduce the Federal deficit we read yesterday that the U.S. Treasury Department is planning to fine Faith Fippinger of Sarasota Florida $10,000 and maybe send her to jail for up to twenty years for acting as a "human shield" in Iraq before the war. Thankfully she wasn't injured. As misguided as we think those folks were we would suggest that there are bigger fish to fry and better places for the Treasury to find money than the social security checks of retired school teachers. But General John Ashcroft, who by the way is a card carrying member of the "too busy to serve in Vietnam although I really believed in the war as long as others fought it" Chickenhawk Brigade, has decided that no miscreant should go unpunished. We are sleeping easier with that knowledge.

The media is having a field day with the California Recall which is in large part the result of the huge budget deficit in California. Yet in the same media there is very little mention of the Federal budget deficits that dwarf anything the country has ever seen.

Following is the full text of the Fed release at 1:15pm yesterday regarding their thoughts on the meeting they had just held:

"The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. In contrast, the probability, though minor, of an unwelcome fall in inflation exceeds that of a rise in inflation from its already low level. The Committee judges that, on balance, the risk of inflation becoming undesirably low is likely to be the predominant concern for the foreseeable future. In these circumstances, the Committee believes that policy accommodation can be maintained for a considerable period."

John Rutledge at www.thestreet.com has a wonderful quote regarding this statement:

"We interpret FOMC statements; the Greeks studied animal entrails and visited oracles. Same thing. Says more about our need to believe the world is predictable than what the future is likely to be."

7:55am and we received the following e-mail which with our response which we share today.

It's the summer doldrums and I am spending time ruminating about the near future for markets. Where to go? If long term interest rates are rising, investing in intermediate and long term bonds is a no go until rates stabilize and one can expect decent returns for limited risk on capital. Not sure the Fed can control this and not impact the Dollar. If the Fed inflates the economy that will further drive up interest rates and the inflationary cycle of the late '70s may start again. If so, buy real estate in Southern Cal. (real estate inflation will outstrip the cost of borrowing) Also, the stock market will not do well due to high borrowing costs and pressure on profits. Until then, where do you go? The market is dangerous now and the best you can do is look for opportunistic trades. You obviously can't make money on money markets and bonds until rates rise, so where does the "smart money" go? These guys aren't going to sit still for 1% return on their money. I keep thinking about gold, but have found that rather expensive to trade in the past. It also appears to be manipulated by central banks and that would be futile to chase. It is difficult to just sit around and do nothing. I'm really just looking for thoughts. Thanks.

Dear Bill:
A good question. With our published and actual investment record we happen to think that we are "Smart Money" and we are sitting on cash. There are times when the smart thing to do is to do nothing. We have been scalping for a while, but scalping gains from the long side right now has stopped working for us. We don't short stocks so that is not an option for us but if we did we would be seriously considering that action.

It is our belief that rates will rise faster than prognosticators predict. But rates probably won't be at a level where we want to invest in bonds for a year or so. So we accept the nothing yields currently paid by money funds and average them with the returns we have received over the past twenty years and are content. Moreover our accounts are up 8% to 15% for the year so we have a bankable return for the year without doing any more risk taking. After all as we noted yesterday the total return on the thirty-year Treasury is negative for the year and the intermediate Treasuries are up about 1% on a total return basis.

The fall period usually provides an opportunity for long side trading. If it does we will try to take advantage. We continue to believe that currently there is more risk to the downside than potential to the upside and so we are sitting for now and letting the markets tell us what to do. We can have fun predicting but the most money is made reacting to what occurs. We are obviously situated for a downside sell off because that is what we expect. If that occurs we will hopefully use DIA and SPDRs to participate in trading rallies and pick at a few stocks for individual gains.

We do not think the housing bubble has burst nor has the consumer learned any lessons. And until that occurs we don't think a bottom has been made. But we are open to being proven incorrect and if the economy by some miracle does begin to flourish and folks are again hired in droves at good jobs with decent benefits then we will swallow our pride and jump in. We just think the odds on that scenario occurring are about zero.

