TABELL'S MARKET LETTER )5 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 The table below lists the earnings, dividends and average price (the mean of the high and low) for the last twenty years on General Motors common stock. Also included is the price to earnings ratio and the yield, both based on the average price. This twenty year period in- cludes the top of the bull market of the twenties, the depression years, the boomlet of the thirties, the war years and three and a half years of peace. Thus, the period covers all phases of the economic cycle. At the 1948 average price of 57, General Motors was selling at eight times earnings. This is the lowest price to earnings ratio in twenty years. At the average price of 57, General Motors yielded 7.9 on the 1948 dividend payments of 4.50 per share. On only three occasions in the past was this yield surpassed. On one of these occasions, in 1931, the dividend was paid out of surplus. In the other two cases, in 1940 and 1941, the divideds ere barely covered. In 1948, only 50 of earnings were paid out in dividends. 1948 1947 10 46 1l45 1944 1943 1942 1941 1940 1939 1938 1937 1936 1935 1934 1933 1932 1931 1930 1929 Earnings 9.00 E 6.25 1.76 4.07 3.68 3.19 3.55 4.45 4.32 4.00 2.17 4.39 5.35 3.70 2.00 1.73 d. .21 2.01 3.25 5.49 Aver.Price 57 60 64 70 58 7/8 50 37 1/4 38 1/2 47 46 1/2 39 3/4 49 1/2 65 1/2 43 33 1/2 22 7/8 16 1/8 34 5/8 42 7/8 62 S/8 Price Earn. 8.0 9.6 36.3 17.1 16.0 15.6 10.4 8.6 10.8 11.6 1(3.3 11.2 12.2 11.6 16.6 13.2 17.2 13 .2 1.4 Dividend 4.50 3.00 2.25 3.00 3.00 2.00 2.00 3.75 3.75 3.50 1.50 3.75 4.50 2.25 1.50 1.25 1.25 3.00 3.00 3.60 Yield 7.9 5.0 3.5 4.3 5.1 4.0 5.4 9.8 8.0 7.5 3.8 7.6 6.9 5.2 4.5 5.5 8.7 7.0 5.7 E – estimated d – deficit At present prices, it is possible to purchase more earnings and dividends for each dollar paid for General lotors than at almost any tDne in the past twenty years. It would fle possible to use much more spectacular examples than General Motors. February 4, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not to be construed illS ilIn offer or solicitation of offen to buy or sell any SClcurities From time to time W,sf' Homan &, Gftd.winbal have an Interest In lomll or all of the securities mentioned herein. The foregoing material has been pr.epared by, us as ,ill matter 0 norma IC! on y. d 1\ ul . upon information believed reli.sble but not neuss.srily complete, is not gUo!Iro!lnteed as accurate or final, o!Ind IS not Intended to foreclose mdepen ent I q ry

TABELL'S MARKET LETTER 35 WALL STREET. NEW YORK 5. N. Y. Digby 44141 Weakness in the commodity markets has brought the stock market sharply below the trading range which it had occupied for the past four weeks. The industrial average reached an intra-day low of 172.91 on Tuesday, as against a 1011 of 170.35 on November 30, 1948. The rails at their low of 49.43 decisively penetrated the comparable November low of 51.91. In spite of the disappointing action of the market I see no reason to change the forecast for 1949 as stated in my letter of December 15, 1948. I repeat below that forecast – To sum up, I again predict that the market will reach its low point for 1949 in the first three months of the year. I do not believe the low will be much, if any, lower than the November, 1948 low of 171, and that it will certainly be above 160. I am still of the opinion that the range of the last twenty-eight months, between 160 and 195 in the industrial average, is an accumulation area and will eventually result in a price level somewhere around 240250. This fundamental pattern has not been changed by the results of the election. It has, however, been delayed. The market during the later part of 1949 should approach or pass the 1946 highs of 213 and be 'on the way to