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Lemley Yarling Management Co
309 W Johnson Street
Apt 544
Madison, WI 53703
Bud: 312-925-5248       Kathy: 630-323-8422

March 29, 2013

Model Portfolio Value As of 29 March 2013

$ 689,010

Comment on Model Portfolio activity

We reduced Facebook and sold Yahoo this week. We are about 20% invested in larger accounts.

Thirty Years ago this week resigned our partnership at Wayne Hummer and basically went on our own. It has been and interesting trip and we have our clients’ confidence and trust over the years to thank for our success.

The world didn’t end when Cypress reopened its banks and the markets rallied in celebration. Everyone keeps looking for the next Black Swan (big bad economic event) which probably won’t occur as long as folks keep looking for it. We remain cautious on the market expecting a pullback.

Bulls rise back to 49% with Bears at 19%. Bullish is bearish if you get our drift.

September 19th, 2012 – the day Apple’s stock price hit an all-time closing high of $702.10 per share. At that moment Apple market capitalization (Market Cap. = Stock Price x Total Number of Shares Outstanding) was $659.3 billion. As of our writing this, Apple was worth $416.6 billion, a drop of 36.8%. During the exact same six months, to the day, Google’s market capitalization has gone from $194.6 billion to $269.7 billion, an increase of 38.6%.  A near mirror-image coincidence?  Or perhaps some big traders and bigger investment funds deciding to switch one tech titan for the other while Apple’s valuation and growth prospects are carefully evaluated.

Read more:



March 22, 2013

Model Portfolio Value As of 22 March 2013

$ 691,974

Comment on Model Portfolio activity

We did a tad of buying and a bunch of selling this week as markets stagnated near all-time highs and Europe became a problem again in the minds of the big boys and girls who man/woman the trading computers.

Every time the Model touches the magic $700,000 number the markets pull back and for the third time in the last three months this occurred.  We took profits in Apple, DreamWorks, Sony, Walgreen Cisco and Research in Motion and traded plus to flat out of Nvdia, JC Penney, Intel EMC Devon, BP and half our GM B warrants.

We did add to Juniper, U.S. Steel, and repurchased BankAmerica in accounts. Finally on the recommendation of our 13 year old granddaughter who has replaced her grandma, aunt and mother as our retail bell weather we purchased shares of Lululemon and at the behest of our grandson we are considering a position in Under Armor. An hour after buying the LULU we got cold feet since it sells at 10 times sales and 40 times earnings. We couldn’t resolve holding such an expensive stock at all-time market highs. As clients know sometimes we don’t know until we own. The day trade cost us $1 a share.

The markets have seemed tired for a while but the bears haven’t yet been able to break the uptrend. Month/Quarter end next week may lead to some pull back in April/May.

March 15, 2013

Model Portfolio Value As of 15 March 2013

$ 690,120

Comment on Model Portfolio activity - Ides of March 2013

The DJIA calmly made new all-time highs all week except today but the S&P 500 couldn’t. Today is quadruple witching and the HFT boys and girls seem to want to e tired. Our guess is that the run to record highs will fizzle by the end of the Month/Quarter. There seem to be many folks still wanting to get in so the pullback may be mild.


The economy is not blasting but it may be humming.  With all the media available it is sometimes hard to hear ourselves think let alone make reasoned judgments on the markets. But we do think this year’s markets feel different from the last five years and that there is more room to room to roam on the upside. Time will tell.


During the week we added Devon (natural gas) and British Petroleum (cheap bad oil) to accounts and purchased more Blackberry, EMC, JC Penney and GM B warrants in some/many accounts.


We are 40% to 60% invested in large accounts and more so in smaller ones and we will probably hold through a correction- unless we change our mind.


