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          Sunni/Shiite/Iraq/Iran
New Address:
Lemley Yarling Management Co
15624 Lemley Drive
Soldiers Grove, Wi 54655
Toll free phone numbers:
Bud: 312-925-5248
Kathy: 630-323-8422

31 December 2007 Model Portfolio

   

Model

S&P500

12/31/2007$582,294

-3.7%

3.5%

12/31/07Purchase

250

National City Corp
12/31/07Purchase

500

General Motors Corp
12/31/07Purchase

500

SLM Corp
12/31/07Sale

-100

Walgreen Company
12/31/07Sale

-500

Dreamworks Animation SKG
12/31/07Sale

-250

Whole Foods Market Inc

28 December 2007 Model Portfolio

   

Model

S&P500

12/28/2007$584,357

-3.3%

4.2%

12/28/07Sale

-150

Amgen Inc
12/28/07Purchase

500

Alcatel Lucent
12/28/07Sale

-250

General Electric Company
12/28/07Purchase

500

Micron Technology Inc
12/28/07Purchase

500

Pier 1 Imports Inc
12/28/07Purchase

1000

Rite Aid Corp
12/28/07Purchase

600

Rite Aid Corp
12/28/07Purchase

500

Advanced Micro Devices

27 December 2007 Model Portfolio

   

Model

S&P500

12/27/2007$588,748

-2.6%

4.1%

12/27/07Sale

-500

Schering Plough Corp
12/27/07Purchase

500

Circuit City Stores Group
12/27/07Purchase

500

American Eagle Outfitters

26 December 2007 Model Portfolio

   

Model

S&P500

12/26/2007$601,861

-0.5%

5.5%

24 December 2007 Model Portfolio

   

Model

S&P500

12/24/2007$603,121

-0.2%

5.5%

12/24/07Purchase

250

Chico's Fas Inc
12/24/07Purchase

250

Alcatel Lucent
12/24/07Purchase

100

Talbots Inc
12/24/07Sale

-100

Walgreen Company
12/24/07Sale

-250

Advanced Micro Devices Inc

Season's Greetings



21 December 2007 Daily Comments

Thoughts

This will be our final post for the year. Our next post will be on Wednesday January 2, 2008. We will continue to post the value of the Model Portfolio on a dally basis in these comments plus any buys and sells but will not change the report on the Model Portfolio page until January 1. We donít expect to be making many changes since we are fully invested and well satisfied with the composition of the accounts.
*****

Asian markets were strong overnight and European bourses are also higher at midday. Treasuries are weaker; Stocks are stronger at the opening and Oil is flat with Gold up $1.
*****

Mother Merrill is in the confessional today with a $5 billion cash infusion and anther $8 billion in write-downs. Ev Dirksen is smiling.
*****

The WSJ reports that Chrysler is in financial difficulty just months after Cerberus Capital Management took the company private. Given the other deals that Cerberus was making and attempting to make which made no sense to us we are not surprised.
*****

Walgreen reported good numbers and was positive going forward and the shares are up $2 in the early going. Micron numbers wee as expected and the shares are off a few pennies. Circuit Cityís report was a disaster and the shares are off $1.25. We didnítí expect anything and our positions in accounts are small. This is a going bust or four bagger stock. We are adding shares at under $5 to accounts. We are also adding Coldwater and Micron.
*****

Gold gained $12 to close at $815. Oil was up $2.28 at $93.34. Treasuries were weaker wit the two-year at 3.17% and the ten-year at 4.16%.

European bourses closed 1% to 2% higher as did Mexico and Brazil.
*****

The DJIA and the major measures opened up 1% and continued to climb throughout the day. At the bell the DJIA was up 210 points at 13450. The S&P 500 rose 25 points to close at 1485 a few points below the important 1490 resistance /support level of the entire autumn period. The NAZZ jumped 50 points to 2690.

Breadth was 3/1 positive on the NYSE and 2/1 on the NAZZ and volume was moderate especially on the NAZZ for a Quadruple Witching Day.

Three were 200 new lows and 100 new highs on the NYSE.

The bulls won the day and the week.

And as the Cubs always say, wait till next year.

Merry Christmas and Happy Holidays.
*****

 

20 December 2007 Daily Comments

Thoughts

Today Pier One announced better than earnings and the stock is up $1.30 on the news. We sold yesterday ahead of earnings because with current market conditions we thought it better to be on the sidelines and then decide whether we want to own after earnings. While some accounts had only 200 to 1000 shares there were more than a few that had 10,000 plus so the ramifications of a $1 drop would have been felt.

Fortunately for the company but unfortunately for us PIR reported a less than loss, better margins, lower costs, and same store sales down only 1.6%. That is why we purchased PIR and we should have had the courage of our convictions but recent market action and the lack of any interim guidance has made us a tad gun-shy.

It is obvious that the new CEO Alex Smith is on his way to turning PIR around. And with a short interest of 25 million shares (shares sold but not owned) which is over 25% of the shares available for trading the share price has popped this morning. Since we want to own the shares for a substantial move we are repurchasing the shares because the report signals a turnaround and this is a stock that is even now selling at 30% of sales. When times were good the shares sold at two times sales or $30.

But in the winsome win some/lose some department, sometimes selling stock ahead of earnings works. We sold Rite Aid ahead of earnings at $4.14 a few days ago and we are repurchasing those shares at $2.92 (they are down $1.20) this morning since RAD reported a larger than loss. We donít have as lofty ambitions for RAD as we do Pier One but we think there is at least a potential double in the share price of RAD from the current level.

The action in RAD suggests what might have occurred had Pier One not begun its turnaround until next quarter.
*****

Bear Stearns was the broker who went to confession this morning and announced its first ever quarterly loss. The investment bank said it lost about $854 million, or $6.90 a share, for the fourth quarter, compared to a profit of $563 million, or $4 a share, for the same time last year. Bear Stearns also said it had written down $1.9 billion of its holdings in mortgages and mortgage-based securities, up from the $1.2 billion it had anticipated last month. As a result of its disastrous results, Bear Stearns said its management will not receive bonuses this year.
*****

Asian markets were mixed overnight and European markets are mildly higher at midday. Gold is down $4 and Oil is up a few pennies at $91.62. Treasuries are flat as the trading day begins.
*****

We added National City to accounts at $16.11. We also bought more Fifth Third, more Home Depot at $26, and Cabelas in our large/aggressive accounts. Cabelas is down from $30 to $14. Earnings this last quarter disappointed but the shares are close to book value. Home Depot is at 15 times earnings which is usually a good buy point.