the aforementioned level. As for the short term action, the market has been in an oversold position for eight hours on my technical action indicator. However, as yet there has been no buying signal. Such a signal would be given if on Wednesday the market were able to reach, on an hourly average, a level above 174.73 on the industrial average. As for the rails, they are nO\'J in a very strong support level between, roughly, 50 and 48. Regardless of the short term action of the market, I still continue in the belief that the market is in a buying range jn or close to the 170-160 area. This has been my advice since September 1946. As for individual issues, I favor the stocks listed belo\'J. These stocks have been covered in previous letters or will be covered shortly. I believe these issues offer better than average appreciation prospects over the intermediate term. Thumbnail sketches are available on those issues marked with an asterisk – American Cyanamid American Home Prod Avco Borg Warner Burlington Mills Cities Service Cooper Bessemer Denver & Rio Grande Eastern Airlines Elec. Power '& Light Firestone Tire .Firth Carpet Flintkote Fruehauff Trailer Hewitt Robins Holland Furnace Closing 2/8/49 36 3/4 25 1/4 6 3/8 48 3/8 17 40 26 1/8 23 1/8 14 1/8 21 5/8 46 16 1/2 24 3/4 19 20 24 Closing 2/8/4 Inter.Min. & Chern. 25 1 8 Joy Manufacturing 36 Lowenstein 21 3/8 Paraffine Co 17 1/4 Penn-Dixie-Cement 18 3/8 Pressed Steel Car 7 Radio Corp 11 7/8 St. Regis Paper 7 3/4 Schenley 26 3/4 Sears Roebuck 36 1/2 Sharon Steel 33 3/4 Shell Union Oil 32 Sperry Corp 25 1/4 Standard Steel Spring 14 1/2 Sylvania Electric 20 3/4 White Sewing Machine 19 1/2 Youngstown Sheet & T 68 1/8 February 8, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not to be conritued as an offer or solicitation of offen to buy or lell any securitlos. From time to tlmo Walston Hoffman & Goodwin may hn8 an Interest In some or all of the securities mentioned h.reln. The fore90l9 material has been prepared by UI as II matter of Information only. It Is based upon Information believed reliable bLrf not necessarily complete, I, not 'ilul!ranteed at accurate or final, and Is not Intended to foreclose Independent Inquiry.

TABELL'S MARKET LETTER 35 WALL STREET. NEW YORK 5. N. Y. Digby 44141 The rails continue their downdrift and at Friday's close of 48.70 were at their lowest point since March 1948 when the rail average started its advance to the year's high of 64.95. After the break in October, 1946, the rail average slowly built up a strong techfiicallpattern. 'fte reacting to approxImately ,44, 1/2Jin october, 1946, theradl'averagerallJtBd back to, 53; in early ili947(. Thelnext reaction carried,' the verage to;a new low of 41 in May). 197. The next advace in mid-1947 to approximately 53 failed to carry above the previous high. On the next decline, the rails held at 46 1/2 in December, 1947. These three successive lows of 44 1/2-41-46 1/2 built up a head and shoulders bottom pattern which was penetrated on the upside in April, 1948. The subsequent high of 64.95 was reached in July, 1948. During May through October of 1948, the rail average built up a distributional top that indicated a possible decline to the 50-48 range. The fact that this range has been reached, plus the fact that the average is in the 53-45 support area, indicates that the rails may be near a turning point. On the basis of earnings, yields and improvement in financial condition, the rails seem greatly undervalued. That is, unless we are on the verge of a long, .deep business depression resulting in several years of deficits. Even the most pessimistic do not expect that. The table below is self-explanatory. It shows, for example, that Southern Pacific earned over 10 last year and that it yields over 