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

21 November 2008

We are going to be traveling for the next two weeks. There will be no regular posts. Any transactions will be noted on the day they occur. We were going to try to post but then we decided that folks are spending too much time reading conflicting views and hearing the media blabbering about the next depression and the end of the U.S. Financial system. We don’t think either will occur and there is nothing we can do about it anyway. We own good stocks at great prices and have a cash reserve in every account that takes withdrawals sufficient to last three years. More than that we cannot do.

We return on December 9.

Thoughts

We arose with the thought that if we were buyers of stocks at 1000 on the S&P 500 and 900 that we should also be buyers at 750,. And so we have added to positions and initiated some new ones when the markets sold off this morning. Please see the Model Portfolio.

We own small amounts of a lot of securities. We could buy index funds, and we have a few; but our thoughts are that we want to won stocks that we know or for a specific purpose as in our package of retailers.

This market has been especially difficult. But we are closer to the end of this selloff now.  The end will come. We have told clients to not look at their statements until they read that the S&P 500 is back at 1000. As we said above we have enough cash in accounts for those who need it to provide for the next three years.

This too shall pass and we will reach the other side of the chasm.
*****

As the markets entered the last hour CNBC announced that Tim Geithner of the NY Fed would be Obama’s Treasury Secretary. And it was also leaked that Obama would personally announce his choices for the Treasury and related posts. The timing of the announcement was as important as the announcement (15 minutes into the final trading hour on an options expiration day) since it demonstrated market acumen, something the Bushies never understood.

The DJIA closed up 500 points at 8050. The S&P 500 was up 48 at 800 and the NAZZ gained 66 to 1382.

Volume was 10 billion.

All will be well.
*****

 

20 November 2008

Thoughts

All the technical folks are predicting Armageddon because support was broken on the close yesterday. Moreover the markets have the feel and the look of the week before the Crash in 1987.

We bought four blue chip stocks and GE when the major measures were down 3% yesterday. To adjust holdings in the face of the volatility and our musings on our walk last night of a Monday collapse we are going to sell half the position in of the four stocks (JPM, MRK, DD, and T) that we bought yesterday. We are also selling all the GE since there is news this morning that the company is approaching sovereign wealth funds for more capital. CEO Immelt said a month ago on CNBC that GE didn’t need any capital. Since then... The shorts are going to jump on that news and will try to make GE the next AIG.
*****

Asian markets were lower by 3% to 6%% overnight and European markets are  2% to 4% lower. The only good news is that by Christmas happy times will return because at the rate markets are falling they will all be a 0 before Christmas.

Oil is under $50. Several years ago we remember writing that markets wouldn’t rally until Oil traded back to $40.
*****

777 and 760 are supposedly support number on the S&P 500. We may find out today.
*****

After dropping 200 points in the first hour and the S&P 500 touching the 777 number the markets rallied back to even off the low. There was major program selling in the major bank stocks forcing their prices down 15% in the first hour and at the low of the morning we repurchased the JPM that we sold on the opening $3 lower than we sold. Unfortunately we were greedy and didn’t sell the shares we repurchased during the day when we had a $2 profit and instead sold them on the close at a loss.

We added the SPDR Major Bank Index (KBE to accounts in which we sold half positions in DuPont and replaced the GE we sold with SPDR Financials (XLF) under $10. The Financials have been causing us pain but we expect them to perform as the major bank stocks did coming out of the 1990-1991 financial turmoil. And we added the NYSE (NYX) to our retail package. It isn’t a retail stock but it is at $18 down from $100 and has a 5.3% yield. We also added to our LIZ at $1.96.
*****

At 1pm the markets are flat as Paulson begins talking. We’ll see if he has the same effect as Bush.
*****

European shares closed 2% to 4% lower. Oil lost $4 to $49. Gold gained $6 to $738. The Treasury two-year is now yield under 1% and the ten-year is 3.13%.
*****

No bailout for the auto industry today. The Congress is saying wait till December and try harder and suggesting the auto CEOs drive to Washington wearing sack cloth if they want the loan.
*****

The DIJA dropped 444 points today (6.2%) and the S&P 500 was down 54 at 752 below the low in 2002. The NAZZ crashed 70 to 1316.

Breadth was 10/1 negative again today on the NYSE and volume was crash active at 11 billion shares.

Combined new lows were about 2900 which suggest we are nearing at least a temporary bottom. In the last conflagration a month ago new lows were about 3600.

The bears are in control. The SEC had better change the short rules or 5000 on the DJIA will soon be in the bears sights.
*****

 

19 November 2008

Thoughts

The tech guru we follow suggests that the last hour surge yesterday was the result of the closing of the InBev/Budweiser deal which removed $5 billion in vale from the S&P 500 Index funds. Those funds didn’t have to sell (they received cash for their BUD shares) but they did have to buy $5 billion in shares of many other companies at the close. This is an example of how computer trading affects stock price movements.
*****

Asian markets were mostly lower except China which gained back 6% of the 7% it lost the day before. European bourses are 1% and more lower at midday and U.S. futures suggest a lower opening. Gold is up $6 and Oil has a $53 handle. Treasuries are firm.
*****

The October CPI was down 1%, the most in many years. Housing starts are also lower.
*****

We guess it could be worse:

Citigroup's Corporate Special Opportunities (CSO) hedge fund is being liquidated after losing 53% of its value last month. Investors in CSO, which managed nearly $4.2B at its peak, will likely receive no more than ten cents on the dollar.
*****

Thanks a lot Ken:

The chief executive of a major U.S. bank that received $25 billion from the government's financial bailout package said Tuesday that federal aid shouldn't be dispensed to the ailing Detroit Three automakers -- unless they become the Detroit Two. "I think there's one too many" automakers, Bank of America CEO Kenneth Lewis told the Detroit Economic Club during a meeting in Cobo Center, the downtown convention center that's home to the North American International Auto Show each January. He added he would require consolidation if he was deciding on a bailout. "I think the American people are suspect of just giving more money and buying more time," he told reporters after the speech. "They want to see that the companies have in fact changed and the strategies have changed.
*****

JP Morgan is down 10% touching its 6 year low and yielding 5%. We traded off this level in July when most of the bank made their lows. We traded the stock and made a few points and then watched it run to $54 afterwards when the short ban was placed in effect. We have no reason to believe it will move that high soon but we did resolve that if JPM revisited this level we would buy to own and we did that today. The shares are down 25% this week.

We bought DuPont yielding 6% and at a twelve year low. We repurchased Merck at a 5.8% yield; AT&T at a 6% yield and we just can’t resist GE at an 8% yield. We have traded all four of these stocks profitably in the last month from these levels although because of their yields we are inclined to hold them this time as investments for the other side of the chasm.
*****

Two hours into the trading session the major measures are again testing their lows.
*****

Shorting Retailers and Banks is the current wisdom in hedge fund land. Great values are being created if one can survive. That is the reason we raised the cash we did yesterday. Retail will surely suffer in this recession and there will be bankruptcies and consolidations but on the other side big money will be made as these same short sellers crowd in on the buy side.