So that is our summer vacation thinking. Over the years in our associations with very successful investors we have learned that doing nothing is sometimes the best course. We don't want to lose the gains we have made over the past five years and the S&P 500 will have to go from 1000 to 2000 to get even with our gains over that period. We also have seen more than a few folks and money mangers become frozen in time when events and market action goes against their thinking. As any of our long time customers will attest, being frozen in time and failing to act is not something we have ever been accused of.

Happy August.

8:22am and the stock markets are going to trade higher this morning but the Treasuries are under pressure and we think that will mitigate any potential breakout to new highs.

And tomorrow is another day.

12 August 2003 - Vacation Comment

7:18am and today the Fed conducts its August Meeting. There will be an announcement at 1:15pm concerning the Fed Funds Rate and also the bias in regard to future actions by the Fed. The stock and bond markets eagerly await this announcement.

That's because most gurus are believers in the "economy is recovering" thesis. And these same gurus are spooked by the rise in interest rates. They believe the rise in rates will cut off any nascent recovery and plunge the economy back into disarray.

Our take isn't that complicated. We don't believe there is a recovery taking place. In fact we believe the housing bubble and consumer confidence have yet to burst. We also think interest rates are going to move higher because of the borrowing needs of the Federal Government to finance the obscene deficit created by the Bush tax cuts. Interest rates moving higher in a non-recovery is not a normal occurrence but then deficits for years on end twice the size of any previous deficits are not something the markets have ever experienced.

Yesterday Treasury yields rose and prices dropped. In the slowest trading of the year stocks managed a small gain with the NASDAQ closing up 1% after six losing days. Today will be a focus on the Fed day for the few folks watching and trading in the markets. We think the day will be nonevent but we will be around at the witching hour of 1:15pm to see what the Fed has to say.

The Model Portfolio remains 100% cash and up 12.8% for the year.

And tomorrow is another day.

11 August 2003 - Vacation Comment

7:15am and we read the following last Friday on www.realmoney.com a pay for site. We are reproducing in full because we don't want to misquote Tony Cresenzi, who is a bond maven who usually has interesting and prescient comments.

"Also helping Treasuries is the end of the Treasury's refunding. Historically, Treasuries tend to trade higher in the week following the end of the Treasury's quarterly sales of debt.

Signs that bonds have entered a period of relative calm don't necessarily mean interest rates are set to head lower, but that the pace of rising interest rates might slow. This should calm investors. But yields are likely to continue to rise, with the yield on the 10-year T-note moving above 4.5%. As has been the case historically, the peak in yields probably won't occur until the Federal Reserve delivers its first interest rate increase sometime in the next year or so."

First of all with the coming deficit we think the quarterly refunding is going to become a monthly occurrence.

We agree with Tony that rates will head higher, but we also think that rates will not make their high when the Fed begins to raise rates. We think the high in rates is a long way off. The supply of Treasuries over the coming years is going to be extraordinary and exceed any previous deficit financing by a factor of more than two. So the fact that the first auction of the new era had to be purchased in the main by dealers is an indication that selling the bonds and notes in the future is going to require much higher rates.

For the year the overall return on the long Treasury is a negative 1.42% and intermediate Treasuries are up 0.8%.

As we begin a new week the DJIA is up 10.2%, the S&P 500 is 11.1% higher and the NASDAQ is 23% higher.

The Model Portfolio is higher by 12.8%.

The NASDAQ has been down for six days in a row and there should be a dead cat bounce soon. The common wisdom is that the NASDAQ stocks are overpriced while the cyclical stocks are the place to be as the economy begins to recover. That's the reason for the selling in the tech stocks and the buying in other areas. We continue to maintain a 100% cash position.

We think this week will see more of the same listless trading and that there is no advantage trying to trade from the long side at this time. The September/October time period is dangerous and with the big move the stock markets have already made we continue to look for consolidation or more as the markets enter next month.

And tomorrow is another day.

8 August 2003 - Vacation Comment

7:10am and reading the NYT this morning we came across a story that made our blood boil. Well, at least it upset us. The story is about how Merrill Lynch has increased its profits by becoming more aggressive in bond trading. With big losses in 1998 in bond trading, according to the story Merrill backed off and reduced the size of this bond trading. Now it seems that they have a star trader who has a golden touch. Where have we heard that before? The story goes on to mention that executives at Merrill have made the $68 billion in assets in Merrill's bank set up for private clients available to the bond traders. In passing the NYT mentions that the bank is FDIC insured. That means you and we are guaranteeing the deposits in that bank that the bond traders are playing with. Happy days are here again.