And for all the high school English class folks of a long ago day:


Brutus Speech:

Romans, countrymen, and lovers! hear me for my
cause, and be silent, that you may hear: believe me
for mine honour, and have respect to mine honour, that
you may believe: censure me in your wisdom, and
awake your senses, that you may the better judge.
If there be any in this assembly, any dear friend of
Caesar's, to him I say, that Brutus' love to Caesar
was no less than his. If then that friend demand
why Brutus rose against Caesar, this is my answer:
Not that I loved Caesar less, but that I loved
Rome more. Had you rather Caesar were living and
die all slaves, than that Caesar were dead, to live
all free men? As Caesar loved me, I weep for him;
as he was fortunate, I rejoice at it; as he was
valiant, I honour him: but, as he was ambitious, I
slew him. There is tears for his love; joy for his
fortune; honour for his valour; and death for his
ambition. Who is here so base that would be a
bondman? If any, speak; for him have I offended.
Who is here so rude that would not be a Roman? If
any, speak; for him have I offended. Who is here so
vile that will not love his country? If any, speak;
for him have I offended. I pause for a reply.



Friends, Romans, countrymen, lend me your ears;
I come to bury Caesar, not to praise him.
The evil that men do lives after them;
The good is oft interred with their bones;
So let it be with Caesar. The noble Brutus
Hath told you Caesar was ambitious:
If it were so, it was a grievous fault,
And grievously hath Caesar answer'd it.
Here, under leave of Brutus and the rest--
For Brutus is an honourable man;
So are they all, all honourable men--
Come I to speak in Caesar's funeral.
He was my friend, faithful and just to me:
But Brutus says he was ambitious;
And Brutus is an honourable man.
He hath brought many captives home to Rome
Whose ransoms did the general coffers fill:
Did this in Caesar seem ambitious?
When that the poor have cried, Caesar hath wept:
Ambition should be made of sterner stuff:
Yet Brutus says he was ambitious;
And Brutus is an honourable man.
You all did see that on the Lupercal
I thrice presented him a kingly crown,
Which he did thrice refuse: was this ambition?
Yet Brutus says he was ambitious;
And, sure, he is an honourable man.
I speak not to disprove what Brutus spoke,
But here I am to speak what I do know.
You all did love him once, not without cause:
What cause withholds you then, to mourn for him?
O judgment! thou art fled to brutish beasts,
And men have lost their reason. Bear with me;
My heart is in the coffin there with Caesar,
And I must pause till it come back to me.


March 8, 2013

Model Portfolio Value As of 8 March 2013

$ 685,169

Comment on Model Portfolio activity

We repurchased Apple, Juniper and Yahoo and added to Alcoa, Deutsch Telekom and Facebook.


Bulls dropped to 44% from 46% as the DJIA made new highs. That is unusual because bullish sentiment usually rise as with the markets and falls with the markets.

GDP in the last Quarter ex the drop in Government spending was up 3.75%. all the pooh bahs are calling for a drop in government spending as the cure of all evils on earth so they should be ecstatic with that fact.

In THE LAST QUARTER Business investment rose 9.7% and residential construction jumped 17%.

The DJIA made a new all-time high exactly 4 years to the day March 6 that is made its correction low in 2009.


March 1, 2013

Model Portfolio Value As of 1 March 2013

$ 678,329

Comment on Model Portfolio activity and other stuff

We sold our trading positions: Merck, Dow, Joseph Banks, and Coach because we wanted to add a few longer tem positions without increasing total equity commitment. We bought Sony, EMC, Facebook DreamWorks, and First Solar with some of the proceeds. Our thought is to maintain our long term positions and add in any selloff while also adding several more holdings in the coming pullback positions. First Solar disappointed with its forecast and dropped 15% in one day but is the leader in the industry and has a good plan going forward. We have been in and out of DreamWorks, Facebook, and Sony for the last year. EMC is a play on VMware which is the leader in the cloud infrastructure stuff. EMC owns 70% of VMware and is a less volatile way to play the cloud because of EMC’s other businesses which add some support to the share price with the volatility of VMware’s share price.