We are adding a package of 8-15 decimated retail stocks to our portfolios. In November 1974 the ‘old stock broker’ prepared a list of 10 REITS and 10 stocks selling under $10 for clients to buy in a package. The idea was that if 1 or 2 went broke the remaining 8 would eventually return much more than the losses from the two. In fact none of the REITs or other stocks in the two packages went under and the returns were a double to much more depending on how long folks held.

We are doing the same today. We know there are retail index ETFS but in this case we want to create our own package that we think offers much greater appreciation potential. Given that we are not at year end and - even though the stocks are at multiyear or historic lows - price risk remain still the bear market ends. That is why we are buying many issues in small quantities.

We raised cash the last two days for peace of mind. Since we sold the markets are down another 10%. Buying 5% to 8% dividend payers down 10% and more from yesterday morning and the retail package doesn’t disturb our peace of mind. In the Model Portfolio the JPM purchase and the entire 15 stock package amount to 23% of available cash on JPM, MRK, DD, T, and GE and 6% on the package which leaves us with 32% cash in the Model Portfolio and more in other accounts.
*****

Our accounts will be more volatile to the downside than the markets because we are investing in Financials and Retail into the teeth of the short sellers. We have always been contrarian investors because that is where the value is and we know that all of these companies are not going broke. In fact if more than one does (CWTR) we will be surprised. And we know that on the other side of the valley we will be correct.
*****

The Retail Package

Abercrombie & Fitch (ANF) is down from $84 to $15 this year and actually yields 5% at this price. The shares are priced at 3X trailing earnings which demonstrates the earnings power of this company in good times. Cash is $300 million and debt is $100 million. ANF will certainly be a survivor and we made a ton of money on this stock in the 1990s and left even more on the table. Insiders own 15% of the company.
*****

Barnes & Noble (BKS) has no debt and yields 6% at its price if the dividend holds. The shares are priced at $13 down from $40 this year. From the WSJ:

The chairman of Barnes & Noble Inc. last week told employees via an internal memo that the nation's largest bookstore retailer is "bracing for a terrible holiday season," and that he expects "the trend to continue well into 2009, and perhaps beyond."

In his memo, Leonard Riggio, the retailer's largest shareholder, noted that comparable store sales, a key retail indicator, recently declined for the first time in the retailer's history.

"Never in all of the years I've been in business have I seen a worse outlook for the economy," wrote Mr. Riggio. "And never in all my years as a bookseller have I seen a retail climate as poor as the one we are in. Nothing even close."

Barnes & Noble employs an estimated 40,000 people. Barnes & Noble shares (BKS) are currently trading at $18.55 on the New York Stock Exchange, off a fraction, but down sharply from its 52-week high of $39.52.

The ongoing economic crisis will have a direct impact on the retailer's plans for new growth. Mr. Riggio wrote that the chain will "curtail greatly" the number of new store openings, and that discretionary spending will be cut sharply.

Barnes & Noble's Memo

Read the memo that Barnes & Noble chairman Leonard Riggio sent to his employees about the outlook for the company.

However, Mr. Riggio wrote that Barnes & Noble will maintain its contributions to the company's 401K plan and intends to pay overtime during the holidays. The retailer expects to finish comfortably in the black for the year and doesn't have any bank debt.

"I am saddened by the many stories of booksellers who have taken big hits in their 401K plans, including many who have a large percentage of their holdings in (BKS) stock," added Mr. Riggio. "While it may be of small consolation to you, your losses mirror the losses nearly everyone in America has experienced, even more so those who were heavily into equities, especially stock in retail companies."
*****

The Gap (GPS)was our first big retail home run in the 1980s. In fact it was a twelve bagger in some accounts. Priced at $10 GPS has $2.50 in cash and no debt. Insiders own 35% and the company is priced at one half of sales, 7X trading earnings and with a 3% dividend yield that won’t be cut.
*****

Nordstrom (JWN) is priced at $9 down from $40 with a 6% dividend yield and at 3X trailing earnings. We are mentioning trailing earnings to suggest earnings power not what earnings will be in a severe recession. As with most department debt is large and that is why we are purchasing four (SKS, JWN, M, DDS). Insiders own 35%.
*****

Williams Sonoma (WSM) is priced at 4X trailing earnings with a 7% dividend yield. The shares have been pounded by short sellers who know that the CEO already sold 3 million shares to meet margin calls and are hoping to cause more selling from him. WSM’s exposure to housing is also hitting the shares and as we have mentioned before market psychology induces selling as share prices drop which is the opposite reaction to the buying of shares when the price rises as often occurs. Cash equals debt. Insiders till own 20%. 12 month high was $30.
*****

Saks (SKS), which is now just Saks stores again after owning a lot of other names a few years ago, is priced at 8 times trailing earnings and is down from $25 to $3. A hedge fund from Iceland owned 20% of Saks shares and the hedge fund community knows that and beside the lousy results we think the selling at higher levels occurred to trap the long hedge fund which was in trouble because the failure of the banks in Iceland. We noticed that a Spanish bank seems to have acquired the Iceland fund position at a price in the high single digits. SKS sells at one tenth of sales but has a large debt load.
*****

Liz Claiborne (LIZ) has been selling and closing down designer names for the past two years to focus on its profitable lines. Remaining lines are KATE SPADE, JUICY COUTURE, LUCKY BRAND JEANS, and MEXX. In addition, it sells its products under its wholesale-based brands comprising AXCESS, CLAIBORNE, CONCEPTS BY CLAIBORNE, DANA BUCHMAN, ENYCE, KENSIE, LIZ & CO., LIZ CLAIBORNE, MAC & JAC, MARVELLA, MONET, NARCISO RODRIGUEZ, TRIFARI, and VILLAGER; licensed brands, such as DKNY JEANS and DKNY ACTIVE; and non-direct fragrance brands, including CLAIBORNE, CURVE, LIZ CLAIBORNE, and USHER.