Fifth Third raised its dividend yesterday and said it had no sub prime exposure and the street has ignored the news. With the shares at 6.7% yield and down from $44 this year and $60 three years ago we think it is a good value.

We expect and it would be prudent for National City to halve its dividend when it announces the dividend on January 2.
*****

The prices of banks and brokers and home builders are reflecting the current miasma in the housing markets. While a few of the larger banks are only down 20% in value this year there are many that are down 50%. Retailers are down 60% and more.

With this price action it doesnít make sense for taking heads to say that stock prices donít reflect the problems in the economy. They do.

There are some solar stocks and high flying tech stocks that have maintained their momentum, the solar stocks because they have no earnings and are trading on psychology, and the tech stocks like Google and Apple because they do have earnings and their prices while expensive can be justified by earnings growth. The markets are doing a good job of pricing risk but in the case of the stocks we have been buying the markets are too negative more from a lack of interest and short sellers pushing their luck.
*****

European bourse indexes ended mostly higher. Brazil and Mexico were also up. Treasuries were firm with the two-year at 3.08% and the ten-year at 4.04%. Gold lost $3 to $802 and Oil lost 16 pennies to $91.08.
*****

The DJIA gained 49 points to end at 13245. The S&P 500 was up 7 points at 1460. The NAZZ jumped 40 points to 2640.

Breadth was flat and volume was moderate.

There were 315 new lows and 40 new highs on the NYSE.

The bulls skimmed a win.
*****

 

19 December 2007 Daily Comments

Thoughts

Morgan Stanley was in the confessional this morning with $9 billion in write-offs and John Mack the CEO is forgoing his multimillion bonuses to make atonement for the loss. What brave and humble men the titans of Wall Street have become. Of course, as with the other penitent CEOs, Mack has $100 million of past bonuses and options to stem the pain. Not so for the poor folks who bought the garbage Morgan, Mother Merrill, Citi, JP Morgan, Goldman Sachs, Lehman, and Bear Stearns were selling.
*****

Stocks are mixed at the opening as yesterdayís failure to fall has some traders rubbing their brows. Investors Intelligence had 56% bulls and 22% bears last week and so from a contrarianís view there is more downside ahead because the bullish camp is too large.
*****

Asian markets were 1% to 2% higher overnight with European bourse mixed small at midday. Oil ahs a $90 handle. Gold is up $3. Treasuries have a bid.
*****

Palm announced disappointing sales and a loss last night. More disappointing is that they are having trouble providing their new $100 Centro phones to the marketplace because of production issues. The same goes for their high end Treo. Of course that is the reason it is selling at $5. Hopefully PALM will solve the problems.
*****

Fifth Third Bank is taking additional write-offs but it raised its dividend 10% and now is yielding 6.7%. The dividend raise is their way of saying that events are not as bad as at their bank as at other banks. Truth or chutzpah is the question?

Fitch rating services cut Fifth Third Bank to a B rating from an A/B rating (a B rating denotes a strong bank and that there are no major concerns regarding the firm). Aside from the charge in the fourth quarter, Fitch noted that Fifth Third has remained relatively insulated from the recent credit markets turmoil, as it reported just $3 million in mark-to-market losses in the third quarter, and the bank reports no wholesale sub prime loan exposure. The ratings agency also said Fifth Third's planned purchases of North Carolina-based First Charter and First Horizon's Atlanta branches provide the bank with the opportunity to pursue higher growth opportunities in less stressed geographies.
*****

We added National City to accounts at $16.40 which is down form the $38 price at which they repurchased stock last spring. And we also bought some Fifth Third in accounts on the strength that their dividend raise and announced write-offs which should lead to some price stability after year end. And, we increased our Williams Sonoma holdings and in our large/aggressive accounts added Schering Plough for a trade. WSM is on a its 12 month low at 14 times forward earnings and SGP is off because there is some question about the efficacy oftheir dual drug combo Vytorin which is SGPís Zetia with Merckís Zocor. The shares are at $26 down from $34 a month ago. We have been trading this soap opera stock for the last five years. We also added shares of BSX and Sprint to our large/aggressive accounts. Finally with earnings tomorrow we sold Pier One at $4 for a scratch but up 20% in the last two days. We can use the funds for other retail stocks if PIR doesnít sell off on the news. Circuit City announces this week and these funds would be available to add there or to buy more Coldwater Creek.
*****

Late in the day we sold Cott for a loss. We are going to use the funds in another issue that is more liquid.
*****

European bourses closed lower with Treasuries higher and the two-year at 3.10% and the ten-year at 4.02%. Gold was down $6 at $800 and Oil jumped $1.410 to $91.49.97. Mexico was lower while Brazil was higher when trading ended for the day.
*****

The DJIA was down 30 points at the close to 13202. The S&P lost 2 points to 1452 and the NAZZ rose 5 points to 2602.

Breadth was flat and volume was light.

There were 275 new lows and 35 new highs on the NYSE.

The bears won the day at the bell.
*****

 

18 December 2007 Daily Comments

Thoughts

Several clients have questioned why we have not remained in cash during this market turmoil. Our response is that we were in cash for most of the year. Our overall purpose is to invest for clients to earn a reasonable return for the risks assumed. We have always used fall corrections as a time to invest in out of favor stocks and at this time we think the bifurcated markets are providing an opportunity to buy select stocks Ė not the markets-at good prices.

Our accounts have been volatile recently. Since August accounts have been up 2% (AUG 31), up 8% (OCT 31), flat (NOV 10), up 6% (Dec 10) and now down 2%. We think the stocks we own will all provide a 50% or more return over the next three years. We wonít get that from cash. The unknown is always the timing of the return. Usually year end is a good time to establish positions. That is what we are doing. Yesterdayís selling and buying was part of the process of setting the accounts up for the New Year.

We view the Micron and AMD, Alcatel/Lucent and Tellabs as one industry and are buying them as a package. The same goes for retailers Talbotís and Circuit City and Chicoís and Pier One and Coldwater Creek. We want to own select depressed stocks in tech and retail. But the available index products don't let you buy only the depressed ones. And we buy smaller amounts of many because we donít know which ones will work and which wonít over any given period of time.
*****

Asian markets were quiet overnight and mixed to slightly lower. Hong Kong is down 11% in the last seven trading sessions. Gold is up $3 and Oil is at $92 in the early going. Treasuries are weaker and stocks are going to open mildly higher in NYC.
*****

Sprint has chosen Dan Hesse to be its CEO. His entire experience is in telephones with exposure to wireless at AT&T for many years.
*****

The Fed has promulgated new mortgage lending rules to prevent future problems. Good for them and maybe now they can address the present problems.
*****

We added various stocks to accounts today to round out our positions.
*****

Housing starts were down 3.7% in November which is the slowest pace in years.
*****

Click through to this important story on Bloomberg that discusses how Florida was sold $800 million in debt by Lehman Bros in July and August of 2007 that was worthless four months later. Jeb Bush figures in the story.
http://www.bloomberg.com
*****

Goldman Sachs announced good earnings this morning and a large buyback and initially the shares were up $5. But now they are down $5 and leading the major measures back to even. If Goldman canít get the bears off their backs then there seems to be more downside in store.