10 based on its present price of 42 and 1948 dividends. As the stock appears to be on a 5.00 basis, although it actually only paid 4 50 in 1948, it might be said that the yield is even higher. It also shows that the stock is selling at only slightly more than four times 1948 earnings. Earnings for the last ten years totaled 94.39 of which only 21.25 were paid out in dividends. A total of 73.14 was retained ih the company thus strengthening its financial condition by reducing debt and by improvements. This amount of 73.14 is over 30 more than the present price of the stook. Equally fantastic examples will be found in the list. TABLE ONE Approx. Price Atchison, Top. & S.F. Atlantic Coast Line Baltimore & Ohio Delaware & Hudson Great Northern Rwy Pfd Illinois Central Kansas City Southern Reading Company Northern Pacific Southern Pacific southern Railway Texas &.Pacific Rwy Union Pacific 91 38 9 37 39 23 35 20 15 43 37 40 82 Est. Earn. 1948 23.33 9.32 7.73 13.95 8.91 14.60 15.42 5.44 4.96 10.27 12.51 15.06 14.24 Price Times Earn. 3.9 4.1 1.2 2.7 4.4 1.6 2.3 37 30 4.2 30 2.7 5.8 Div. 1948 8.00 4.00 4.00 3.50 1.00 1.50 1.00 4.50 3.25 4.00 6.50 …; , cJ .( Yield 8.8 10.5 10.8 9.0 2.9 .5 6.7 10.5 8.8 10.0 7.9 Total Total 10-Yr. 10-Yr. Earn. -Di-v.- Balance 145.87 47.00 98 .8 114.84 2.75 90.09 60.16 60.16 85.34 16.00 69.34 73.36 21.00 52.36 92.16 92.16 56.86 1.00 '55.86 43.50 10.50 33.00 44.75 6.00 38.75 94.39 21.25 73.14 107.13 17.00 90.13 98.99 17.50 81.49 81.23 33.50 47.73 Adjusted for two-four-one split July 1, 1948 Some of the newly re-organized roads also appear very reasonably priced. Ten-year figures are not available. Most of these issues are selling at just slightly more than twice 1948 earnings and have generous yields. TABLE TWO Approx. Price Chicago, R0k Island Denver, Rio Grande Gulf, Mobile & Ohio St. Louis,-San Francisco Seaboard Air Line February ll, 1949 A- Paid in 1949 29 24 11 9 15 Est. Earn. 1948 11.41 1531 513 . 3.46 6.81 Price Times Earn. 25 1.6 2.1 2.6 2.2 Dividend 1948 3.00 2.00 .50 1.00-A 1.00 -Yi-el-d 10.3 8.3 4.5 11.1 6.7 EDMUND W. TABELL WALSTON, HOFFVAN & GOODWIN This memorandum Is not h..ve lin Interest In lome to or be at! construed 115 an of the securitIes offer or solkltallon of mentioned hereIn. The offers to foreQoing buy or sell anI securities, From mllterial has been prepared by tuims easto time Wliiston Hoffan matter of In ormlltlC!, & GoodwIn may only It Is. bll!ed upon information believed reliable but not necessarily complete, Is not quarllntef!d as accurate or final. and is not Intended to foredole Independent InqUiry,

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby '141 While the rail average Q,t last week's low of 48.43 penetrated the November low of 51.91, the induntrial average has so far held above the comparable November low of 170.35. Last week's low was 171.03. This divergence in pattern between the two averages is a potentially bullish sign and brings up the possibility of an ending of the intermediate down- trend from the June-July closing highs of 193.16 and 64.95. Failure of one average to follow the lead of the other average into new high or new low territory is quite often the sign of an important change in trend. In recent times, this divergence occurred at the May 1945 top, the May 1947 bottom and the February 1948 bottom. If it does turn out that the market reached its low last week, the normal technical pattern would be an irrcgular-uptrend to 175-178 and 51-52 followed by a dip back to 174-172 and 50-49. After that, I would expect a long trading ranGe within the limits of the projected highs and lows mentioned abpve. In the event that the market does not hold at last week's lows, I would not expec't any great extension of the decline. The broao May-November