Priced also at one tenth of sales at $3 down from $25, insiders won 20% and the company does have a lot of debt that is has been paring through asset sales.
*****

Chico’s (CHS) is priced at $1.90 down from $12 this year and $30 last year. With $1.50 a share in cash and no debt the company is priced at $60 million net of debt with $1.5 billion in sales and EBITDA of $100 million. This year should be a breakeven year.
*****

Sears (SHLD) is priced at $28 down form $100 two months ago and $200 last year. At $200 it was overpriced, at $28 it may have some value. $28 places an equity value of $3 billion (EBITDA is $2 billion) on a company that has $40 billion in sales. Eddie Lampert, who used opt be called the new Warren Buffet when Sears shares sold at $200, is now stuck. Mimicking hedge funds are liquidating Sears’s shares and since the market is thin and the only buyer in size has been Lampert who doesn’t have any funds left to do much buying the hedgies have ganged up on their fellow member and are drubbing the shares to the downside.
*****

Urban Outfitters is a stock we used to trade and sold too soon. URBN has been the darling of the momentum funds the last two years and it is now the darling the short sellers. Last week URBN announced better sales and earnings and the share price dropped because they were cautious going forward. It is that kind of market. The share price is down from $35 to $14 which is 10X rising earnings. Sales equal market cap and URBN has no debt and $1 per share in cash. Insiders own 30% of the shares.
*****

Tiffany has dropped from $54 to $18. Japan is a large market for TIF and with the worldwide recession the markets have decided that even rich folks are pulling back. The shares trade at one times sales and 7X trailing earnings. The stock has a 3.5% yield.
*****

Macy’s (M) which is the old symbol for Montgomery Ward –not a good omen- (and formerly Federated and formerly Field’s, Dayton Hudson and other local department stores whose names it should have kept) has a ton of debt and went broke after the 1987 Crash and could do so again. We own it as part of the package at $5 down from $31 this year and $45 last year.
*****

Dillard (DDS) is in the same boat as Macy’s as far as debt is concerned but insiders have a large stake (35%) in the company. It ahs been run much more conservatively than Macy’s. Two hedge funds amassed a position in the shares to force changes and it looks like their fellow hedgies have ganged up to force them out of their shares. At $3 down from $25 this year we aren’t risking a lot of money but will be rewarded by survival. Market cap ex debt is $200 million for a company with $7 billion in sales.
*****

Coldwater Creek is a catalogue company that tried to make itself into a retail store chain. Insiders own a bunch of stock (38%) and still run the company. This is the most likely not to make it but at $1.50 a share it is worth the risk. The shares sold at $8 this year and $30 two years ago. CWTR has a net $1 in cash.
*****

Our Retail Big Four

American Eagle Outfitters is one of our four large retail holdings. The shares are priced at 5X trailing earnings with a 4% dividend yield. At $8 there is a $2 per share in cash in the company and the whole shebang is priced at 50% of revenues. Share price is down from $30.
*****

Whole Foods just received a $459 million infusion of cash through convertible preferred shares. That cash infusion solves any money need they might have had and effectively pays for the Wild Oats purchase. Sales may suffer in the short term from the recession but the share price dropping to $9 from $40 this year has accounted for that. the quality of the food will win out. WFMI sold at $70 in the nutty period.
*****

J Crew was priced at $54 last May and $30 two month ago and is changing handed at $9 today. The shares are price at on third of sales. Cheapo.
*****

Starbucks is also cheap.
*****

XLF yield 6%; JPM yields 5%; Merck yields 5.8%; DuPont yields 6%; AT&T yields 6%; GE yields 8%; Intel yields 4%; NVDIA has no dividend; CBS yields 13% and Motorola yields 5%.
*****

European bourse indexes closed 4% and more lower.
*****

Microsoft says it has no interest in Yahoo and Yahoo shares are down 20% to a new low at $9.50.
*****

Mr. Rumor says that Harbinger hedge fund is selling its NYT stake and the shorts are on the case.
*****

Oil ended down $ .82 at $53.73. Gold was up $3 to $736. Treasuries were flat.
*****

The DJIA lost 5% today and broke the 8000 level.

The DJIA closed down 430 at 7998. The S&P 500 dropped 52 to 806 and the NAZZ crashed 98 to 1386.

Breadth was 10/1 negative and volume was active at 8 billion on the NYSE.

There were about 1700 combined new lows and 20 combined new highs.

The bears are still in control.
*****

 

18 November 2008

Thoughts

We have decided that bad news and the pervasive negativity of the media reporting that news will continue for another month as much lower Christmas sales, terrible economic statistics, more foreclosures and more bank failures dominate. We thought the market were making a bottom in late October which is why we moved money from cash to stocks after holding cash for most of the year since recovering our early year losses. We were wrong.  After bouncing off a bottom twice, the markets are again at support.

If the major measures fail to hold support this time around the drop will be another 10% to 20%. Measured against the 50% down the major measures have already traveled another 15% is not great. But in dollar terms in accounts it is.

We think that towards the end of December when folks become less media conscious and more inward family oriented there may be a bottom formed as occurred in 1974. In early January the media will turn its saturation attention to the incoming Obama administration and his plans. Obama cannot risk his authority now by proposing policy actions because the present administration is going to do its own thing as it has for the last eight years.

As the media concentrates on OBAMA a note of hope and much less negativity will help restore some confidence in the system and may at least arrest any more severe downward action. Then it will be up to Obama to deliver.

Normally we would say that when tax selling abates in December the markets would rally from the relief from the selling pressure. But with hedge fund short selling that scenario may not occur in the New Year. We realize now that the continuation of short selling in the new year 2008 is why we suffered the losses we did when the expected relief rally in sold down stocks did not occur. The short selling uptick rule had been removed the previous July.

We reduced our SPDR Financial Position by half again this morning. We also switched VECO to NVDIA. And we reduced the Whole Foods position to relatively the same amount of shares per account as we own in AEO, JCG, and SBUX. With these sales most accounts are back to 50% or more cash. With the markets down 55% from their highs a year ago a 30% to 40% invested position is warranted. We miscalculated the bottom and paid dearly for ourselves and clients; but we are here and not there. In effect the losses we have incurred for most accounts would have resulted if we had been 40% invested for the whole year with the rest in cash. That gives us some but not very much solace. We have been concentrating on the spilled milk for a few days but we now we are looking for cows to replace the spilled milk. Since we have been farming off and on for almost forty years we are sure we will.

The markets are trying to hold and there are a few signs of a bottom forming (including our raising cash). Some gurus want another 20% whoosh down and if it occurs we have the funds to take advantage of the down. Stocks are cheap now. The companies we own all have the finances to emerge as winners on the other side of the bottom. If we were in cash until yesterday we would be buying these same positions today. That is the measure we use to know whether to hold. Our dreams of great profits and perfect timing are gone but we know that as investors the risk/reward ratio from current prices of the stocks we won justifies holding tehm.

The stocks we own will sell at double or more their current prices within three years. In between we have no idea where they will be valued. Realizing that the markets are not acting as we thought they would we have retreated to sufficient cash holdings in accounts. We have balanced the cash with stocks that provide a good reward/risk opportunity.
*****

The Producer Price Index was down 2.8% last month. Stocks were set to open lower in that Asian markets were 4% to 7% lower and European bourse indexes are 3% lower at midday. Gold is down $9 and Oil is flat at $55.

But then Hewlett Packard pre-announced above expected numbers for its quarter and Home Depot reported better than earnings. That news and the news that Jerry Yang stepped down as head of Yahoo which revived Microsoft/Yahoo takeover speculation and caused the futures to move close to even on the morning.