Talking heads are on CNBC saying Goldman has been losing big money in the last five weeks since tier year ended. Those comments are pushing markets into negative territory.
*****

Oil ended down 14 pennies at $90.47, Gold was up $7 to $806. Treasuries were flat with the two-year at 3.19% and the ten-year at 4.14%. European stocks closed mixed and Brazil was up over 2% while Mexico gained a bit.
*****

The DJIA gained 65 points to end at 13230. The S&P 500 was up 9 points at 1455 and the NAZZ jumped 20 points to 2695.

Breadth was 3/2 positive on the NYSE but volume was light.

There were 355 new lows and 25 new highs on the NYSE.

The bulls didnít so much win as they didnít lose today.
*****

 

17 December 2007 Daily Comments

Thoughts

While reviewing our accounts the weekend and bemoaning that they are now under water for the year after being 7% and higher October 31 we shed a few tears and then remembered that this action is pretty much what occurred to our accounts in 1990. And since we have been saying all year that the market action and news cycle reminds us of that year we realized that we shouldnít be surprised. So we arenít surprised but we are chagrinned.

We certainly donít like begin down for the year and we are going to take some action to mitigate some further erosion in the accounts in case we are incorrect in our assessment of the present economic and market situation. In reviewing accounts we realized that we were too heavy in some issues because we bought more than we should have on the way down. We sometimes forget that Mr. Market is a lot larger than we are and that our puny buying power is not going to stem the tide of falling knives in a late year end sell off in individual stocks.

And so this morning we halved our holdings in Walgreen, AMD, Micron, Alcatel Lucent, and reduced positions in Dell, Ericsson, Starbucks, GM, and Yahoo. We also eliminated our holdings in Marvel Technology, American Eagle, the two SPDR financials, and Intel. These actions have re-centered the accounts so that they have relatively equal exposure in all issues held which is more realistic diversification given the fact that the markets are doing their darnedest to interrupt our sleep.

We would hope that these actions induce the Santa Claus rally. At the least they have the accounts in good position to participate over the longer term in the recovery of many of the issues that we hold.

Investing is more psychology than science and we firmly believe that the stocks we own (and the portions we sold) will one day sell substantially higher, but prudence and the nature of this market with all its unknowns plus the volatility of hedge funds and shorting on down ticks suggest that we have a bit more cash on hand than we did at the end of last week.
*****

DreamWorks, the animation folks, stock is down at $22.90. We are adding shares to accounts at that level. The company has $4 per share in cash and a building library and good movies. The high this year was $35. Eventually the trio of Spielberg, Geffen and Katzenberg will sell out as they did with their moviemaking operation. Periodically they or Allen want to sell shares as they did this year and magically a few brokers recommends a buy on DWA and the stock rises to the low $30s where the sales take place.
*****

Asian markets were down 2% to 3% overnight and European markets are down over 1%. These moves are a catch up to Fridayís U.S. market action. Treasuries have a bid and Gold and Oil are both lower in the early going.
*****

National City released its mid-quarter update and reported it is reserving another $700 million for loan losses. This is a much more realistic posture than the $300 million they said in September and the market is rewarding their honesty with the shares up 50 cents. That is the first rally in the shares in a week.
*****

Symantec was downgraded to neutral this morning.
*****

We do think the elimination of the shorting on downtick rule has made the downs more down this year. That increased downside pressure will of course work the other way when the markets rally and we are seeing shorting in thin traders which causes greater downside but then thin traders will also pop higher, faster, and farther.
*****

Gold finished flat at $800 and Oil lost 57 pennies to $90.70. Treasuries were up with the two-year at 3.22% and the ten-year at 4.15%.
*****

European bourses closed 1% to over 2% lower and Mexico and Brazil were both down over 3%.
*****

Stocks again closed lower with no bounce. For most of they day they looked like they wanted to rally but couldnít find any leadership. The momentum stocks finally broke today and that is a good sign. A few more days of selling in them and there may be a set up for a recovering final few days of 2007. New lows expanded to 720 combined on the NYSE and NAZZ.

At some point we would guess that the short sellers will step back but hedge funds do like to push their bets. If you are in pain donít look at the value of your account. Pretend it is 1990 when computers didnít give daily values. We are holding on because what we own will do well, eventually, if not sooner.

The DJIA lost 172 points to close at 13167. The S&P 500 dropped 22 points to 1445 and the NAZZ dropped 61 points to 2575.

Breadth was 3/1 negative on the NYSE and volume was moderate.

There were 375 new lows and 30 new highs on the NYSE.

The bears are in charge until further notice.
*****

 

14 December 2007 Daily Comments

Thoughts

Stocks opened down the 1% usual number this morning and now are trying to fight their way back. Several brokerages discovered that Citi is having problems and lowered their advice from buy to neutral or sell. Given that the share price is down from $55 to $30 this year we would suggest that these folks may be a little late to the bash Citi game.

Citi announced overnight that it was taking $48 billion in assets from 7 SIVs onto its own books. This is either good or bad depending on the talking head you wish to listen to. We have decided to limit our exposure to talking heads and also blogging gurus and go with our 40 years of experience. There is too much noise and opinion floating around impairing the ability to make reasoned judgments.

For several years we have been saying the housing emperor has no clothes. During that time period we were leery of markets and being too invested. Now that everyone recognizes that the emperor has no clothes we are much more comfortable invested.

Back in the olden days twenty years ago when computers and dally market values were not readily available it was easier to take positions in stocks and hold them for eventual recovery.

