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Lemley Yarling Management Co
309 W Johnson St
Apt 544
Madison, WI 53703
Bud: 312-925-5248

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28 October 2022

Watching the news or reading the major papers or websites you may not have learned that: The U.S. economy grew at a better-than-expected 2.6% annual rate from July through September, snapping two straight quarters of economic contraction and overcoming punishingly high inflation and interest rates…. Consumer spending, which accounts for about 70% of U.S. economic activity, expanded at a 1.4% annual pace, down from a 2% rate from April through June. Last quarter's growth also got a boost from exports, which shot up at an annual pace of 14.4%


We continued to take trading profits and adjust accounts reinvesting in Verizon and AT&T as they seem to have put in sustainable bottoms. We currently own the above plus Citicorp, Truist Financial, Organon, Newell, Ford, Paramount +, AMC Networks, The Cloud ETF, Warner Bros Discovery, Macy's, The Gap, Abercrombie, The Container Store and Under Armour.

The markets rallied in October- as we expected. Early November is usually a down period as the month end readjusting of Mutual Fund tax selling and inventory readjustment ends. With the major measures higher for the last few weeks from their September lows, a rest period is warranted. Whether we get it is another question. Meta and Amazon tanked on earnings on Tuesday and Wednesday nights respectively, and the NSADAQ was in dire straits until Apple rescued the QQQs with a good earnings report and a 6% Friday gain. As Apple goes so goes the market.

With accounts back to even and up on the year we plan to enjoy the weekend. Happy Halloween.


21 October 2022

The markets finished the week up with a strong +2% day on Friday which was quadruple or more witching day.

We raised cash this week to a more comfortable level while maintaining many of our positions. We continue to expect a rally into yearend but we are also hoping the 2-year Treasury reaches 6% so that we can invest a significant amount in that issue.

We took trading profits in GSK, Pinnacle West, AT&T, IBM, Macy's and Abercrombie. We eliminated Dow with a greatly reduced loss as it popped on earnings. We eliminated Hewlett Packard Enterprises with a plus scratch.

The gurus and market savants continue their hate on Verizon. Earnings and revenues -announced today-were better than; and VZ will earn over $5 a share this year. The shares dropped 5% to a 12-year low because VZ added only 8000 postpaid when 32000 adds were expected. Verizon has 114 million subscribers (90 million postpaid). It's nuts that a difference of 24000 subscribers caused a 5% drop in market value. With a 7.3% yield the shares are worth buying and holding.


And so, it goes.


What happened to the Reagan Republicans and the need to confront and contain Russia? To abandon Ukraine- who are doing their own fighting- would be to destroy NATO.

"I think people are gonna be sitting in a recession and they're not going to write a blank check to Ukraine," House Minority Leader Kevin McCarthy, who's favored to become House Speaker if the GOP retakes the chamber, recently told Punchbowl News. "They just won't do it."

Ukraine has repeatedly defied expectations since Russia launched its unprovoked invasion, delivering a blow to the Russian military's prestige. With the help of Western aid and at a massive personal cost, Ukrainian forces prevented Russia from seizing Kyiv in the early days of the war and more recently launched a counteroffensive that's shown major signs of success.

But a far-right faction of the GOP has increasingly pushed against continued assistance to Ukraine, saying the billions the US has provided to Kyiv is too costly and not worth the risk of sparking a wider conflict with Russia.



14 October 2022

Mr. Market provided an interesting week. After the usual September/October stock price erosion for the first three days the big boys and girls and their computers provided a forgettable Thursday of trading. Before the opening of trading stock futures were higher by 1% because Britain reversed the proposed changes in some of its tax policies that had been roiling the markets. Never mind that Britain's GDP is less than that of the state of California. At 8:30 AM EST the announcement of a too high CPI by 2/10ths of 1% caused the DJIA futures to reverse a 300-point gain and by one half hour after markets opened for trading the DJIA was down 550 points. This drop to the lowest levels since November 2020 for the major market was followed by a strong reversal of the reversal and resulted in all three major measures closing up more than 2% with the DJIA up 800 points. Thus, the market measures moved greater than 5% (1700 DJIA points) in 8 hours. Phew!

On Friday the markets gave back one third of their Thursday gains on much less trading volume and ended down for the week. Nobody said it would be easy.

We continue to trade and refine while trying to remain mostly invested. We currently comfortably own:

IBM 5.5% yield, Pinnacle West (Arizona Utility) 5.5%, Verizon and AT&T both 7%, Cisco 3.6%, Dow Inc 6.2%, Energizer 4.8%, Organon (women's health products) 4.8%, Hewlett Packard Enterprises 3.9%, CitiGroup 4.7%, Key Bank 4.7%, GSK (GLAXO) 6%, Newell Rubbermaid 6.2%. GM 1%, Ford 5%, Paramount Plus 5%, AMC Networks 0%, HAIN Celestial 0%, Nordstrom 4%, Macy's 3.6%, Abercrombie 0%, The Gap 6%, Under Armour 0% and Container Store 0%. All except Under Armour and Hain are priced at 10X earnings or less. Many are down 40% from their 52-week highs.

The End.


UK finance minister Kwasi Kwarteng has been fired as the government waters down tax cuts.

When in trouble fire the Black guy. The Girl (PM) may be the next to go.


My 79th birthday 2022
(as in over 55 years of market watching, we’ve seen this all before).

We were smart until Wednesday with the major measures up 3% and Mr. Market reasserted his negative action and the market measures gave back most of their weekly gains. These markets are no fun for but we continue to believe that the major corrections in large cap stocks have lowered most stocks to attractive levels. Of course, when markets are in a downtrend sentiment tanks. And computer programs which don't care about fundamentals are programmed to exacerbate moves on the downside- and last year to the upside.

On Monday thru Wednesday we had the bright idea that there was a potential trade in some beaten down chip stocks and we were correct. Unfortunately AMD preannounced on Thursday -after the close- a significant (over 15%) shortfall in revenues for this quarter and our gains became losses on Friday morning. The further collapse of the chip stocks (they were already down 50% and more this year), coupled with a not weak enough monthly employment report allowed the bears to reassert their mastery of the market indexes and so the week and month which began with a 1700 point DJIA Monday/Tuesday rally ended on with a Thursday/Friday 1000 point drop. These markets are not for the faint of heart.

The next market moving inflation report will be October 15 and until then markets will probably maintain their negative tone. The prospect of recession now or next year has become a common theme among talking heads. We are guessing that the fact that gains of last two years have disappeared for most investors is leading to some wholesale liquidations. Since individual investors are less than 20% of daily trading their selling is a minor part of daily trading but a significant pressure on the market trends.

As stocks are dropping, dividend yields for quality companies are reaching the 5% level and we are readjusting portfolios-maintaining our quality focus- to take advantage of the yields.

Talking heads are positing that investing in the 2-year at 4% is better than buying stocks yielding 5% because there is no risk to principal if held to maturity. Our perspective is that while stocks can (and are) move lower the yield and appreciation potential over the 2 year term of the Treasuries the appreciation potential over 2 years justifies the near term risk.

Our stocks positions remain the same as last week with tax related adjustments and some strategic switching among issues occurring.

Keep the faith, the stocks we own are solid and we anticipated the September/early October swoon as a buying opportunity.


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