There is also a report that John Paulson, the fellow who got the subprime mortgage crisis right and made billions shorting subprime, is now buying mortgages in the marketplace. That is good news.
*****

At 12:45pm the major measures are down 1.5% as the quant program short sellers try to break the markets support levels. The WSJ printed an opinion piece on the uptick rule today:

There's a Better Way to Prevent 'Bear Raids'

The SEC should restore the uptick rule.

By ROBERT C. POZEN and YANEER BAR-YAM

When U.S. stocks plunged last summer, the SEC adopted several measures to constrain short selling, or betting that a stock's price will decline by selling borrowed shares. These included weekly reporting of short positions by large investment managers, requiring short sellers to line up in advance borrowed shares, and temporarily banning all short sales in financial stocks.

These measures proved ineffective. Even during the three-week ban starting on Sept. 22, financial stocks fell along with the market, after outperforming the market prior to the ban. Moreover, the liquidity of these financial stocks decreased, and the cost of trading them increased, as bid-ask spreads widened.

Given the continued turmoil in the financial markets, the SEC should reinstate the "uptick" rule, which helped limit downward spirals by allowing a stock to be sold short only after a rise (an "uptick") from its immediately prior price. Adopted in 1938, the uptick rule was repealed by the SEC on July 3, 2007, primarily on the basis of a pilot program conducted in 2005. In the pilot program the agency compared 943 randomly selected stocks from the Russell 3000 not subject to the uptick rule to the remaining stocks in the Russell 3000 (a broad-based index of U.S. stocks of all sizes) still subject to this rule.

The comparison was only for six months -- far too brief a time to draw conclusions about a rule that had been in effect for 70 years. The comparison also did not take place when repeal of the uptick rule could be stress-tested: 2005 was a year of rising stock prices with low volatility.

During these six months, the SEC found that the stocks not subject to the uptick rule had 2% lower returns than those still subject to the rule. This difference implies that removing the uptick rule goes farther than the SEC's apparent goal of attaining a neutral environment for stocks. As explained by a research analyst at University of Tennessee, Min Zhao, the SEC's lifting of the uptick rule for large stocks in the pilot "is associated with undervaluation . . . [and makes it easier] for 'predatory' short sellers to aggressively submit short orders and to manipulate stock price downward."

In today's Opinion Journal

The SEC dismissed this 2% difference as statistically insignificant relative to the standard deviation of the Russell 3000 during the pilot period. However, if we eliminate a small number of outlier stocks in that index with returns over 100% during the pilot period, the 2% difference becomes statistically significant. More fundamentally, return differences of 2% within six months are economically important, because annual returns in the U.S. stock market since World War II average 6% to 7%.

The SEC was warned by two commentators not to repeal the uptick rule since it limited "bear raids" -- when short sellers drive down a stock's price in the hopes of scaring other investors into dumping the stock or triggering margin calls to force liquidations. In response, the agency approvingly summarized the views of three other commentators -- that bear raids "are highly unlikely to occur in today's markets, which are characterized by much smaller spreads, higher liquidity, and greater transparency than when the rule was adopted 70 years ago." This summary did not take into account another factor -- the advent of over $1 trillion managed by hedge funds with the ability to short stocks.

In fact, after the repeal of the uptick rule, there was a marked increase in the number of NYSE-listed stocks with price drops of over 40% in a day -- a rough proxy for a bear raid. In the 12 months following Sept. 30, 2007, the number of such huge drops doubled as compared to a prior period with similar market declines and high volatility -- the 12 months following March 31, 2000.

The passage of the Economic Stabilization Act of 2008 has not stopped bear raids, so the SEC is reviewing its tool kit on short selling. Instead of another blunt tool like a temporary ban, the SEC should promptly bring back the uptick rule.

Mr. Pozen is chairman of MFS Investment Management. Mr. Bar-Yam is president of the New England Complex Systems Institute.
*****

The share prices of the retail stocks we own are being forced down by short sellers since that is the current strategy of many hedge funds. While the share prices of retail companies certainly should be lower than they were last spring the prices at which these companies currently trade is the result of unbridled short selling on downticks. Time will eventually allow us to recover our losses and prosper but it is frustrating to know that the failure of the SEC to understand markets is causing so much pain to ordinary investors. The SEC changed the rule to benefit the quant hedge funds that found it impossible to write a software program that would allow them to sell short on their computers with the uptick rule in place. A six month study in a time of rising prices when hedge funds were triple long instead of triple short demonstrates the total inanity of the Cox led SEC.
*****

European indexes closed higher on Tuesday and Oil was pennies lower at $54.60. Gold lost $7 to $735.Treesduires rallied with the two-year at 1.12% and the ten-year at 3.53%.
*****

The DJIA recovered from a 2% loss, which sent the number below 8000, in the final hour to close higher on the day. At the close the DJIA was up 150 at 8423. The S&P 500 gained 10 to 860 and the NAZZ was down 10 at 1475.

Breadth was 2/1 negative and volume was moderate.

There were about 1440 combined new lows and 15 combined new highs.

The quant computer jockeys remain in control. When the trend eventually turns these same quants will push stocks higher the same way they are pushing them lower now.
*****

 

17 November 2008

Thoughts

This is one tough market and as we have said before has taken on the look of 1974. In that market stocks moved lower day after day until they finally bottomed in early December.

The markets are trying to hold important support. For our own peace of mind we are selling one half of our SPDR Financial position and one half of our CBS position. We also sold for a small profit the GE we bought the other day.  These sales will place a comfortable amount of cash in accounts. While the losses we are taking in the two issues hurt it is acceptable given current market conditions. The important thing here is to survive. The next bull market will offer plenty of opportunity as long as we are still around to participate.
*****

Asian market indexes were fractionally lower overnight and European bourse indexes are down 1% to 2% at midday. Oil is weaker as is gold.
*****

In early trading the financials are under stress and Target is lower on lower earnings and a bleak forecast.
*****

The Financial Times has an interesting article on the Iceland bankruptcy:

http://www.ft.com/cms/s/0/66c87994-aec1-11dd-b621-000077b07658.html?nclick_check=1
*****

We have to leave early today for our annual physical. At 1pm the major measures were down about 1%. European bourse indexes closed down about 3%. Gold was lower by a dollar and so was Oil at $56.27.
*****

 

14 November 2008

Thoughts

Yesterday’s action was a classic exhibit of a retest of a low. It was too classic for many gurus. This morning the shorts are back and the major measures are down 3%.

Asian markets were higher overnight by 2% except India which was lower by 1.5%. European bourse indexes are up 2% plus at midday attempting to catch up to U.S. markets from yesterday.

Gold is up $22 and Oil is flat. Treasuries have a bid.
*****

Getting rid of mark to market accounting and allowing pricing to maturity and reimposing the uptick rule would “save’ the markets. Then the Fed and Treasury and new administration could deal with the economic crisis in a reasoned manner instead of reacting to every screwy 3% rise or drop in the major stock measures.
*****

Gold was up $36 to $741. Oil was down $1.70 at $56.60. Treasuries were flat and European bourse indexes were up 1% and more.
*****

After dropping 300 points in morning trading the DJIA rallied back to up 75 ten minutes into the final hour. At 2:30pm programs hit the market and in 2 minutes the DJIA was down 175 points. We like it when programs take stocks up and hate it when they take them down. The range today was 10%.