Our advice to clients is that if they are worried about the volatility in their accounts donít look. Our surmise is that in the longer run the risk we are assuming will be justified by the reward.
*****

The Consumer Price Index was up 0.8% in November. Year over year the CPI was up 4.3% and the Core CPI year over year was up 2.3%. Suddenly, traders are looking at the CPI up 4.3% and getting worried. That is because this is a market that needs to worry. We have been worried for years and are still worried.
*****

Asian markets were lower overnight except China which was up over 1%. European markets are mixed at midday and Oil has a $92 handle while Gold is down $8 in the early going. Treasuries are weaker as the dollar is showing strength for the first time in a while because inflation in the November CPI and PPI suggest that the Fed may not want to cut interest rates for a while.
*****

We did some switching in our large accounts. We sold Loweís, and Gap and bought Talbotís, National City, AMD, Micron, Alcatel Lucent, and Chicoís. The percentage gain potential is greater in the purchased stocks.

We also re-established a position in the Financial SPDR.
*****

European bourse indexes closed mildly higher on Friday. Gold was down $5 at $799 and Oil dropped $1 to $91.29. Treasuries gave ground with the two-year at 3.30% and the ten-year at 4.24%.
*****

Chicoís CEO Scott Edmonds bought 100,000 shares of CHs last week. That was the largest insider purchase in five years, according to Thomson Financial. Edmonds bought 100,000 shares last Friday at an average per share price of $10.24. He was joined by Chief Information Officer Gary King, who paid $103,398 for 10,000 shares, and director David Walker, who bought 1,000 shares. Itís nice to have company.
*****

The DJIA tanked again on Friday closing down 180 points at 13340 with no final hour rescue as occurred on Wednesday and Thursday. The S&P 500 dropped 20 points to 1468 and the NAZZ lost 32 to 2636.

Breadth was 3/1 negative on the NYSE but volume was light.

There were 230 new lows and 45 new highs on the NYSE.

The bears won the day and the week.
*****

 

13 December 2007 Daily Comments

Thoughts

For the two weeks preceding Tuesday the glass was half full as the DJIA rallied 800 points. Then, on Tuesday when Uncle Ben disappointed traders and self appointed economic talking head experts, the DJIA gave back 400 points in 24 hours. A Wednesday morning rally that attempted to reverse Tuesdayís quick carnage failed miserably and this morning the DJIA is going to be down 100 points on the opening and back to the 50% retrenchment level of the rally.

Markets anticipate events and so while there is a slowdown and maybe a recession on the horizon the length and severity of the economic turmoil is unknown. Stock markets usually price stocks on the perception of revenues and sales six to nine months out. Current sales and earnings are history as soon as they are reported. Our crystal ball doesnít tell us what will be in June of next year but we do know that the crisis in housing that we and others have been- for the past few years- suggesting was occurring in now recognized by those who chose to ignore it. That is the first step in solving the problem. Financial stocks are suffering now for their sins but there is no way the powers that be are going to let any of the major players go broke. And so as all the banks and insurance coma pines and brokers fess up to their mistakes and take their huge one time charges the housing bubble becomes history and it is on to the next glory or crisis in the ever-changing economic landscape.
*****

We have been buying stocks that are off 20% to 50% or more from yearly highs and in most cases are selling at multi year lows. These stocks represent value but will be under price pressure through year end. They then should bounce a bit as the selling pressure dissipates but we donítí think they will move substantially higher until they or the economy relieve the problems that affected their earnings. We have often used year end tax and disgust selling to establish holdings and we are doing that this year.

We are not buying these stocks for a 10% bounce. Many of them bounce 5% to 10% on a daily/weekly basis. Many of these stocks have the potential to move 50% after year end and 100% or more over the next few years. And as we did in 1991 and in 2001 we are looking for significant gains and that is why we are willing to endure our present pain.

The stocks we own are not the mainstream momentum names and it may be that the momentum names have to correct before the trading gods will be satiated. But we do think that the stocks we own will provide an above average return over time. We hope to reduce positions in the New Year on any rally but we will keep a core holding of those stocks.

For the last seven years we have engaged in trading accounts because we thought that strategy would help us attain above average returns with less overall risk. For the first for years that strategy worked like a charm and helped us well exceed S&P 500 returns.

But for the last three years we have had a more difficult time obtaining satisfactory gains and while some of it is certainly the uncertain markets we think that our difficulty stems from the fact that the movements of stocks have become random over the short term because of index trading and the plethora of day traders.

And so, because the present market reminds us of the 1990-91 market environments, we are buying stocks at year end as we did then to hold for a longer period of time and/or a greater return than the 10% to 20% trading return on an individual stocks that we have been satisfied with recently.

As we state in our investment philosophy: Our portfolio management follows an investment philosophy that buys good quality stocks when they are out of favor. This investment philosophy infers that all companies, no matter how smart the people in charge, eventually have problems with earnings or sales - either because of incorrect internal business decisions or because of external market forces. When this bad news hits the marketplace, selling occurs and the price of the stock drops. After a period of time, those who run the company usually solve the problem, earnings start to improve, institutions become more aggressive buyers on the good news, and the price of the stock goes up. Just because a stock is down is not a reason to buy. Rather, it is a reason to begin looking at the company's fundamentals. We stress book value, cash flow, low debt, insider ownership, previous market performance, and patience.
*****

Asian markets were down 2% and more overnight as are European markets at midday. Oil was higher but now is lower as the stock trading day begins. Treasuries are on the downside in price and Gold is down $4.
*****

The Producer Price Index was up 3.2% versus 1.9% expected and 7.2% year over year. Year over year Core PPI without the necessities of life was up 2.0%. The 7.2% year over year number may be the reason the Fed only dropped the rates 25bps.
*****

These volatile markets are rife with rumors that move stocks because the trading occurring is 99% psychology right now. Yesterday there was a rumor of a Goldman write-down and many websites are repeating the rumor today in case it turns out to be correct. Today there is a rumor that Bear Stearns was on the wrong side of the Biogen Idec mess. Biogen is down $20 today because the hoped for takeover- BIIB had placed itself up for sale- ahs become a take-under for those who hold the shares because no company was interested at the price required.

Rumors moving markets and stocks to the degree they currently are are signs of confusion and lack of conviction and often occur near turning points.
*****

Ciena had great numbers today but warned that it may incur losses from $43 million of short term SIV investments in fiscal 2008, as it did in the fourth quarter. Ciena said that its fiscal fourth-quarter profit included a $13.0 million loss related to the $43 million investment in commercial paper issued by SIV Portfolio Plc and Rhinebridge LLC, two structured investment vehicles that failed to make payment at maturity and recently entered bankruptcy. CIEN said it may have to write down the remaining $30 million next year.

These losses came from short term cash investments. And there are many other companies that are going to be writing down losses over the next six months.

