Viewing Month: October 1949

Tabell’s Market Letter – October 07, 1949

Tabell’s Market Letter – October 07, 1949

Tabell's Market Letter - October 07, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 A glance at the graph patterns of the twelve-hundred or more individual stocks in our chart portfolio indicates that the various issues are at different stages of development. The most favorable.issues have been building up accumulation patterns for the last three years and have already started their upward trend,or appear about ready to do so. Others are at a median point of their accumulation pattern and still require more work to complete the pattern. Still others appear to have reached their lows but have formed no base and will require an even longer period of accumulation before a worthwhile move is indicated. The last two groups consist mainly of the more speculative issues. The stocks in the favorable group fall roughly into two classifications. One classification is the so-called special situations. We have drawn your attention to a number of these in our letters. American Seating, Cities Service and Standard Gas 4 pfd are examples. The second classification in the favorable group consists of the high grade dividend paying stocks. In my opinion issues of this type can be bought with a minimum risk on the downside coupled with high return and much better than average prospects for 20 to 40 market appreciation over a period of time. With bond yields at record low levels, high grade common stocks can be bought to show more than twice as much return as on high grade bonds. This spread will narrow. With earnings stabilizing and less need for expanSion, many high grade common stocks could increase their dividends as they are today paying out much less than the usual percentage of earnings in dividends. But even if dividends remain the same, a lowering of yield must result in higher prices. A stock selling at 100 and paying 6 will yield 6. If the yield drops to 5, the stock will sell at 120 and if the yield drops to 4 the stock will sell at 150. As investor confidence returns, money will gradually move from high grade bonds to high grade preferreds to high grade or better grade common stocks. This has already started and will result in higher stock prices as the demand for this type of equity increases. The Exchange, monthly publication of the New York Stock EXChange, in March of this year listed a roster of 203 common stocks on the New York Stock Exchange which have paid cash dividends every year for 25 to 101 years. Many of these issues are selling at prices to yield over 6hig. h Tyhiee ldosppworitlul nniotyt tloasbtumyucihssluoensgeorf. this type at the present abnormally October 7, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum is not to huapyone tiInnfIonrmteartuiotnin bseolmieeveodr erbleellioacfobnlteshterbusueetdcunlrioSittiteisnn emcoefe5fnestarlroo,'r,'fe dscoonhmeerlpeta,et,1'oen, T0,efnf0oOi fteersouItoaabnU7'Je.eadOtefrllinaS'l \ahcaucnuyrbaeSteeKn loltirtfleienpsatl,ehdoanmbdy tIums eafl I, not oa tImmeettWer Intended aoldf oInn,'oHrmofaftmioann o&nlyG. oOItdwIsinbmelaeyd to foreclose Independent Inquiry.

Download PDF

Tabell’s Market Letter – October 14, 1949

Tabell’s Market Letter – October 14, 1949

Tabell's Market Letter - October 14, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 The following is Jules I. Bogen's Journal of Commerce Newsletter in the issue of October 11th. Because it coincides with my opinion, I am reprinting it below Advancing stock prices in the face of dec.lining corporate earn- ings indicate a basic change may be taking place in the public attitude toward stock investment. Interest in the stock market on the part of both investors and speculators has been at low ebb during the past three years. The jump in corporate earnings to record totals in 1947 and 1948 was practically ignored by investors, stock prices remaining well below the high level reached in the spring of 1946. The price-earnings ratio for all listed stocks dropped last year to about 81, the lowest on record and comparing with about 161 in 1939. Industrial stocks early this year sold on an average yield basis of over 7 But the stock market has been moving up in recent weeks to a 3 years' h5,gh point in the face of serious strikes and expectations in many quarters of a further business recession next year. Does this advance not point to changing investor psychology High taxes have been blamed as the chief reason for investors' in- difference to increased earnings and dividends. This view applies parti- cularly to the investor in the middle and upper income brackets. However, high taxes do not discourage investment by persons in the lower income brackets and there are evidences that the purchase of equities by the lower in,come groups is, on the increase. There is a pers istent ex- cess of odd-lot purchases over sales of stocks reported by the Securities and Exchange Commission. And open-end investment trusts, which appeal es- pecially to the lower and middle income investors, have enjoyed a great increase in sales during the past few years. The public is undoubtedly becoming more yield conscious. This is shown by the fact that savings and loan associations, which pay their Shareholders a higher rate of return, have made greater percentage gains in assets than savings banks in the past few years. Mutual savings banks; most of which pay 2 to depositors in this State, in turn have gained deposits at a considerably faster rate than have commercial banks, gener- ally paying 1. ' With yields of 6-7 available from the general run of common stocks, there has been growing interest in equity investment among smaller investors. Public utility stocks in particular, because of the relative stability of the return they afford, have enjoyed an extraordinarily favor- able market despite heavy new equity financing and occasional distributions by holding companies in process of dissolution. Even among high bracket investors, the purchase of stocks is attractive where capital gains can be secured. A broader market for stocks among low-income buyers, with consequent advances in quotations, tends to encourage the purchase of shares by wealthier investors in quest of capital gains. Lack of faith in the future stability of dividend yields has de- terred many investors from purchasing common stocks in recent years, des- pite the relatively high yields available. But memories of the severe depression of the '30s are becoming dimmer. There are more and more present-day investors who were too young in the '30s to have actually experienced losses. Moreover, the belief is gaining in many quarters that Government intervention, through deficit spending and otherWise, makes another such major depression unlikely for the future. It is also widely recognized that corporations have built up large liquid resources that will help them to stabilize dividends in future periods of reduced earnings. A change in popular psychology makes established yardsticks in- applicable in judging stock values. Such a change caused the stock market to decline in 1946 and 1947, when earnings were on the increase but in- vestors found stocks unattractive. The current marke advance in the face of declining corporate earnings may mean that another change in popular psychology, involving a more optimistic appraisal of stock values, is under way. , EDMUND W. TABELL October 14, 1949 WALSTON, HOFFMAN & GOODWIN This memorndum Is not to be condrued al an offer or solicitation of offe, to buy or lell any securities. From time to time WIIIsfon, Hoffman & GoodwIn may have an ntered In lome or all of the Sl'IctJrlties mentioned horeln. The foregoln9 m.!lterial hu been prepared by us .!II II militer of !nformetron only. It Is blued upon tnformlltlon bt'llieved reliable but not necenllrlly complete, is not c;lUllfllnteed liS accurate or finlll, lind I nof Intended to foreclose Independent Inquiry. – ..—.