Stocks turned in a so-so performance yesterday on the back of a so-so ten-year bond auction. Since there will be another big auction next month and a larger one the month after ad infinatum, we are less impressed by the results of the auctions than most of the myopic gurus on Wall Street who refuse to recognize the tremendous amount of deficit financing that is going to occur through bond sales in the future.

We mentioned to a client yesterday that he was up 10% for the year. And so we felt no need to quickly put the cash we held in his account to work. And we also weren't worried that we are earning only 0.4% on the money while it sits in the account. That's because we don't want to be stampeded into ten-year Treasuries yielding 4.3% (which have fluctuated by more than 5% in price over the last month) in order to earn a "decent" return on the money. Ten-year Treasuries and bond funds of similar duration with higher yields are going to experience substantial principal losses in the coming years as interest rates inevitably rise if the economy recovers. Governments demand for money to fund its deficits will be the culprit that is going to raise the price of borrowing. The canard that tax receipts will increase to offset the rise in spending as the economy recovers didn't happen in the 1980s and won't happen now. the country won't be able to have guns and butter and tax cuts no matter how much the folks in Washington insist we can. The same folks who wanted a balanced budget amendment to the Constitution in 1994 now want us to believe that deficits don't matter. That's baloney, and not even edible baloney.

For today, the stock markets look like they may recover the rest of Tuesday's loss and so we may finish the week unchanged which would be a fitting end to a summer week in August.

And tomorrow is another day.

7 August 2003 - Vacation Comment

7:56am and as we entered the office we were about to write "same old, same old" in relation to the markets and daily news. Then we received a phone call to tell us our oldest customer who turned 100 years of age last spring had crossed the river yesterday. Good for him. His last couple of years had been difficult. We will miss him for the confidence he had in us and the wit he shared with us. He began doing business with the "old stockbroker" back in 1960 with $25,000 and as he passes his account has $700,000 in it with the removal of well over $1.5 million over the years. He and we never really kept track because we trusted each other. Mutual trust is the cornerstone of good performance. R.I.P.

Overnight, the Nikkei just barely closed below the support number of 9300. Yesterday's U.S. stock markets were muted but the fact that they didn't drop more gave heart to the bulls. The up 20 points on the DJIA and up 2 points on the S&P 500 after being lower in the morning was the result of an excellent Treasury auction that led to a gain of 2 points in the thirty-year and 1.25 points in the ten-year. The last tranche of the auction is today with the ten-year on the block. European Central Banks bought a big chunk of yesterday's auction and that was a big help. We are sure Alan was grateful.

This morning Walmart announced same store sales up 4.7% and raised guidance for the rest of the quarter. Best Buy also came in with good numbers and so gurus are happy that the consumer is not going away. The consumer may be pre-spending the tax checks that are in the mail.

Oil prices are the highest since the Gulf War with oil exceeding $30 per barrel. Gasoline prices are also rising just in time for the end of the summer driving season.

Jobless claims were announced this morning as down 3000 at 390,000 and preliminary second quarter productivity increased 5.7%. It's amazing how firing folks increases productivity.

Pfizer and other drug companies are threatening to cut off Canadian pharmacists supplying U.S. customers with cheap drugs. Ah capitalism, profits before conscience. Actually drug companies don't exist on pure capitalism; rather theirs is a form of protectionist capitalism. Tax breaks, patent protection, and campaign donations all work together to provide profits and oligopoly status.

The MCI -AT&T brouhaha took another turn when AT&T announced yesterday that MCI ceased routing calls through Canada the day that AT&T brought the matter to public attention. Oh Canada, Oh Canada, why do we use you so?

The California recall circus is going to provide good theatre for the next few months. 300 folks are thinking of filing. Can anyone say banana republic?

And on that note we now turn our attention to rearranging the sawdust in the loafing shed. The ten-year auction will set the tome for the markets today.

And tomorrow is another day.