For the life of us we will never understand why folks bought that stuff for a few extra basis points of yield. They ignored the basic investment rule of measuring reward/risk. Part of the reason is that they didnít buy it; they were sold it by Goldman and Citi and Bear Stearns and Mother Merrill et al. who used their reputations to foist junk on their clients while Ė at least in the case of Goldman shorting the same stuff for its own account-and the sad fact is that the sheep will keep doing business with those charlatans because they are invited to play golf a few times a year.

Banks and brokers work for themselves and their own profits- not for their clients. That is a truism that investors seem to have to learn every ten years.
*****

We added Fifth Third, New York Times and National City Bank to some accounts that didnít own it.

We sold St. Jude at $41 for a $2.50 per share gain and placed the proceeds in the Regional Bank SPDR and shares of Pier One. We have had several profitable trades in STJ between $38 and $41. And we also had a profitable trade in the Regional Bank Index two weeks ago.

In an aggressive move we also sold CBS at a $2 loss and placed a portion of the proceeds in an equal amount of shares of Time Warner which is also down $2 from the time we bought CBS. We are investing the remaining proceeds of the CBS sale in an equal amount of shares Alcatel Lucent. This move gives us a two for one opportunity. Both stocks have the same dollar price range from high to low as does CBS.
*****

Gold ended down $16 at $801. Oil lost $1.85 to $92.55. Treasuries were lower on worries that inflation (jump in the PPI) will keep the Fed from lowering rates again for a while. The two-year closed at 3.22% and the ten-year was 4.19%.

Most European bourse indexes closed over 2% lower as did Mexico down 1.5% and Brazil down over 3%.
*****

Since we are fully invested we are encouraged by the fact that the DJIA dropped about 100 points twice today which is the approximate 50% correction point and then rallied back.

At the close the DJIA was up 55 at 13525. The S&P 500 rose 3 points to 1489 and the NAZZ was down 2 points to 2668.

Breadth was 2/1 negative on the NYSE and NAZZ and volume ws moderate.

There were 205 new lows and 30 new highs on the NYSE.

The bears won the day on the terrible breadth figures.
*****

 

12 December 2007 Daily Comments

Thoughts

No sooner did the Fed speak and the markets crash yesterday than after the close the Fed spoke again and said they were aware of the situation in the financial markets and that they were working on solutions to the disintermediation.

With that blink by the Fed the stock markets roared higher out of the gate erasing 70% of yesterdayís loss as shorts scrambled to cover. The Fed seems to be speaking through Steve Liesman of CNBC who broke last nightís news and is on the tube again this morning explaining the various types of collateral the Fed will take to restore liquidity to the system.

After the opening rally selling ensued but the S&P 500 has regained the 1490 level and remains above that important level. Since August the S&P 500 has made three lower highs on rally attempts and it is important that the S&P hold the 1490 level and go on to make a new high on the next rally attempt.

As we said yesterday we think the markets will meander through year end. Moreover, the stocks we own are so beaten down that we donít think they will pop until after year end.
*****

Asian markets were lower overnight and European markets are lower at midday.
*****

We miswrote yesterday about GE. Actually earnings next year are forecast to be up 10% which is wonderful given their potential sub prime exposure in GE Capital. And the shares at $37 are price at 15 times next years earnings which certainly isnít expensive.
*****

The $60 deal for Sallie Mae is off. The directors of Sallie Mae wouldnít consider a $50 bid a few months ago and with the stock now at $28 there is a lot of money under the dam. The $50 bid would probably have been withdrawn anyway. Easy come, easy go.
*****

Ratings on BankAmerica have been lowered and an analyst at Morgan Stanley placed a sell on Citi. So much for timing. Where was the sell the shares were at $55? They now are at $33.
*****

Investorsí Intelligence had 53% bulls and 27% bears last week. We would guess that yesterdayís contremps may have lowered the bullish figures for this week.
*****

Oil is back at $92 and gold is down $3. Treasuries are lower in price this morning with the two-year back up at 3.12% from 2.90% yesterday in the midst of the sell off and the ten-year at 4.12%.
*****

We are adding Sprint to accounts at $14.85 and also we bought Williams Sonoma and Hershey in some accounts that didnít own them.

We sold Qwest and Rite Aid for 10% plus profit. We want to winnow our low priced holdings. Qwest and Rite Aid have the most debt in relation to market value of the low priced stock we own and that is why we are eliminating them. We are holding the proceeds from these sales until Palm on the 18th, Circuit City on the 19th and Pier One on the 20th announces earnings.
*****

We are selling Cisco for a $1 gain. We bought it for a trade and we would like to have the funds available in case the retrenchment of the last day provides opportunities for a longer term play.

We opened a new position in Liz Claiborne at $22.90. The shares are priced at book value and at 14 times 2007 earnings. LIZ sold over $40 this year. The company is attempting to sell some of its brand lines to concentrate on its namesake. Itís cheap.
*****

European markets closed mostly higher.
*****

Entering the final hour of trading the DJIA was flat on the day having surrendered the 250 point morning surge higher. With forty five minutes left to trade the DJIA is down 95 points. The up/down/up/down/up moves over the last 24 hours exceed 1000 points on the DJIA.

There is a rumor on the floor, which is given as one of the reasons for the reversal, that Goldman is going to write off over $10 billion in SIV exposure and will announce that after the close.
*****

Gold closed unchanged at $817 and Oil was up $3.66 and $93.48. Treasuries were lower but regained some of their losses as stocks gave up their gains. The two-year at 3.07% and the ten-year was 4.05%.
*****

The DJIA closed up 40 points at 13473. The S&P 500 was gained 9 points at 1486 and the NAZZ rose 19 points to 2672.

Breadth was 5/4 negative on the NYSE and NAZZ after being 8/1 positives in early morning trading and volume was active on the NYSE but moderate on the NAZZ.

There were 135 new lows and 60 new highs on the NYSE.

