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

March 1, 2014

Model Portfolio Value As of 28 February 2014

$ 740,809


Comment on Model Portfolio activity

During the week we added Chico Fas to accounts, traded First Solar for a $3 one day gain, took a loss on GM common since we had replaced our exposure with GM B warrants, sold Citrix and Abercrombie for nice gains and added to our Urban Outfitters position.

We expect market to continue to move higher into May and are acting accordingly.
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February 21, 2014

Model Portfolio Value As of 21 February 2014

$ 736,371


Comment on Model Portfolio activity

Facebook acquiring WhatsApp for $19 billion was the big news of the week. This time around the metric is users. Back in the dotcom era of the late 1990s the metric was page views. History doesn’t repeat itself but is often rhymes.

During the week we purchased Whole Foods, repurchased KB homes, and added to GE and Urban Outfitters.

This year the S&P dropped 6% reversed to flat and is meandering trying to decide what to do. Our crystal ball suggests a grind higher into May.
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Four years ago, Brian Acton was looking for a job.

His job at Yahoo, where he’d filled many engineering roles over 11 years, had come to an end.

He was networking with recruiters:

He met with Twitter. Twitter said no:

He met with Facebook. Facebook said no:

So he and Jan Koum, a colleague from Yahoo, set out to do their own thing.

Today, they sold that thing to Facebook for 19 billion dollars.

Life is crazy.

http://techcrunch.com/2014/02/19/how-things-change/?ncid=twittersocialshare


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Verizon should be bought following recent pullback, says Jefferies

Jefferies recommends investors buy shares of Verizon following the recent sell-off. The firm attributes the recent weakness in part to technical pressures into the Vodafone/Verizon Wireless transaction and says negative sentiment on the name is overdone. Jefferies believes Verizon's business update on Monday could serve as a near-term catalyst and keeps a Buy rating on the stock with a $55 price target.
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Valentine Day February 14, 2014

Model Portfolio Value As of 14 February 2014

$ 734,086


Comment on Model Portfolio activity

Markets rallied this week. We sold Aéropostale at a hurting loss and invested the money by adding to American Eagle. AEO’s Chairman just bought 500,000 shares and we are worried that Aéropostale may become another Talbots. Our other issues are doing fine so we are taking our loss and moving on and improving quality with the switch. We added Urban Outfitters and repurchased Cisco when both dropped on disappointing results. We still have plenty of cash and are content to take position in value stocks that disappoint with the thought that most will recover at least enough to make the risk worthwhile.
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Jeff Saut on markets and investing:

After 43 years in this business, I have seen a number of cycles and developed a long-term perspective, much like Richard Russell wrote about in "Rich Man, Poor Man." I like this story:

In the investment world wealthy investors have one major advantage over the little guy, the stock market amateur and the neophyte speculator. The advantage wealthy investors possess is they don't need the markets. I can't begin to tell you what a huge difference that makes, both in one's mental attitude and in the actual handling of one's account. The wealthy investor doesn't need the market because he already has all the income he needs. He has money coming in via bonds, T-bills, money market funds, real estate, and stocks. In other words, the wealthy investor never feels pressured to "make money" in the market.

The wealthy investor tends to be an expert on values. When bonds are cheap and bond yields are irresistibly high, he buys bonds. When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry is on the "giveaway table," he buys them. In other words, the wealthy investor puts his money where the values are. And if there are no outstanding values, the wealthy investor waits. He can afford to wait. He has money coming in daily, weekly, monthly. In other words, he doesn't need the market. He knows what he is looking for, and he doesn't mind waiting weeks, months, or years (they call it patience).

What about the little guy? This fellow always feels pressured to "make money," to "force the market to do something for him." When this fellow isn't buying stocks at 3% yields, he's off to Vegas or Atlantic City trying to win at craps or he's spending ten bucks a week on lottery tickets or he's "investing" in some crackpot real estate scheme with an outfit that his bowling buddy told him about. And because the little guy is forcing the market to do something for him, he's a consistent and constant loser. The little guy doesn't understand values so he always overpays. He loves to gamble, so he always has the odds against him. He doesn't understand compounding and he doesn't understand money. He's the typical American and he's perpetually in debt.