At the bell the DJIA was down 340 at 8498. The S&P 500 lost 38 to 873 and the NAZZ dropped 80 to 1517.

Breadth was 3/1 negative and volume was 6 billion on the NYSE.

There were about 400 new lows and 10 new highs.

Today was a win for the bears.
*****

 

13 November 2008

Thoughts

CNBC has Jim Chanos, a well known short seller, on as its morning guest. Unlike many of the current short sellers Chanos picks specific companies and makes reasoned bets against them. But, it is telling of the atmosphere pervading the markets that the guest would be a short seller. There is an almost perverse complacency that markets are going lower forever now and we may as well get used to it.

But even in bear markets there are rallies and today would be a day to expect one. After yesterday we must admit that we were a bit discouraged as we saw another 7% of the value of our accounts disappears, not forever but at least for the night. In the last seven days 20% of value has been eliminated from our accounts.

We take some solace from the fact that Warren Buffet’s Berkshire Hathaway is also down 30% on the year. In the last 10 years Berkshire Hathaway is up 60%. Our Model Portfolio is still up 71%. Jack Welch’s GE is down 40%.

Moreover had we stayed all cash in accounts until last Wednesday, the morning after the election and all the turmoil of the last three months, and then invested our funds we would still be down over 20% for the year. It is that kind of market.

But today is a new day and we are closer to at least a temporary bottom than we were yesterday and so we will muddle on as we always do with the expectations of reversing the losses over time.

The selling that is occurring is more macro than stock specific and so we don’t take it personally. As we have been saying, this too shall pass.
*****

Intel lowered revenue expectations last night and Wal-Mart was cautious this morning. Jobless claims for last week were just announced at 516,000 and so the 500,000 number has been breached.

Asian markets were under pressure last night with Hong Kong and Japan down 5% while European bourse indexes are mixed plus or minus 1% at midday. U.S. futures suggest a down opening.

Oil is up a few pennies and Gold is down $5.
*****

The article at this website on a GM bailout is informative: http://mobile.time.com/detail.jsp?key=262205&rc=to
*****

The last time Intel sold at this level was October of 1996.
*****

The one suggestion we heard which seems viable and very helpful would be to rescind FICA for a year or two. In effect that would give  real impetus to Corporations and individuals by increasing after tax income by over 7% for both. It would help corporations hire and be specifically aimed at workers.
*****

Stocks opened 1% higher and are now giving back the gains.  On the opening ramp we sold the SPDR Technology and we sold QQQQ by swapping an equal amount of the QQQQ for the SPDR financials. That raised cash for individual stocks we bought today on the 300 points drop and test of the October 10 low.
*****

We may be dumb but an 8% yield on GE is too good to pass up and so we bought shares at $14.75. We sold it at $19.80 a week ago. At that time we sold because we didn’t understand why GE needed money from the rescue fund after they said they didn’t. We still don’t but they got it and reaffirmed the dividend thought 2009 and so we are now willing to accept the risk.
*****

The shorts are at it again today. What is a marvel to us is that no one mentions the lack of an uptick rule anymore when trying to understand the selling. This is not 1932 and the selling will end at some point. We just hope it isn’t 0. Actually we wouldn’t mind 0 as long as it occurred in one day.

From CNBC: At noon we are down 300 on the DJIA. The Standard & Poor's 500 and Nasdaq both breached their 2008 lows and the Dow briefly dropped below 8,000, triggering a sharp selloff across the board on Wall Street that sent the indexes down more than 3 percent. After a morning of waffling in a tight trading range, stocks plunged as financial shares declined and consumer weakness weighed on technology companies. The S&P fell below 839.80, triggering a wave of technical selling that had traders bracing for the worst. Indexes moved off their lows for the day but were still down more than 2 percent heading with less than three hours of trading to go.

This intraday collapse is necessary and hopefully this afternoon we can rally. If not....., it’s more the same pain we have experienced this week.
*****

Intel announced bad news last night and remained green or within shouting distance of green even when the DJIA tanked 300 points at noon. One of the signs of a turn is when bad news doesn’t kill the stock involved. We repurchased the Intel we sold yesterday below our sale price. The shares have a 4% yield and last saw the $13 level in 1996.
*****

Gold jumped $15 and Oil reversed higher after trading at $54 early in the day to close at $59.60 up $3.25. Treasuries were weaker and European bourse indexes closed mostly small percentages higher.
*****

The DJIA traded in a 1000 point range today with a move of over 1900 total points up and down and up and down and up. Given that we traded below the October 10 low today before moving above it such volatility makes sense. Bulls want to buy the hold and bears wanted to break the hold but are  now covering for the night only to return tomorrow to try again. The lack of an uptick rule allows them to do that.
*****

The DJIA gained 550 to close at 8840. The S&P 500 was up 60 to 910 and the NAZZ gained 98 to 1598.

Breadth was 2/1 positive and volume was 7 billion plus.

There were about 1400 combined new lows and 10 new highs. That is half the new lows made the last time we made market lows and is positive as is the volume.

The bulls held at key support. Let us see what tomorrow brings.
*****

 

12 November 2008

Thoughts

Sometimes and ugh is just an ugh. Last night at the end of our post we inserted and ugh before our comment that the bears won the day. While we are confident the stocks we own will reward us over time, we are tired of the negative action of the markets. That is the reason for the Ugh. The economy is in trouble but share prices have retreated to the point where the end of the world as we know it is in the cards.

As an example, this morning Best Buy said that earnings in 2009 will be in the $2 range instead of the $3 range. The shares immediately sold off 15% to $20. That is 10X reduced expectations. Those reduced expectations are the result in part of Circuit City going broke and planning to sell inventory to pay creditors. Those bankruptcy sales will surely affect Best Buy sales over the next six months but after that Best Buy will be without a major competitor and should benefit. Surely this morning’s news is a glass half full not a glass half empty. But this is a take no prisoners market and so the shares will be pounded today.