The bears squeezed out a win even though the major measures closed higher because the S&P 500 wasnít able to close above 1490. But the bulls can take heart from the rebound from down 100 points in the last hour to close on the plus side. By the by, that 100 point down move completed the 400 points correction from the 800 point up move of the alst two weeks that we wrote about yesterday.
*****

 

11 December 2007 Daily Comments

Thoughts

Asian markets were higher overnight with Hong Kong up over 2% and India up 1.8%. European bourse indexes are lower at midday and Gold is off $3 while Oil has an $88 handle and Treasuries have a bid ahead of the Fed announcement at 1:15pm.
*****

Texas Instruments raised earnings guidance this morning and that has given a bid to large tech stocks.
*****

Washington Mutual the large mortgage originator is taking a $2 billion write-down, cutting its dividend, and raising billions in a preferred stock offering while firing a bunch a people. The share price is lower on the news which is the opposite of yesterdayís market action in UBS and May portend a creeping back of some caution on the part of traders.
*****

The Fed cut the discount rate (now 4.75%) and the Fed funds rate ( now 4.25%) both by 25 bps. Since the markets were expecting that they sold off on the news and the DJIA went from being up 45 points to being down 200 points. Easy come easy go. The first move is usually a fake out so we will have to see what the rest of the trading day brings.
*****

We have been adding to positions in various accounts most of the day. We bought no new companies.
*****

European bourse indexes closed lower before the Fed announcement. Oil ended dup $2.900 at $89.76. Gold lost $5 to $808. Treasuries rallied on the less than Fed cut with the two-year at 2.97% and the ten-year at 4.05%.
*****

GE cut earnings guidance for 2008 by 7 pennies. Oops. That is going to take the stock down to $35. There must be some sub prime stuff and SIV lurking in the holding of GE Credit. That is doing more damage to the DJIA as GE sells off. Why did they announce today?Maybe tomorrow is an option pricing day.
*****

Well the stock markets reacted negatively to the Fed moves. As we have been saying lowering interest rates isnít going to solve the housing imbroglio. The Congress has to set up a Government agency to buy sub prime mortgages. But that isnít going to occur soon.

And so the markets are now in the doldrums again and the 800 points up move in the DJIA over the last two weeks is now halted. If there is any good from this move down today it is that it removes any need for us to take some profits on the news since there are no profits to be taken. We didnít buy the stocks we own for the next week or two and better that the pullback comes now. 400 points down to retrace the 800 points up and then muddling into year end is a likely scenario.
*****

The DJIA closed down 294 points at 13432. The S&P 500 lost 40 points to end at 1478 and the 1490 support level wasnít, and now becomes resistance. The NAZZ dropped 66 points to 2652.

Breadth ended the day 4/1 negative and volume was light on the sell off as it ahs been on the rally.

There were 106 new highs and 110 new lows on the NYSE and the new lows exceeded new highs by 40 on the NAZZ.

The bears took control again today. No one said it would be easy.
*****

 

10 December 2007 Daily Comments

Thoughts

Asian markets were mostly lower overnight with Hong Kong down over 1% but of course Shanghai was up over 1%. European bourse indexes re mixed small at midday. Oil ahs an $87 handle and Gold continues its volatile trading up $15 at $815. Treasuries are better.
*****

UBS is going to write off $10 billion in mortgages and receive and infusion of $11.5 billion. The markets yawned at the news which is an indication of how the sub prime crisis is in the backseat--- for now.
*****

Barronís was negative on Yahoo over the week-end.
*****

We are adding to positions in Yahoo, and Symantec and Talbotís today and adding a new holding in Amgen in many accounts. It sold at $84 last year and is now at $50 selling at 19 times earnings.
*****

Bank America froze a $12 billion short term institutional fund and is allowing only redemptions. The market hasnít reacted negatively to the news. This is another tell, a month ago the markets and BAC would have been lower immediately. BAC is still up 2% on the day.
*****

European bourse indexes closed mildly higher. Mexico and Brazil were lower.

Treasuries gave ground ahead of the Fed meeting tomorrow. The two-year ended at 3.16% and the ten-year closed at 4.14%. Gold finished up $15 at $815 and Oil was down 30 pennies at $87.99.
*****

The DJIA closed up 101 points at 13727. The S&P 500 gained 11 points to 1516 and the NAZZ was up 13 points to 2718.

Breadth was 3/2 positive on the NYSE and 5/4 on the NAZZ but volume was only moderate.

There were 120 new highs and 80 new lows on the NYSE and 100 new highs and 90 new lows on the NAZZ.

The bulls won the day but the Fed announcement tomorrow is going to be the market mover of the week.
*****

 

7 December 2007 Daily Comments

Thoughts

The markets are overbought according to the technicians and there is talk of a Christmas rally now but a pullback (if the Fed only cuts 25bps) may come before a final push into the New Year. At least that is our hope.

Asian markets were mostly higher overnight except Hong Kong which was down over 2%. European bourses are higher at midday and Gold is unchanged while Oil is higher with a $90 handle. Treasuries are flat.

The Employment report said that 94,000 jobs were created which was in line with expectations an 100,000 less than the ADP report of Wednesday. Who is correct is anyoneís guess since figuring out 100,000 plus or minus in an economy with over 100 million jobs is a foolís game.

October Employment was adjusted to up 170,000 from up 166,000 and September was adjusted to up 44,000 from up 96,000. So much for certainty.
*****

Palm warned going forward and tanked 20% today. We own shares (just added some yesterday in an example of year end risk in catching falling knives) in our large/aggressive accounts and feel the pain but we donít own any in our other accounts and so we may buy a few shares today.

In October the investment group Elevation Partners, who manage $2 billion, bought $350 million of preferred stock convertible into about 28 million Palm shares at a conversion price of $8.50. With the shares trading at $5.50 they are underwater for now.
*****

We are adding more GM and reinitiating National City Bank in our large/aggressive accounts.
*****

The Model Portfolio is fully invested now or all in as they say in poker which is pretty much what trading in the markets today has become.
*****

What the bears are not paying attention to is who make the rules. When the Hunts cornered the gold and silver markets in 1980 the folks on the other side of their trades who also ran the CBOT just changed the trading rules and the Hunts were bankrupt in a year.

So too with the banks and brokers. They are technically insolvent now. The Fed, Treasury Department and SEC make the rules on capital needs and if they choose to look the other way on valuing assets so be it. After all, the folks at the Fed and Treasury Department and SEC play musical chairs with the folks who manage the large banks and brokers. The folks who run the government agencies come from and return to the bosom of the financial industry. The mess they have made is their own creation and they certainly are not going to blame themselves. Oh sure, they fire a few of their friends but they make sure those folks have wonderful goodbye packages.

It has always been so. Capitalism is only important as a motto not a reality.
*****

Why AMD is trading where it is:

AMD said the widespread release of its newest "Barcelona" computer chip would be delayed. Barcelona is AMD's first chip that features four computing brains, or cores, on one piece of silicon. It was originally scheduled for general availability in mid-2007, but now won't be broadly available until early next year. AMD began shipping the chip in small quantities in September, but it disclosed in an October conference call with analysts that production was slower than it had anticipated. The company said it was having problems translating Barcelona's design into production. A technical glitch, or errata, in the chip has delayed its more general release.

