Lemley Yarling Management Co
309 W Johnson Street Apt 544
Madison, WI 53703
Bud: 312-925-5248       Kathy: 630-323-8422
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January 23, 2015
Comment on Model Portfolio activity
The markets continue to be volatile with the major averages
finally turning positive for the year on Thursday before going negative again
on Friday afternoon. We have been taking our lumps with KBH blowing up on us
last week and continuing under pressure this week. We decided to switch at a not
nice loss to BankAmerica. BAC has been under pressure recently but is more
conservative vehicle with which we hope to recoup the KBH losses. We also
switched Athena Retail at a loss to American Eagle for the same reason. And to
complete a dismal week for us in Friday DreamWorks dropped 10% on several
analyst downgrades. we are maintaining since we still expect the company to be
sold and with the profits we made last year we are still positive on the
holding. We added General Electric, Fifth Third Bank, and
Huntington Bank to portfolios as conservator purchases for the eventual higher
move in markets.
At least the January thaw continues.
*****
January 16, 2015
Comment on Model Portfolio activity
Ugh!! The correction is upon us for real as the Swiss Franc
blowup which has led to some currency trading houses going broke coupled with
the continued drop in the price of oil and all things oil related have
pressured markets. The big boys and girls are of course enjoying the
volatility- or at least trading it- and we have no idea how low markets will go
or how long it will last.
Our guess, a guess seasoned by 45 years in the business, is
that there are some large losses lurking at large banks around the world. The
Swiss had kept the exchange rate with the euro fixed for three years and
computer programs for the big boys and girls most probably had factored in a
continuation of that fix or only a slight change. Since computers run the
trading world - and the big boys and girls like to trade in the billions to
make pennies per trade - small moves can lead to big losses. A large unforeseen
move like that of the last two days in currency markets can lead to humongous
losses. The Big whale trade at JP Morgan involved over $100 billion of assets
to capture 1% or less moves. The leverage is needed to make the trades
worthwhile. 20 to 50 times leverage in currencies are often used.
For peace of mind until all the news is out, we sold
AT&T and Verizon today for small losses (we did capture a dividend) to
raises cash in accounts and also eliminated Deutsch Bank at a 10% Loss. While
we were taking our lumps we switched U.S. Steel to Fifth Third Bank at a large
loss to lessen our exposure to the oil patch to our investment in Marathon which
we plan on holding. Our oil venture X for an after year end pop obviously
didn�t work and we will lick our wounds while awaiting better opportunities.
We don�t like taking losses but these sales have raised
sufficient capital while not threatening the upside by much should the current
correction run its course since the stocks we continue to hold will be more
volatile to the upside than the ones we sold.
The losses come early in the year coupled with a small
profit in American Eagle which we also sold this week and so we have 12 months
to recover.
On the bright side this correction seems to have engendered
more fear than the ones in October and December last. But it is surely painful
as are all pullbacks and being more fully invested than usual for a New Year
pop did not help. But the stocks we own are cheap, the economy is good and this
too shall pass- -eventually.
Keep the faith and enjoy the January thaw.
*****
January 09, 2015
Comment on Model Portfolio activity
We thought the markets
would rise in the New Year and then correct but this week they did the opposite
swooning 4% in the first two days only to bounce back to up on the year by
Friday.
What this means we have
no idea. We remain as fully invested as we want to be. Doing the week we traded
Ford for a wash and placed the proceeds in more Marathon Oil. We have enough
exposure to the auto industry and wanted to increase our oil exposure as the
price continues to drop. The oil companies seemed to have stabilized at lowered
levels and our guess is that a drop below $40 would be needed to
cause a more substantial sell off.
*****
January 02, 2015
Comment on Model Portfolio activity
The Model Portfolio ended the year up 3.8% versus up 7.5% on
the DJIA and almost 12% on the S&P 500. We usually lag on the upside and
outperform in down markets. Our large cash position
through most of the year was more a function of not having any stocks we wanted
to own than great fear that the markets would tank.
We did get fully invested at year end as Tax loss selling
and name avoidance by the big boys and girls presented more stocks with value
versus share price. We will use any sustained rally into March to lighten
positions which is our usual action in markets that are behaving normally. As
we keep saying the economy continues to improve and while there are excesses in
some of the no/slight earning�s concept stocks most major stocks are at most
only slightly over priced.
During the week our only new addition was to repurchase KB
Homes.
And let the fun begin again.
*****
Happy New Year
Bud, Katie, Kelle, Gerald, Abby, Dave, Tyler, Lisa, Katie, Bud - 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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