top on the industrial average has a downside indication of 172-167 and the comparable downside objective on the rail average is 50-48. In addition, both averages are in or near the very strong support areas of 53-45 and 170-163. It would appear that the market, as measured by the averages, has either reached its low or, at the \',orst, is within 5 of such a low. For intermediate term holdings, suggest purchase of the following issues during periods of market irregularity. These stocks have been covered in previous letters or will be covered shortly. Thumbnail sketches are available on those issues marked with an asterisk .. ,\ , Closim- Closing 2/16/49 2/16/49 American Cyanamid American Home Prod. Avco Bendix Aviation Bigelow-Sanford Borg Warner Burlington Mills Cities Service Cooper Bessemer Denver & Rio Grande Eastern Airlines Electric Pr & Lt Firestone Tire Firth Carpet Flintkote Fruehauf Trailer .Hewitt Robins Holland Furnace 38 25 1/2 6 3/8 32 1/2 29 1/4 48 1/2 17 1/8 40 1/8 27 22 3/4 14 3/4 22 1/8 47 1/8 16 1/2 25 1/2 18 1/2 18 22 1/2 Inter.Min & Chern Joy Manufacturing Lowenstein Paraffine Companies Penn-Dixie-Cement Pressed Steel Car Radio Corp St. Regis aper Schenley Sears Roebuck Sharon Steel Shell Union Oil Sperry Corp Standard S'ceel Spring Sylvania Electric White Sewing Machine Youngstown Sheet & T Reynolds Metals 26 37 1/2 22 1/2 17 1/2 18 3/8 6 7/8 11 7/8 8 26 7/8 34 7/8 33 33 1/2 25 1/4 14 3/4 21 1/2 20 3/8 67 3/8 20 3/4 February 16, 1949 EDMUND W. TABELL WALSTON, !QFFMAN & GOODWIN Thb memorandum Is not to be construed .,s an offer or solicitation of oHen to blJY or lell any securities. From time to time Walston, Hoff,man &IyGftdb'nbo!l!l hay. an Interest In 10m. or all of the securities merrlloned herein. The foreQoln; material hflS been prepared by UI as e metter of Infonnelon on . d I I upon Information believed reliable but not necessarily complete, Is not Quatanteed al accurate or final, and I, not Intended to foreclose Indepen ent nqu ry. '—– – f t

SAN FRANCISCO, CALIF. .- n.Hoffmon &, GOOduTi.,. NEW YORK, N. Y. LOS ANGELES, CALIF. BAKERSFIELD BEVERLY HILLS EUREKA. FRESNO RIVERSIDE SA.CRAMENTO SAN DIE&O LONG BEACH MODESTO SAN JOSE SANTA ANA OAKLAND STOCKTON PASADENA VALLEJO TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 44141 Signs of a recession in business are multiplying. During the past week, this situation has been described as a leveling off, a disinflationand even as an economic burp. I prefer to call it a return to economic normalcy, an adjustment from the war boom with its dislocations and shortages to normal peacetime competitive condi- tions. This is a healthy situation. Sustained prosperity is not based on shortages and high prices and black markets. From 1921 to 1929, there was almost immediate delivery on any automobile you wanted and the only black market was in bootleg liquor. Of course a return to competitive conditions and lower prices will be painful to many marginal companies, but its effect on soundly entrenched enterprises should result in no more than a drop in earnings from the unprecedented peaks of 1947 and 1948. Business is following the normal post-war pattern. Economists have been predicting a depression since late 1945. Their timing has been woefully bad because they failed to take into consideration the huge pent up demand built up not only by five years of war shortages, but also by the t.en previous years of depression. That is why, in my opinion, the present dip in business will be in no way comparable in magnitude to the 1921 recession. When the adjustment is completed, there should be a sustained period of prosperity. The demands of fifteen years of depreSSion and war shortages have not been nearly supplied by the production of the last three years, even