VMware, Inc . provides virtualization and virtualization-based cloud infrastructure solutions in the United States and internationally. The company’s products address planned and unplanned downtime management, system recoverability and reliability, backup and recovery, resource provisioning and management, capacity and performance management, and security issues. Its cloud infrastructure products and technologies include VMware vSphere, which is a data center platform that also enables live migration of actively running virtual machines across servers or storage locations without disruption or downtime; enables availability for all applications against hardware and operating system failures; and enables centralized point of control for cluster-level networking, as well as automatically manages the placement and balancing of a virtual machine across storage resources. The company also offers cloud application platform solutions that help organizations build, run, and manage enterprise applications in public, private, or hybrid clouds optimized for vSphere. In addition, it provides end-user computing solutions, which provide secure access to applications and data from various devices and location, as well as serves the corporate IT departments through managing and connecting end-user assets delivering them as a managed service. The company’s end-user computing solutions also provide the ability to manage software as a service, Windows, Mobile, or enterprise applications, as well as enhance communication and collaboration between end users. Further, it provides a range of professional services, such as consulting, education, and technical account manager services, as well as customer support services. The company sells its products through distributors, resellers, system vendors, and systems integrators. VMware, Inc. was incorporated in 1998 and is headquartered in Palo Alto, California. VMware, Inc. operates as a subsidiary of EMC Corporation. http://finance.yahoo.com/q/pr?s=VMW+Profile


Our Earth feels like all there is, but we know that it’s just a tiny planet in a vast Solar System. And our Solar System is just one member of a vast Milky Way galaxy with 200 to 400 billion stars. But how many galaxies are there in the entire Universe? This is a difficult number to know for certain, since we can only see a fraction of the Universe, even with our most powerful instruments. The most current estimates guess that there are 100 to 200 billion galaxies in the Universe, each of which has hundreds of billions of stars. A recent German supercomputer simulation put that number even higher: 500 billion. In other words, there could be a galaxy out there for every star in the Milky Way.

Read more:


Earnings Power:

While there is no doubt that Fed support has been a crucial, crucial support mechanism for higher equity values and economic improvement since first being utilized in late 2008, one cannot ignore (nor, admittedly, separate out) the improvement in the earnings environment. Our good friend Larry Kudlow is fond of saying that profits are the mother’s milk of stock prices. In that regard, the S&P 500’s four quarter trailing EPS is currently $98 or so. At the end of March 2009, that number was $43 or so meaning EPS has more than doubled, 129% higher today than at the equity market’s bottom. Guess how much the S&P 500 is up since then? 128%. We suppose this isn’t all about the Federal Reserve after all.

Read more:




Health Care Costs:


What are the reasons, good or bad, that cancer means a half-million- or million-dollar tab? Why should a trip to the emergency room for chest pains that turn out to be indigestion bring a bill that can exceed the cost of a semester of college? What makes a single dose of even the most wonderful wonder drug cost thousands of dollars? Why does simple lab work done during a few days in a hospital cost more than a car? And what is so different about the medical ecosystem that causes technology advances to drive bills up instead of down?

Recchi’s bill and six others examined line by line for this article offer a closeup window into what happens when powerless buyers — whether they are people like Recchi or big health-insurance companies — meet sellers in what is the ultimate seller’s market.

The result is a uniquely American gold rush for those who provide everything from wonder drugs to canes to high-tech implants to CT scans to hospital bill-coding and collection services. In hundreds of small and midsize cities across the country — from Stamford, Conn., to Marlton, N.J., to Oklahoma City — the American health care market has transformed tax-exempt “nonprofit” hospitals into the towns’ most profitable businesses and largest employers, often presided over by the regions’ most richly compensated executives. And in our largest cities, the system offers lavish paychecks even to midlevel hospital managers, like the 14 administrators at New York City’s Memorial Sloan-Kettering Cancer Center who are paid over $500,000 a year, including six who make over $1 million.

Taken as a whole, these powerful institutions and the bills they churn out dominate the nation’s economy and put demands on taxpayers to a degree unequaled anywhere else on earth. In the U.S., people spend almost 20% of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries.

According to one of a series of exhaustive studies done by the McKinsey & Co. consulting firm, we spend more on health care than the next 10 biggest spenders combined: Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain and Australia. We may be shocked at the $60 billion price tag for cleaning up after Hurricane Sandy. We spent almost that much last week on health care. We spend more every year on artificial knees and hips than what Hollywood collects at the box office. We spend two or three times that much on durable medical devices like canes and wheelchairs, in part because a heavily lobbied Congress forces Medicare to pay 25% to 75% more for this equipment than it would cost at Walmart.

























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309 W Johnson Street Apt 544, Madison, Wi 53703 312-925-5248
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