Hopefully AMD will solve its production problems.

The investment arm of the Abu Dhabi government, Mubadala Development Co., invested $622M for an 8.1 percent stake in AMD in November. The price per share works out to $12.70. The deal, which just went through this morning, gives Mubadala 49 million shares of AMD, but doesn't come with a seat on the board or represent a controlling interest in AMD. For its part, AMD didn't give any specific plans for the cash, instead saying it'll be used for R&D, manufacturing improvements, and unspecified "innovations."
*****

One reason your health insurance premiums are so high:

Former United Health Group ( the health insurance company that is the chief health insurance company for AARP) CEO William McGuire has agreed to forfeit about $620 million in stock-option gains and retirement pay to settle civil and federal-government claims related to stock-option backdating.

But weep not for Dr. McGuire for he retains about 24 million stock options that currently could be cashed in for a gain of roughly $800 million, on top of about $530 million in pay he pocketed while running United Health from 1991 to 2006.
*****

We repurchased Coldwater Creek at $7.50 in our large/aggressive accounts and bought Palm at $5.85 in larger accounts that didnít own it.
*****

European bourse indexes closed higher except Norway which was down 2%. Mexico and Brazil also closed higher.

Oil closed lower on the day down $1.98 at $88.25. Gold lost $6 to $800. Treasuries were lower in price/higher in yield with the two-year at 3.12% and the ten-year at 4.13%.
*****

The DJIA closed up 5 points at 13625. The S&P 500 dropped 3 points to 1504 and the NAZZ lost 3 points to 2706.

Breadth was flat on the NYSE and slightly negative on the NAZZ and volume was moderate.

There were 120 new highs and 85 new lows on the NYSE. The bulls are glad to see new highs assume leadership. New lows outdid new highs on the NAZZ.

The Bulls won the day on the basis of new highs crossing over and were ahead for the week.
*****

 

6 December 2007 Daily Comments

Thoughts

Markets in the U.S. this morning are awaiting the Treasury Departments plan for the mortgage mess.

CNN's is reporting:

People who qualify:

  • have an income and live in their homes
  • are currently making their payments on time
  • would default if their interest went up

Also:

  • ARM mortgage has to have been taken between 1/05 and 7/7
  • Has a rate reset between 1/8-1/10

And you don't qualify if:

  • have missed payment
  • can afford mortgage rate increase
  • don't have an income
  • own homes which are worth less than their mortgage.

*****

The Bush bailout plan is going to work as well as the Bush plan for aiding New Orleans.
*****

Asian markets were mostly higher overnight and European bourse indexes are also slightly higher at midday. Gold is down $12 and Oil is up to $88 after touching the $85 level in overnight trading. Treasuries are slightly weaker.

The Bank of England cut its lending rate by 0.5% but the European Central Bank left rates unchanged.
*****

Jobless claims were 338,000. One of the reasons given for the market rally of yesterday was the ADP jobs report which said that 190,000 jobs were created in November. That report has often been at odds with the Labor Departments numbers which will be reported tomorrow. Weíll see in the morning whether the numbers agree this time.
*****

Dell will begin selling notebook and desktop computers through more than 900Best Buy locations in the U.S. in the next few weeks. With this agreement, Dell products will be available in nearly 10,000 stores worldwide. Dell announced a similar deal with the Wal-mart earlier this year. Among other stores Dells are now available, or will be soon, include Staples, France's Carrefour SA and Gome, China's largest electronics retailer.
*****

We purchased Boston Scientific in accounts from which we sold CMCSA yesterday. We also added more TLAB to accounts as well as AMD. We initiated positions in Xlinx, American Eagle Outfitters and The Gap in some of our large accounts.
*****

Gold finished up $5 at $808 after being $15 lower during the day. Oil gained $2.93 to close at $89.42. Oil traded at $87 and $90.50 today. Treasuries were lower in price/ higher in yield with the two-year at 3.04% and the ten-year back over 4% at 4.02%.

European bourse indexes close mixed while Mexico and Brazil were higher.
*****

The DJIA gained 175 points to 13620. The S&P 500 rose 22 points to 1507 closing above 1490 resistance which now becomes support. The NAZZ gained 42 points to 2709.

Breadth was 3/1 positive on the NYSE and better than 2/1 on the NAZZ but volume was only moderate.

We would guess a lot of the gains in the financial sector are short covering.

There were 101 new lows and 97 new highs.

The bulls won the day.
*****

 

5 December 2007 Daily Comments

Thoughts

Fannie Mae sold $7 billion in preferred stock and cut its dividend by 30% to go along mirroring the actions taken by Freddie Mac last week to shore up the finances of the two quasi government mortgage bankers.

Asian markets were higher overnight as are European bourses at midday. U.S. markets are going to open 1% higher. Gold is up $3 and Oil is up over $1 with an $89 handle. Treasuries are soft.
*****

Investors Intelligence had 49% bulls, up 2%, and 27% bears, down 2%, in the latest reporting week.
*****

Chicoís earnings disappointed and warned going forward and it is down $1 in early trading. And Comcast said that it will add only 6 million subscribers in the next year down from a previous forecast of 6.5 million. CMCSA is also going to increase capital spending. The street doesnít like that news and the shares of CMCSA are down $2.50.

Catching falling knives at year end has become a way of life for us over the years. It takes a strong stomach but the rewards are usually worth the risk. We are selling the Comcast for a $1 per share loss because as it falls we are more inclined to buy Time Warner as a cable play with other areas of interest than Comcast. This is the second time we have lost money on CMCSA and so we are taking it off our screens. The karma obviously is not right.
*****

Dell said it would resume its buyback plans, and begin repurchasing $10 billion in common stock this week -- almost 20% of its outstanding shares at current prices. Dell had suspended its repurchase program in August last year when it began restating four years of earnings. The company did not announce any time frame for the buyback program. Dell has sufficient liquidity to carry it through the announced share buyback program. It has about $14 billion on its balance sheet and is likely to generate strong free cash flows.
*****

3rd Quarter Productivity was up 6.3% while Labor Costs were down 2%. Those figures which have probably been massaged and will certainly be revised do allow room for Uncle Ben to cut.
*****

European markets closed higher with Germany up 1.8% and England and France up better than 2%. Mexico and Brazil also jumped 2%.

Gold ended down $8 at $799 and Oil faded into the close to finish at $86.96 down $1.36. Treasuries were lower with the two-year at 2.90% and the ten-year at 3.94%.
*****

The DJIA gained 196 points to close at 13444. The S&P 500 rose 22 points to 1484 and the NAZZ jumped 46 points to 2666. With the positions we have on we sure like the up days better than the down days.