as large as that production has been. The Stock market started its readjustment period in the Fall of 1946 when it dropped from a May high of 213 to a low of 160. Since that time, regardless of greatly increased earnings, the market has moved in a relatively narrow range. Stocks are selling today at the lowest ratio of price-to-earnings, dividends, cur- rent asset value and book value in twentyfive years. The only comparable periods are 1921, 1932 and 1942. Today there are no top-heavy speculative pOSitions, only a small amount of stock on margin. and plenty of liquid money awaiting investment. This com- bination of factors will not last long. It is happening today only because of the depressed mental state of the investing public. The following quotation from the column of C. Norman Stabler n the New York Herald-Tribune of February 20th, is an excellent description of present public psychology. The tendency of the pendulum of human reactions always to swing too far, and thus to produce waves of unjustified optimism or pessimism, brought some thought-provoking observations from Herbert H. Weitsman, of the Stock Exchange firm of L. F. Rothschild &Co., last week. In the period immediately preceding the panic of 1929, he observed, there was a tendency to think that 'nothing means anything'unfavorable. It was a New Era. NOW, 'nothing means anything' favorable. A remark frequently heard is that 'earnings and dividends don't mean anything'. The mis- taken philosophy of the present, Mr. Weitsman notes, goes something like this. 'Low earnings are obviously no good, but high earnings are no good either, because the higher the earnings, the greater the vulnerability. Neither are increased dividend payments any good because large disbursements lend themselves to future reduction. Mere continuation of current rates is nothing less than catastrophic. After all, what good are stable dividend payments High pro- duction, at best, is just another reflection of unhealthy boom conditions. Why, it is the stuff that nightmares are made of – that slip from 102i of capacity and then fall rlght through the rigid break-even point into a bottomless sea of red ink. As to book values, well,have you ever tried to eat a brick or a lath or an openhearth furnace – who would want to drink from an oil well Big book values don't mean a thing, except perhaps potential business for the junk man. High commodity prices are no good because inflated prices are subject to collapse. Deflated commodity prices certainly are no good, Such a condition is bad for the farmer and inventory values are adversely affected. Implied lower costs for the consumer also are no good because the consumer is going to be worried about his job, if he has one. Anyway, he is nown the habit of saving instead of spending, the figures proves that. War is no good, that is self-evident, but neither is peace. Parades and inaugurations would hardly justify the present-day expensive military establishment. The prudent thing is to ignore values and yields. Equities should not be bought, it is concluded. 'Nothing means anything'-favorable. The 1929 philosophy was just as mistaken,Mr. Weitsman pointed out, for then nothing meant anything unfavorable. 'It made no difference,' so the thoughts of that day went, 'that market prices in relation to earnings and dividends and book values were fantastically high. It was all in the future – prospects were the impGrtant consideration and that prospect was not only undiminished but increasing prosperity for the foreseeable future and even longer and the Dow Jones industrial average was only 380. The thing to do was to buy more and more common stocks.' Reference should be made to the 19291932 stock tables.for the complete details of that 'New Era' — and its surprises. .nThis memorandum Is not haY8 an Interest In some to or be condrued ., an of the NeurUies offer or IOlldtatlon of offers to mentioned herein. The foreooln; bmuyateorr!!!sI,1Ihaasnybeseencuprritji;MllU..''f'rWMll..V..tulrtWp,MtoA..1hln…'.,WaJ,stoInnoHrmoaftfm1oann & GoodwTn ma, only. It Is baled upon Information believed rellable but not n.cessarlly complete, Is not c;luaranteed as accurate or fInal, and Is not Intended to foreclose Indepondent InquIry. – ..