One thought we did have last night was that when we ugh, the markets may be getting ready to stage at least a slight rally. On that note we present the following form Dick Arms at realmoney.com:

Tuesday's semi-holiday, lighter-volume trading led to what started out to be a dismal session of lower prices and general apathy amidst fear. But later in the day, it looked as though the sellers had run out of strength, and the DJIA regained much of its loss, before giving much of it back again. But the point is that the drop was not based upon intense selling, it was based upon a lack of aggressive buyers. ... (Tuesday’s action) seems to have been yet another light-volume pullback, testing the heavy-volume low of Oct. 10. One or more tests of a major low, over a period of weeks are very typical of a market reversal. Therefore, the current action is not only to be expected, but is encouraging. It broadens the base and continues the series of higher lows. The second chart emphasizes my contention of the very oversold current condition. Both the five-day and the 10-day moving averages of the Arms Index are at rarely seen levels. Such readings usually only come in at, or very close to, important market bottoms. It looks like a time to be buying, not a time to be selling.
*****

Asian markets were lower overnight and European bourse indexes were higher at midday but are now lower. Oil is at $58 and Gold is off another $5. Treasuries are flat. Paulson speaks at 9:30am and so the markets are awaiting that event.
*****

Investors’ Intelligence had 32% bulls and 46% bears last week.
*****

Russian markets are closed until Thursday to allow the Russian Central Bank to figure things out after the collapse of the Russian ruble and Oil prices.
*****

We also received a comment on our phrase this too shall pass. From Wikipedia:

“This too shall pass" is a phrase occurring in a Jewish wisdom folktale involving King Solomon. The phrase is commonly engraved on silver rings.

Many versions of the folktale have been recorded by the Israel Folklore Archive at the University of Haifa. Heda Jason recorded this version told by David Franko from Turkey: “King Solomon once searched for a cure against depression. He assembled his wise men together. They meditated for a long time and gave him the following advice: Make yourself a ring and have thereon engraved the words "This too shall pass". The King carried out the advice. He had the ring made and wore it constantly. Every time he felt sad and depressed, he looked at the ring, where on his mood would change and he would feel cheerful.

The phrase "This too shall pass" and the associated ring story were made popular by Abraham Lincoln in his 'Address before the Wisconsin State Agricultural Society, Milwaukee, Wisconsin' on September 30, 1859:

It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: "And this, too, shall pass away." How much it expresses! How chastening in the hour of pride! How consoling in the depths of affliction!”
*****

We sold Symantec and Broadcom and placed the funds in the top 100 OTC stocks through the QQQQ. That diversifies our risk and allows us to participate in the upside on Apple and other issues. The top ten holding are

APPLE INC

13.17%

MICROSOFT CORP

5.64%

QUALCOMM INC

5.54%

GOOGLE INC

4.89%

RESCH IN MOTION

4.22%

CISCO SYSTEMS       

3.14%

GILEAD

3.08%

ORACLE

2.88%

INTEL

2.76%

TEVA PHAR

1.85%

Total:

47.17%


*****

We sold Cisco and bought more SPDR Financials with the proceeds. We still have enough exposure to the tech industry and we obviously want to concentrate on financials. The turmoil in these stocks is presenting a buying opportunity similar to the one in 1990. While the XLF holding is large please note that it is an ETF and is comprised of 85 different companies.
*****

Over the last five years the SPDR financial ETF is down 50% in price while the S&P 500 is down 10%. This year the XLF is down 55% while the S&P 500 is down 40%. When the turn comes we think XLF will be more volatile to the upside as it has been to the downside.

We are selling Intel, Dell, NVDIA, Micron and Tellabs and placing part of the proceeds in the SPDR Tech which gives us exposure to a lot of techs and not individual issues. We are keeping some of the cash in case the rout continues.
*****

Oil was down $4 at $55. We remember that several years ago we said the markets wouldn’t rally until Oil moved back under $40. That may soon occur.

Treasuries were better and Gold lost $22 to $710. European bourse indexes closed down about 3% across the continent.
*****

The DJIA dropped 411 to 8282. The S&P 500 lost 46 to 852 and the NAZZ was down 82 to 1500.

Breadth was 8/1 negative and volume was about 6 billion in the NYSE.

There were about 1100 new lows and 10 new highs.

The bears are in control.
*****

 

Veterans Day 2008

Thoughts

Markets worldwide are lower today with Asian markets losing 4% plus and European bourse indexes all 2% and more lower at midday. Oil is off $3 at $59 and Gold is down $18. Treasuries are flat.

Since last we wrote the markets were up on Friday and down yesterday. Our concentration in financials and tech and retail is hurting near term performance. The stocks we own are good values at the levels at which they are trading. We don’t like losing money and we take small comfort that we are down only half the market losses of this year. But investing is about making money over the long term and we do believe that what we own will do that for us.
*****

We have traded out of lesser quality stocks while we were traveling and today and improved quality by moving into the SPDR Financials and adding to other holdings. We have reduced our retail exposure to four stocks that will all survive and thrive when the recession ends: J Crew, Whole Foods, Starbucks and American Eagle Outfitters. All have low debt and are in excellent financial shape. JCG is off 75% from its 12 month high and 40% below its offering price three years ago. WFMI is down 80% from its high a few years ago and 75% from its 12 month high. Starbucks is down 75% from its three year high and 50% from its twelve month high. The same goes for American Eagle Outfitters.

Our tech holdings are of the highest quality and priced at half or less of yearly and five year highs. CSCO ( $4 per share in cash and sells at at 12 X earnings, Intel with $2 per share in cash and at 10X, DELL with $3 net in cash at 8X. BRCM, SYMC, NVDA ($2.50 cash per share), and VECO are all at multi year lows with better than recent quarterly sales and earnings reports.

Evergreen Solar (ESLR) is a speculation on solar energy taking off. It is priced at 20% of its yearly high.

We are concentrating on financials by owning the SPDR Financial ETF which is comprised of money center banks and insurance companies that have been guaranteed survival by the Fed and Treasury. The XLF is down 60% from its twelve month high and yielding 4%.

CBS is down 75% in price over the last twelve months as is The New York Times. Both have 6% plus yields.

Motorola with $3 in cash and priced at $4.50 and Tellabs $3.50 in cash and priced at $3.80 and both are at one third or less of revenues. We have been trading Micron successfully and will either hold or trade as conditions suggest.

Now it is a matter of time and patience.
*****

Russia's ruble fell the most in two months and stocks tumbled after the central bank indicated it may scale back its defense of the currency as officials grapple with the worst financial crisis since the 1998 devaluation. The ruble slumped 1 percent against a basket of dollars and euros after central bank chairman Sergey Ignatiev said the currency has a "tendency toward weakening,"' during a televised press conference yesterday. Russia's Micex Index plunged 10 percent, the biggest decline worldwide today.
*****

European bourse indexes caught up with Asian indexes at the close with the DAX down 5% the CAC down 4% and London down 3%.
*****

Las Vegas Sands has an offering of 180 million shares at $5.50 per share last night. One year ago the shares were selling at $112.
*****

Gold ended down $12 at $734. Oil dropped $3.68 to $58.80. Treasuries were flat.
*****

Part of the selling today is related to a formerly $10 billion hedge fund that has lost 75% of its value this year after being up 100% in 2003 and 2007. Supposedly the selling of that fund is over but how many more to come remains the $1 trillion question.
*****

This too shall pass.

The DJIA lost 180 to close at 8690. The S&P 500 dropped 20 to 898 and the NAZZ gave up 35 to 1580.

Breadth was 4/1 negative and volume was active at 4.5 billion on the NYSE.

There were 685 new lows and 15 new highs.