6 August 2003 - Vacation Comment

7:15 am and in case you didn't know:

The Amazing Planet Mars the Red Planet is about to be spectacular! This month and next, Earth is catching up with Mars in an encounter that will culminate in the closest approach between the two planets in recorded history.

The next time Mars may come this close is in the year 2287. Due to the way Jupiter's gravity tugs on Mars and perturbs its orbit, astronomers cannot only be certain that Mars has not come this close to Earth in the Last 5,000 years, but it may be as long as 60,000 years before it happens again.

The encounter will culminate on August 27th when Mars comes to within 34,649,589 miles of Earth and will be (next to the moon) the brightest object in the night sky. It will attain a magnitude of -2.9 and will appear 25.11 arc seconds wide. At a modest 75-power magnification Mars will look as large as the full moon to the naked eye. Mars will be easy to spot. At the beginning of August it will rise in the East at 10 p.m. and reach its azimuth at about 3 a.m.

By the end of August when the two planets are closest, (North American perspective - other time zones and hemispheres may vary) Mars will rise at nightfall and reach its highest point in the sky at 12:30 a.m. That's pretty convenient to see something that no human being has seen in recorded history. So, mark your calendar at the beginning of August to see Mars grow progressively brighter and brighter throughout the month.

Share this with friends and children...


7:20am and now back to the mundane. $24 billion in three year notes were auctioned yesterday along with $4 billion in T bills. Given the Treasuries borrowing and refinancing needs over the next two years we envision $100 billion of Treasury paper coming to market every month ad infinitum. That should be interesting.

Yesterday's auction was a disaster for the primary dealers but another Don corollary is that auctions that begin badly often end well. We continue to think of coming supply and fee no need to get our toes wet

After all as of today our accounts are ahead of Treasuries and the DJIA and S&P 500 for the year and we see no reason to assume risk in a confused marketplace. This is a time when holding cash for a while is the prudent course of action.

Cisco announced in line results last night and was positive in outlook and the share price still sold off $2. The Nikkei is approaching support at 9300 after bouncing off 10000 a few weeks ago and if it breaks that support-it closed at 9323-that will be bad news for Japanese stocks.

The technical numbers yesterday were not pretty with 2/1 down over up issues and 4/1 down volume over up volume. New lows on the NYSE were almost twice new highs.

Much is being made of Mike Tyson filing bankruptcy. He earned $500 million and at least that much for the various media venues he fought in and it is sad he's out of luck and money. Interestingly, Tyson did nothing but make money for all those who promoted him and leeched off him.

John Meriwether, the former honcho at Long Term Capital Management, lost billions for investors and almost ruined the capital structure of the United States until his miscues were rescued by the Fed, and yet five years later he is running a billion dollar hedge fund.

For today we expect an early rally to test the bears resolve and then a move lower. If the auction of the five-year Treasury goes well stocks might then rally and totally confuse the issue.

Based on yesterday's action another 3% or 4% down on the S&P might be expected before a rally, or so the gurus say.

We say cash is king.

And tomorrow is another day.

5 August 2003 - Vacation Comment

7:53am and the trading range held yesterday as the early breach of the 975 level by the S&P 500 was met with enough buying to close the S&P 500 higher for the day. Until the range is broken the stock markets as a whole are going to be dull. Individual stocks on the other hand are providing good action for both bulls and bears. The difficulty as always is knowing what stocks to short and long before the bad or good news arrives.

We are in a bearish mood and since we don't short stocks our basic posture is to hold cash. Since the money fund we hold is only yielding 0.4% we have been tempted to buy the five-year Treasury with a 3% yield or to move to the 6 month T Bill with a 1% yield. But we don't plan on being in cash for more than a month or two and the move in the five year of over 2% in the last month has given us pause.

That's because we believe Treasuries have put in their lows for the twenty year move from 14% long rates and 20% short rates back in the early 1980s, and unless recession returns we don't think there is much upside price potential. Obviously Treasuries aren't going to 6% or 8% overnight but we think the trend is to higher yields and thus lower prices as long as the economy continues its lethargic positive growth. That's because the burgeoning deficit is going to force rates higher.