Breadth was 2/1 positive on the NAZZ and NYSE and volume was only moderate.

There were 135 new lows and 90 new highs on the NYSE.

The bulls won the day. 1490 on the S&P 500 is big-time resistance/support and if the bulls can take it out to the upside December may wind up being in the 13% of the years in the last 50 where the S&P closed higher after being down 1% the first two days of the month. Time will tell.
*****

 

4 December 2007 Daily Comments

Thoughts

JP Morgan downgraded Goldman Sachs and Morgan Stanley and Mother saying write offs and credit market disintermediation are affecting earnings. Merck also said earnings will be less than by a few pennies and Fannie Mae raised its loss estimate. This news has futures lower.

Overseas Asia was mixed with Japan and India lower and the three Chinas higher. European bourse indexes are lower by 1% across the continent and Treasuries are firm with Gold up $10 at $800 and Oil down a few pennies with an $89 handle.
*****

A week ago oil was $99 and today it is $87. But of course the gurus say that oil is trading on fundamentals and not hedge fund manipulation. We guess that means the news that Iran is not trying to create nuclear weapons ahs eliminated the imminent threat of war. Of course Washington knew this news last year. Too bad they couldnít have shared it. But then there was an election.
*****

We added shares of Walgreen to accounts at $35.90 and also added SBUC to accounts that own Yahoo.
*****

According to Jason Roney, a technician who writes on minyanville.com over the last 50 years if the S&P 500 was down more than 1% for the first two days of December the S&P 500 closed the month of December lower by an average 2.2% 87% of the time. Conversely if the S&P 500 was higher by 1% over the first two days of December the S&P 500 closed the month of December higher 85% of the time by an average 3.3%.

To be 1% lower this year the S&P 500 would have to close today lower than 1467. In between 1467 and 1494 and all bets are off.
*****

Walgreen same-store sales rose 4.4 percent in November. Pharmacy same-store sales grew 5.5 percent, with the number of prescriptions filled rising 3 percent.
*****

Gold was up $14 at $803 and Oil closed down $1.10 at $88.20. Treasuries were a tad weaker with the two-year at 2.90% and the ten-year at 3.89%.

European indexes closed about 1% lower as did Mexico while Brazil was up slightly.
*****

The DJIA lost 70 points to finish at 13245. The S&P 500 was down 10 points at 1463 and the NAZZ dropped 18 points to 2620.

Breadth was 2/1 negative on the NYSE and MAZZ and volume was moderate.

There were 195 new lows and 45 new highs on the NYSE.

The bears won the day and according to Jasonís numbers stand a good chance of winning the month since the S&P 500 were down over 1% in the first two days of the month. We of course, hope not, but hope is not tradable. But neither is past performance an indication of future performance.
*****

 

3 December 2007 Daily Comments

Thoughts

December blew into the Land of Milk and Honey on the winds of a snow. And now we have a winter wonderland to get us in the holiday mood.

The market action last week restored some of our holiday spirit also but we would guess that there is still some coal to be removed from the stocking before Christmas arrives.
*****

Asian markets were mixed small overnight and so are European bourses at midday. Gold is down another $3 and Oil is off 80 pennies with an $87 handle on news that the Chavez referendum was defeated and he accepted it without cutting off oil to the U.S.
*****

In the spirit of holiday sales Morgan Stanley purchased 1100 separate land plots from Lennar, the home builder for $550 million. That land had been carried on Lennarís books at September 30 at a value of $1.3 billion.
*****

The study behind these facts can be obtained at: http://www.demos.org/pub1514.cfm

31 percent of middle-income families match our profile for being securely middle class. That is, despite falling into the broad range that defines middle-class "income," less than one in three families have the necessary combination of other factors to ensure middle-class security.

Thirty-four percent of white middle-income families are securely in the middle class, as compared to 26 percent of African-American middle-income families and only 18 percent of Latino middle-income families.

One in four middle-class families matches our profile for being at high risk of slipping out of the middle class altogether.

One in five (21 percent) white families is at high risk for slipping out of the middle class, as compared to one in three (33 percent) African-American headed households and an alarming two in five (41 percent) Latino families.

More than half of middle-class families have no net financial assets whatsoever-that is, no financial assets or debt levels that exceed their assets.

13 percent of middle-class families have sufficient assets to meet three-quarters of their essential living expenses for nine months, should their source of income disappear.

About four out of five middle-class families do not have sufficient assets to cover three quarters of essential living expenses for even three months should their source of income disappear. Essential living expenses are defined as food, housing, clothing, transportation, health care, personal care, education, personal insurance and pensions.

Middle-class families have a median debt of $3,500 and median net assets of $0.

Twenty-one percent of middle-class families have less than $100 per week ($5,000 per year) remaining after meeting essential living expenses. These families are living from paycheck to paycheck with very little margin of security.

In nearly one out of four middle-class families (23 percent), at least one family member lacks health insurance of any kind.

Twenty-eight percent of middle-class families spend 30 percent or more of their income on housing expenses, putting them above federal guidelines for housing affordability.

Twenty-seven percent of middle-class families do not have any education beyond high school, placing them increasingly at risk in a rapidly developing global economy where higher education skills have become fundamental to achieving middle-class status.
*****

Any mortgage rescue plan that doesnít allow all mortgaged borrows to refinance at the same rate is a joke. The rate should be 8% or 9%. Thus those with lower rates wonít be disadvantaged and wonít refinance and those with higher rates who arenít behind in their payments wonít be punished for being current. The rescuers are spending too much time worrying about the dopes who bought the junk. But that is the greed of folks who only want to rescue if it is to their advantage.

We know we are blowing smoke with our rant but it makes us feel better.
*****

We added AMD at 9.80, Dell at $24.50, Chicoís at $11.60, and Walgreen at $36.75 to various accounts.
*****

Fordís November sales were up slightly while GM was down 7% and Toyota was up 1%.
*****

European bourses indexes closed down large fractions to over 1% lower. Mexico and Brazil were slightly higher. Treasuries were strong with the two-year at 2.88% and the ten-year at 3.88%. Gold gained $5 to $794 and Oil was up $1 to $89.90.
*****

The DJIA lost 57 points to close at 13314. The S&P 500 was down 9 points at 1472 and the NAZZ dropped 24 points to 2637.

Breadth was 3/2 negative on the NYSE and NAZZ and volume was moderate.

There were 150 new lows and 60 new highs on the NYSE.

The bears carried the day.
*****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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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.