Download PDF

Tabell’s Market Letter – October 21, 1949

Tabell’s Market Letter – October 21, 1949

Tabell's Market Letter - October 21, 1949
View Text Version (OCR)

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 The increasing investor confidence of which we have written about in several recent letters continues to be an important factor in market action. Te techn5r,al behavior and supply and demand factors continue to favor the better grade, dividend paying issues. rany issues of this type have built up strong base patterns over the past three years and have broken out or appear to be on the verge of breaking out of these accumulation areas. This formation iil also pre'3ent in numerous special situations. The run-of-the-mill speculative issues appear in need of a longer period of accumulation and consolidation before any worthwhile move is indicated. I would be cautious about following strength on this type of issue and would confine purchases to reactionary periods. It appears that we have reached a phase of the market Ihere individual issues must be followed closely. 'file averages will most likely remain in a relatively narrow trading range but there will be excellent opportunity for profit in individual situations. We have graphs on almost every listed,issue on the New York Stock Exchange and New York Curb and welcome inouiries s to the technical status of in- dividual issues. . A recommended list of issues is given below Better Grade 1SSUt'il Allis Chalmers American Cyanamid Amer.Home Products American News Borg Warner C. I. T. Financ ial Commercial Credit Crown Zellerbach Endicott Johnson Federated Dept.Stores General Amer. Trans. Hewitt Robins 1ntertype Kresge S.S. McKesson & Robbins Otis Elevator Phelps Dodge Shell Union 011 —S.tad tee-lilig Last Price' 31 3/8 46 27 7/8 33 3/8 52 5/8 55 3/8 54 1/4 28 5/8 333/8 28 1/2 44 17 1/2 30 40 5/8 40 35 43 7/8 39 3/8 li3-lj8- Speculative Issues Last Price American Airlines American Power & Lt Avco Budd Company Carrier Corp Chic.Rock 1s.& Pac Combustion Eng. r,ontinental Baking Denver 8; Rio Grande j)istillers Seagram Eastern Air Lines Illinois Central ;.fi-t-erI'h-&;hem- Lowenstein !It-ag-a-i'a-Huds o n – P r – Penn-Dixie Cement Pressed Steel Car Radio Corp Reynolds Metals St.Regis Paper Schenley Shamrock Oil & Gas Studebaker Sunshine Mining United Mer.& Mfgrs 9 7/8 12 5/8 5 7/8 11 1/8 15 34 25 15 3/8 27 5/8 17 1/8 15 3/4 29 1/2 3/.lj.. 23 1/4 14…..;i)8 23 7 12 7/8 20 1/8 7 3/4 29 28 1/2 24 1/2 11 12 1/8 October 21, 1949 EDMUND W. TABELL 1IALSTON, HOFFMAN & GOODWIN / This memorandum Is not to be construed .!II an offer or solicitation of offers to buy or sell any securities. From tIme to ttme Welston, Ho!,n;an & Goodwin may have u Interest In some or .!III of the securities mentioned herein. The fo(ogolng mllterial has beon prepllred by us al a matter of Information only. It II based upon Information believed reliable but not necenarlly complete, j, not guaranteed as accurate or final, lind II not Intended to foreclo,e Independent Inquiry.

Download PDF