The little guy is in hock and he's always sweating -- sweating to make payments on his house, his refrigerator, his car, or his lawnmower. He's impatient, and he constantly feels pressured. He tells himself he has to make money fast. And he dreams of "big bucks." In the end the little guy wastes his money on the market, he loses his money on gambling, and he dribbles it away on senseless schemes. In brief, this "money nerd" spends his life running up the down escalator. Now here's the ironic part of it. If, from the beginning, the little guy had adopted a strict policy of never spending more than his income, if he had taken that extra income and compounded it in safe, income-producing securities, in due time he'd have money coming in daily, weekly, and monthly – just like the rich guy. Then in due time he'd start acting and thinking like the rich guy. In short, the little guy would become a financial winner instead of a loser.

After more than 50 years of writing "Dow Theory Letters," Richard Russell says the most popular piece he's ever published is the above essay. In this day and age of constant advertisements, infomercials, junk mail, cold callers haranguing all about how to make a killing in the stock market, real estate, commodities, and so forth, it's refreshing to read some advice from an honest old pro that makes sense. Moreover, almost every magazine you see tells you what mutual fund you should buy, how to invest to retire, how you can make it big in whatever. Indeed, I would bet that those writers, advisors, and testimonial seers who concoct those pieces make more money selling their "pitch" than following their own advice. Putting that pitch on paper or through the TV, radio, or phone is a lot easier than actually putting up their own money. I know many stock brokers, advisors, writers, etc. who never invest themselves. Yet they make their money telling others how to do it. A case in point is a story in a widely read financial magazine. It chronicles a now successful promoter who earlier on tried the get-rich-quick schemes, which didn't work for him. So that led him to "why not trade commodities and get rich," which again did not work for him; and then later, "why not write a book about how to trade commodities and get rich." To make a long story short, he made mucho moola selling the book!

Read more:

 http://www.minyanville.com/trading-and-investing/how-to-invest/articles/Jeff-Saut-In-Uncertain-Markets-Put/2/10/2014/id/53697#ixzz2sw3vnQe2
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February 7, 2014

Model Portfolio Value As of 7 February 2014

$ 727,853


Comment on Model Portfolio activity

Markets have been in correction mode for a few weeks now and may have more to go. We have added Verizon, Abercrombie, and GM B warrants this week and will continue to add to other positions as the markets move lower.

Markets dipped then rose then dipped on the Friday Employment report and our guess is that there is more to go on the downside. The DJIA was off 10% at its lowest this week with the S&P 500 down 6%. How low they will go is the $64,000 questions for those old enough to remember the $64,000 question.

The Financial Fox guarding the hen house

http://www.bloomberg.com/news/2014-02-06/jpmorgan-s-blythe-masters-to-join-swaps-regulator-panel.html

JPMorgan’s Blythe Masters to Join Swaps Regulator Panel
By Hugh Son and Silla Brush Feb 6, 2014 11:00 PM CT

Blythe Masters, head of JPMorgan (JPM) Chase & Co.’s commodities division, joined an advisory committee of the U.S. Commodity Futures Trading Commission.

Masters, 44, is a member of the CFTC’s Global Markets Advisory Committee, the Washington-based regulator of futures and swaps said on its website. She was invited by acting Chairman Mark Wetjen to sit on the panel and is scheduled to participate in a CFTC meeting on Feb. 12 to discuss cross-border guidance on rules, a person with knowledge of the matter said. …

The CFTC has been enacting rules required by the 2010 Dodd-Frank Act designed to reduce risk and increase transparency in the global swaps market, after some firms’ bets on the derivatives helped fuel the 2008 credit crisis. The agency put in place more than 60 rules seeking to have most swaps guaranteed at central clearinghouses, which accept collateral from buyers and sellers, and traded on execution facilities or other exchanges. …

The global markets committee is made up of industry executives and includes representatives from firms including Goldman Sachs Group Inc., Citigroup Inc. (C) , Morgan Stanley and Bloomberg LP, the parent company of Bloomberg News.

JPMorgan Tenure

Masters joined JPMorgan in 1991 after internships at the firm and became known that decade for helping develop credit-default swaps, which help investors hedge risks on bonds. She was named to run the commodities business in late 2006, and she also heads regulatory affairs within JPMorgan’s corporate and investment bank.

JPMorgan agreed in July to pay $410 million to settle Federal Energy Regulatory Commission claims the New York-based firm manipulated power markets. The settlement released the company and its employees from any future enforcement actions by the agency. Masters, whose division includes the unit involved in that case, wasn’t named as a defendant.
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