– .—- SAN FRANCISCO, CALIF. NEW YORK, N. Y. BAKERSFIELD BEVERLY HILLS EUREKA RIYERSIDti SACRAMENTO ,..SAN DJEGQ TABELL'S MARKET LETTER LOS ANGELES, CALIF. OAKLAND PASADENA STOCKTON VAllEJO 35 WALL STREET. NEW YORK 6, N. Y. Digby 4-4141 I see no reason to change my forecast for 1949, as stated in the letter of December 15, 1948. Briefly, I still expect that the market will reach its low point for 1949 in the first three months of the year. I do not believe that the low will be much, if any, lower than the November 1948 low of 170.35, and that it certainly will be above 160. I believe that by the latter part of the year the market will approach or pass the 1946 high of 213. The action of the market has been discouraging, particularly as far as the rails are concerned. The rail average and individual rail stocks had two possible top formations. The first top formation was outlined by the May to July highso The second formation was formed across the entire May to October pattern. It appeared for a while that the average would hold at its first object- ive, but last week's decline carried most of the rail issues down to their lower objectives. I have listed below the downside objectives of the averages and individual issues in the three groups that have shown worse than average market action since Election Day. These groups are the rails, oils and steels. These downside objectives are the object- ives outlined by the complete May to October distributional pattern. It is interesting to note that in a great number of cases these objecttives are very close to recent lows. Prices are as of Friday, February 25th. – 2g Last Objective Low 1946-1948 Low (- Dow-Jones Ind. 171,10 172-165 162 170.56 Dow-Jones Rails 46.34 48-45 41 46004 New York Times 110 110-108 107 110 New York Herald-Trib 117 116 114 117 Armco 23 7/8 23 21 23 1/2 Atch.Topeka & S.F. 87 3/4 86-81 66 87 1/2 Atlantic Coast Line 36 37-35 41 36 Baltimore & Ohio 8 5/8 9 -7 8 8 1/2 Baltimore & Ohio,pfd 16 5/8 12 12 16 1/4 Bethlehem Steel 30 7/8 31-29 26 30 3/8 Chesapeake & Ohio Chicago & North W. 3110 /88 30 10 32 31 1/8 14 10 1/2 Chicago,Rock Island 28 1/2 28-26 26 28 1/8 Cities Service 39 39-36 21- 38 1/2 Continental Oil 50 45-42 34 47 5/8 Delaware & Hudson 34 35-33 26 34 Denver & Rio Grande 21 1/2 21 7 20 1/4 Great Northern, pfd 37' 36 35 36 1/2 Gulf,Mobile & Ohio 10 3/8 10 7 10 1/8 Gulf Oil 60 1/4 61-59 57 60 1/4 Illinois Central 23 23-20 19 22 1/2 Inland Steel Jones & Laughlin 36 5/8 28 1/8 33 28-27 33 28 36 1/2 28 1/8 Kansas City Southern 35 30-28 16 34 1/4 Louisville & Nashville 35 1/2 34 39 35 1/2 Mid-Continent Pete 42 41-39 32 40 1/8 M-K-T, pfd 18 16 12 16 1/4 New York Central 10 1/2 9 12 10 1/4 Since listing. The balance of the list will follow in the next letter. February 25, 1949 EDMUND W. TABElLL WALSTON, HOF1AN & GOODWIN j This memor.!lndum Is not to be construed as an offer or solicitation of offers to buy or sell any securities. From time to time Wolston, Hoffmfln & Goodwin may have an Itertlst In lome or all of the securities mentioned herein. The fOrElQolng matarlal has been prepared by us as a Mlitte, of Information cnly. It Is based upon information believed reliable but not necessarily complete, is not quaronteed as accurate or flnll1. lind Is not Intellded to foreclose independent Inquiry.