This week the Treasury is selling $62 billion in paper beginning with an auction of three year notes today and followed by the five year tomorrow and the ten year on Thursday. Our partner Don always said that bond prices rose into refunding and large bond sales by the Treasury and so it was better to wait to see how the auctions went before committing capital. And that is what we are going to do this week. We want to see how the markets absorb the debt that is offered. After dropping precipitously in price last week, Treasuries staged a slight recovery Friday and yesterday and so we are in a wait and see mode.

Our sideline sitting is also occasioned by our desire to see more economic data and getting by the September/October period before committing any major cash. Since we are bearish we tend to concentrate on the negative data. And we don't think the data that the Bushies and media have touted as positive has been.

For example the supposedly good GDP number was loaded with unusually high defense spending that won't continue. The drop in unemployment was the result of the fact that 500,000 folks stopped looking for jobs and the bond rally of the last two days was a normal rebound from a large sell off.

Just today American Airlines pulled a measly $250 million convertible bond offering when underwriters could only get indication of interest for $150 million at the terms suggested.

Costco, the large discount membership store change issued a gloomy forecast this morning and the share price is off $4 in price or 12%.

Our favorite company General Electric after announcing the sale of 2 insurance units for billions of dollars in the last month is now buying a commercial lender for billions of dollars. These actions perfectly fit the GE pattern of creating large financial transactions within quarters which lead to special charges and gains and obfuscate underlying earnings and sales from continuing operations. If GE didn't own NBC and CNBC, and co-own MSNBC with Microsoft and thus have a huge media influence and control of business news and publicity for talking heads, we think the business media would be taking a much harsher look at the financial jiggling that GE conducts on a quarterly basis.

By the way, after posting our comments on Treasuries yesterday we happened to visit the WSJ website and see that they had posted similar though more extended remarks. Our thoughts were original to us at the time we wrote them, but it is obvious that the thoughts were not unique.

Yesterday's action was a small win for the bulls, but breadth was 2/1 negative on the NYSE and for the second day in a row new lows exceeded new highs and there were over 100 new lows on the NYSE. So the bull case is muted and we think it is only a matter of time before the major market measures break down.

On that happy note we are again off to move hay for our horses winter repast.

And tomorrow is another day.

4 August 2003 - Vacation Comment

9:29am and it is hard to get back into a market commenting frame after the week off. The nice thing is that not much has happened and our cash position is comforting.

The S&P 500 broke through 975 on the downside a few minutes ago and that was a significant technical support area for the bulls. 1015 was upside resistance on the S&P 500 and that number was breached early last Thursday on the good economic data reported but that breakout didn't last for more than a few hours. And the downside penetration this morning may lead to a similar result later today. Time will tell. Until we close significantly below 975 or above 1015 the trading range remains in place and is the controlling dimension for traders.

The stock markets seem to be suffering from the vacation blahs and with Bush in Texas for a month and most of the S&P 500 companies having reported there is not much news on which traders can hang their hats. Cisco and Gillette are the two big numbers this week with CSCO the only potential market mover after the close on Tuesday. That report may save the bulls for a few days but the lack of oomph in stocks over the past months coupled with last Thursday's breakdown doesn't bode well.

As of this morning the return on the long Treasury was negative for the year and the long Treasury lost 11% of its value in July. Now it had a big run up in June into July but the erosion of 11% of principal in one month has to have hurt someone on Wall Street. We don't buy the argument that the run up in yields is competition for stocks since we don't know anyone who is going to be satisfied with a 4.5% return on their money coupled with a 10% or more risk to principal after the glory days of old and the 30% up move in the NASDAQ for the year.

Our guess is that traders are tired and see no trend and many are plus for the year like we are and since we are entering the volatile September-October period, few traders are willing to trade away their hard made profits. Many folks are finally higher after three dismal years and with no strong conviction cash and sideline watching seems the safe way to go.

We read an interesting statistic over the week end from Paul Krugman that if Social security receipts and expenditures are taken out of the equation, the current U.S. Government deficit is one-third of GDP. That places the $1 trillion deficit in the next two years in a more ominous light.

And on that cheery note were off to move some hay for our horse's winter meals.

Cash remains king.

And tomorrow is another day.

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.