Ugh. The bears won again.
*****

5 November 2008

We will be traveling until next Tuesday.

Thoughts

Asian markets were mixed overnight with China and Japan up 3% and India down 3%. European bourse indexes are down about 1% to 2% giving back some of yesterday’s gains and U.S. stocks are going to open lower after the pump yesterday. Gold is down $5 and Oil is off $2 at $65. Treasuries are flat.
*****

Obama delivered a great speech last night and McCain did him one better by delivering the best speech we have heard from him. If he had taken that tone throughout the election he may have won.
*****

Obama owes Michigan and Ohio and so we think there is going to be a rescue package for Ford and GM. The auto industry affects over 3 million jobs and so any real disruption would compound the problems of the economy. The mistakes made by the auto makers were dumb but honest as opposed to the greed induced dishonest decisions the financial system has imposed on the economy. It is cheaper to give the auto companies $100 billion that to retrain and find jobs for 1 million folks. The government should take a 50% equity stake through warrants in the companies when it lends the money.

While GM is cheaper on an absolute we don’t understand the Chrysler mating dance and so we bought a bit of Ford in accounts as speculation.
*****

Las Vegas Sands, the gambling company, flopped from $142 a year ago to $4 last week and is now trading a $12. Now that is volatility.
*****

After the 20% run up in stocks over the past few weeks a pause is to be expected. We do note a tome of conciliation and good will in the talking heads this morning and so we are hoping, but not predicting a few days, weeks, and months (?) of equanimity towards President-elect Obama as he forms his cabinet. That mellowing effect should help the psychological part of the markets. Unfortunately the earnings part of the markets is going to remain punk and retailers’ numbers which will begin to be reported are going to be horrid. We will soon find out how much of the horrid is priced into the stocks.
*****

We spoke too soon, the talking heads on CNBC on the nine screen setup are all wailing that Obama hasn’t done anything yet and that is why the markets are down today. There is no thought to the fact that a 20% up move needs some pullback to settle the ground.
*****

Yahoo popped a bit on takeover rumors and we switched to Barnes & Noble with the money. We sold Micron for a 25% gain.
*****

Gold lost $15 to $740 and Oil reversed lower and dropped $5 to $64.50. Treasuries were firmer and European bourse indexes lost half of yesterday’s gains to close 3% lower.
*****

Cisco beat on sales and earnings after the close.
*****

The DJIA closed down 486 at 9140. The S&P 500 dropped 52 to 952 and the NAZZ lost 100 to 1680.

Breadth was 4/1 negative and was active at 5 billion shares on the NYSE but only 2 billion on the NAZZ.

There were 145 new lows and 7 new highs.

The bears won the day and

Obama won the election.
*****

 


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*****

 

Election Day 2008

Thoughts

How sweet that Fast Eddie Vrdoylak pleaded guilty on the eve of Obama winning the Presidency. Mike Ryoko is smiling.
*****

BENTON, Ill. (AP) -- A rooster played chicken in the wrong town. That's the word from the downstate community of Benton, where police took a rooster into custody after it allegedly confronted a woman and her child. Police Chief Mike O'Neill said the rooster has been bothering people lately, trying to keep them from getting where they want to go. O'Neill said officers had enough on Monday and took the rooster into custody after what he described as a brief scuffle. Nobody was injured and the rooster was thrown in an enclosed area near the police department. There, it lived on chicken feed and water until police located the owner. Chickens aren't allowed to live in Benton and the rooster was turned over to the owner only after he promised to find it a new home in the country.
*****

Asian markets were higher overnight with Japan up 6%. Japan is now 30% higher than its 26 year low made just last week. Timing is sometimes everything. European bourse indexes are 1% to 3% higher at midday and U.S. futures are suggesting a higher opening. Gold is up $7 and Oil is $1 higher.

The Australian Central Bank cut their key lending rate by .75% which was much more than expected.
*****

A story of the times we live in from the WSJ:

Billionaire investor Carl Icahn reported Monday that his affiliates sold 8.5 million shares of Lear Corp.'s stock at $1.90 a share, slashing his stake in the auto-parts maker to 4.95% from nearly 16%. According to a filing Monday with the Securities and Exchange Commission, Mr. Icahn's representative on Lear's board, Vincent Intrieri, also resigned from the board.

In his resignation letter, which was disclosed in the SEC filing, Mr. Intrieri said his departure wasn't because of any disagreement with the company, though he expressed regret that a buyout transaction that was proposed by Mr. Icahn last year wasn't approved by Lear's shareholders.

Lear shareholders rejected a sweetened $2.9 billion buyout offer valued at $37.25 a share from Mr. Icahn after rejecting an earlier bid of $2.8 billion, or $36 a share. The bid was supported by Lear's top executive but criticized by some shareholders who said the company was worth more than Mr. Icahn was offering.

Mr. Intrieri said Mr. Icahn's funds are reducing their positions in Lear in order to realize capital losses before the end of the year. He said these capital losses will offset certain capital gains realized by the funds.

After the sale, Mr. Icahn beneficially owns about 3.83 million Lear shares, according to the filing.

On Monday, Mr. Icahn also delivered a letter to Lear's board, expressing his "great respect" for Lear Chairman and Chief Executive Robert Rossiter and Executive Vice President Daniel Ninivaggi.

Mr. Icahn said he finds them to be "extremely competent" executives and he hopes to keep up his relationship with them in the coming months.

With his stake now under 5%, Mr. Icahn is no longer required by law to file share-sale announcements with the SEC.

Lear shares rose 14 cents, or 7.2%, to $2.09 at 4 p.m. in composite trading on the New York Stock Exchange.
*****

The WSJ has a story this morning about the Treasury considering investing funds in GE as they have with banks. We don’t understand why GE would need any investments after Buffet’s $3 billion buy. We are selling GE and will placing half the funds in the SPDR Financial ETF (XLF). We will invest the remainder of the funds in the XLF on any pullback. Both GE and XLF are down 40% this year and we think that if GE makes it to $40 so will the XLF for a better percentage gain and more diversification.
*****

We are adding Veeco and Talbots to accounts. The Talbots has been and is an anchovy.
*****

European bourse indexes closed 4% to 6% higher.
*****

Gold gained $40 to $766 and Oil jumped $6 to $70 and change. Treasuries were a tad weaker.
*****

The DJIA closed up 300 points at 9622. The S&P 500 gained 40 to 1005 resistance. The NAZZ jumped 53 to 1780.

Breadth was 3/1 positive on the NYSE and 5/4 to the good on the NAZZ and volume was moderate.

There were 135 new lows and 20 new highs.

The bulls and Obama won the day.
*****

 

3 November 2008

Thoughts

Asian markets were higher overnight and European bourse indexes are fractionally higher at midday as a new month is welcomed on ‘Wall Street. With October behind us and the markets up on Friday there is a calmer tone in the media maven mutterings this morning.

Today and tomorrow may be quiet as the traders await the election results. Most folks seem to think Obama will win and so we would surmise but not bet the ranch on the thought that Obama’s win is in the markets.

Gold is up $20 in early trading and oil is down another $2. Middle Eastern stock markets are taking it on the chin as oil prices drop. And Dubai with its bubble building boom is in the sights of the abandon ship hedge funds. As noted in our comments month ago, Dubai was an accident waiting to occur.
*****

The FDIC took over a bank in Florida and gave the deposits to Fifth Third. The logical extrapolation is that Fifth Third is going to be a survivor of the bank mess since the FDIC is giving them the deposits. We are buying shares of Fifth Third in accounts. Hopefully our logic prevails.
*****

General Motors auto sales were down 47% in October versus last year. Ford was down 30% and Toyota was down 27%. Ouch.
*****

We bought Veeco, which is a tech instrument company that we used to trade when it was in the $20s. We bought at $8.50. We also began a holding in Old Second Bank Corp., which is a small Aurora Illinois bank selling below book. We will be adding shares over the next days. And we began positions in Molex and Garmin and Barnes & Noble and Barnes Group with the idea of adding shares accounts over the next few weeks.
*****

Barnes Group, Inc. manufactures and distributes aerospace and industrial products worldwide. It operates in three segments: Barnes Aerospace, Barnes Distribution, and Barnes Industrial. Barnes Aerospace segment produces precision-machined and fabricated components and assemblies for original equipment manufacturer turbine engine, airframe, and industrial gas turbine builders worldwide, and the military. It also provides jet engine component overhaul and repair services for various turbine engine manufacturers, commercial airlines, and the military. In addition, this segment also supplies designated aftermarket parts for the life of the related aircraft engine program. Barnes Distribution segment distributes maintenance, repair, operating, and production supplies, as well as provides inventory management and logistic services. It also offers replacement parts and other products, including fasteners, electrical supplies, hydraulic components, chemicals, and security products to small repair shops, railroads, utilities, food processors, chemical producers, and vehicle fleet operators. Barnes Industrial segment manufactures high-precision punched and fine-blanked components used in transportation and industrial applications; nitrogen gas springs and manifold systems used to precisely control stamping presses; retention rings that position parts on a shaft or other axis; reed valves, which are custom-engineered components used in compressors; and injection-molded plastic-on-metal and metal-in-plastic components and assemblies used in electronics, medical devices, and consumer products. It also distributes die springs and nitrogen gas springs, and mechanical struts and standard parts, such as coil and flat springs. In addition, this segment provides engineering solutions, including product design and development, product and material testing, and rapid prototyping. The company was founded in 1857 and is headquartered in Bristol, Connecticut.

Garmin, Ltd. and its subsidiaries design, develop, manufacture, and market global positioning system (GPS)-enabled products and other related navigation, communications, and information products worldwide. It operates in four segments: Automotive/Mobile, Outdoor/Fitness, Marine, and Aviation. The Automotive/Mobile segment offers a range of automotive navigation products, as well as various products and applications designed for the mobile GPS market. The Outdoor/Fitness segment provides GPS-enabled handheld products for outdoor activities and training assistants for athletic pursuits. The Marine segment includes network products and multifunction displays, fixed-mount GPS/chartplotter products, instruments, radars, autopilots, and sounder products. The Aviation segment comprises panel-mounted product line, which includes GPS-enabled navigation, VHF communications transmitters/receivers, multi function displays, receivers, instrument landing system receivers, marker beacon receivers, and audio panels, as well as digital transponders that transmit an aircrafts altitude and its flight identification number in response to requests transmitted by ground-based air traffic control radar systems or collision avoidance devices on other aircraft. Garmin’s consumer products are sold through independent dealers and distributors, and panel-mount aviation products are sold through distributors worldwide. The company was founded in 1990 and is based in Camana Bay, Cayman Islands with additional offices in Olathe, Kansas; Southampton, the United Kingdom; and Shijr, Taiwan.

Molex Incorporated manufactures and sells electronic components worldwide. It offers micro-miniature connectors, SIM card sockets, keypads, electromechanical subassemblies, and internal antennas and subsystems for telecommunications market; and power, optical, and signal connectors and cables for end-to-end data transfer, linking disk drives, controllers, servers, switches, and storage enclosures for data products market. The company also provides interconnects used in air bag and seatbelts, tire pressure monitoring systems and powertrain, and window and temperature controls; and designs and manufactures connectors for home and portable audio, digital still and video cameras, DVD players, and recorders, as well as devices that combine multiple functions for automotive market. In addition, Molex manufactures cables, backplanes, power connectors, and integrated products that are found in various products, such as electronic weighing stations, and industrial microscopes and vision systems, as well as provides connectors and custom integrated systems for diagnostic and therapeutic equipment used in hospitals, including x-ray, magnetic resonance imaging, and dialysis machines. Further, it provides manufacturing services to integrate specific components into a customers product. The company sells its products to original equipment manufacturers, contract manufacturers, and distributors. Molex was founded in 1938 and is based in Lisle, Illinois.

Veeco Instruments, Inc., together with its subsidiaries, designs, manufactures, markets, and services a line of equipment primarily used by manufacturers in the data storage, high brightness light emitting diode, solar, wireless, and semiconductor industries. The company operates in two segments Process Equipment and Metrology. The Process Equipment segment produces and sells various process equipment products, such as ion beam deposition systems to deposit precise layers of thin films; ion beam etch systems for use in the fabrication of discrete and integrated microelectronic devices; and physical vapor deposition systems, which offers a deposition platform for developing next-generation data storage and compound semiconductor applications. It also offers diamond-like carbon deposition systems that deposit protective coatings on advanced thin film magnetic heads; precision lapping, slicing, and dicing systems for use in back-end applications in a data storage fab; metal organic chemical vapor deposition systems for use in signage, mobile device backlighting, and specialty illumination; and molecular beam epitaxy systems for depositing epitaxially aligned atomically thin crystal layers, or epilayers in an ultra-high vacuum environment. The Metrology segment provides atomic force/scanning probe microscopes for data storage, semiconductor, research, and other industrial applications; stylus profilers to produce cross-sectional representations and/or quantitative measurements; and optical/stylus metrology products to make non-contact surface measurements. The segment also offers versatile tools for use by research and development centers and universities. The company sells its products through its sales and service organizations in the United States, Europe, Japan, and the Asia Pacific. Veeco Instruments, Inc. was founded in 1945 and is headquartered in Woodbury, New York.
*****

Oil lost $3.30 to $64.50. Treasuries were flat and Gold gained $4 to $72. European bourse indexes closed higher.
*****

The DJIA lost 5 to 9320, The S&P 500 was down 3 to 966 and the NAZZ gained 5 to 1726.

Breadth was 5/4 positive and volume was moderate.

There were 125 new lows and 25 new highs.

Today was a sleeper.
*****

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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Summary of Business Continuity Plan

15624 Lemley Drive, Soldiers Grove, Wi 54655 312-925-5248
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.