SAN FRANCISCO, CALIF. NEW YORK, N. Y. LOS ANGELES, CALIF. BAKERSFIELD BEVERLY HILLS EUREKA FRBNO RIVERSIDE SACRAMENTO SAN DIEGO LONG BEACH MODESTO OAKLAND PASADENA SANTA ANA STOCKTON VAllEJO TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 The industrial average has now had a double test of the November low and has Succeeded in holding above that level on both February 11th oancdcaFsieobnrsuary 25th while the rail average reached new low territory on both Dow-Jones Industrials DOW-Jones Rails Nov. 30th 170.35 51.69 Feb. 11th 171.03 48.43 Feb. 25th 170,56 46.04 This divergence in the action of the two averages may well mark the end of the intermediate downtrend from the June-July 1948 highs of 193 and 65. At Tuesday'S high of 174.61, the industrials were close to the February 18th high of 175.62 which was the high point of ,the rally from the February 11th low. Ability to penetrate this high would confirm the change in minor trend. However, even if the November lows are penetrated downside, I would not expect much further reaction. Last week, I listed the down- Side objectives of the May-October tops of some leading rail, oil and 'steel issues. The balance of the list is given below. As noted last vleek, the objectives in many casel have been approximately reached Norfolk & Western Northern Pacific Ohio Oil Pennsylvania R.R. Phillips Petroleum Pure Oil Republic Steel Richfield Oil St.Louis-San Fran Seaboard Air Line R.R. Sharon Steel Shell Union Oil Southern Pacific Southern Railway Stand.Oil of Calif. Stand.Oil of Ind. Stand.Oil of N.J. Texas Company Texas Pacific Rwy Union Oil Union Pacific Western Pacific Wheeling Steel Youngstown s. & T. Allrox. 3 1/49 Last 52 1/2 14 1/2 27 1/4. 15 7/8 56 27 1/2 24 3/8 27 9 16 1/4 33 1/2 33 1/2 41 5/8 35 59 5/8 38 3/8 67 1/2 51 1/8 40 27 3/8 81 1/8 24 44 1/8 66 1/2 ObJective 48 14 24 15 52-50 24 23 27-23 7 14 30 31 39-35 34-33 55-50 37 66-62 48 41 24 75-70 22-19 42 66-61 Low 1246-1248 55 14 20 16 51 20 23 13 6 12 24 25 35 28 49 37 62 53 35 20 55a 27 33 54 Low 50 1/8 13 3/4 25 3/4 15 1/4 51 1/2 25 1/4 23 3/8 24 3/4 8 14 1/2 32 31 39 3/8 34 1/8 56 3/8 37 3/8 65 1/2 49 40 25 1/2 77 5/8 22 1/4 42 1/4 63 3/4 Since listing. a- On split basis. March 1, 1949 EDMUND W. TABELL . WALSTON, HOFFMAN & GOODWIN —–

….;;.,..r– — SAN FRANCISCO, CALIF. NEW YORK, N. Y. LOS ANGELES, CALIF. BAKERSFIELD BEVERLY HILLS EUREKA. FRESNO RIVERSIDE SACRAMENTO SAN DIEGO LONG BEACH MODESTO SAN JOSE SANTA ANA OAKLAND PASADENA STOCKTON VAllEJO TABEll'S MARKET lETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 44141 Market action continues to favor the probability that the market reached its intermediate term low on February 25th as against the possibility of a further dip into the 170-160 range of the DowJones industrials. There is a large segment of the financial world that expects a lower market before a turn but, in my opinion, the failure of the industrials to follow the rail weakness on two occaSions last month is a sign of a sold-out market condition and indicates a change in the trend. Ability to penetrate the February 18th high of 174.62 would definitely strengthen this conclusion. However, even in the event of new lows, I would not expect the decline to carry much below the February lows. The downside objectives of rails, oils and steels were included in recent letters. Briefly, I believe there is a good probability that we have reached the lows of the move. In the less likely event of a further decline, I do not believe the eventual 10W3 will be more than 5 below February 25th prices. This is in the face of my belief that business and earnings will be lower i 1949 than in 1948. I am repeating below my list of recommended issues. This group has shown, in the main, better than average market action and I believe will continue to do so. Thumbnail sketches of all of these issues are available on request. American Cyanamid American Horne Products Avco . Bendix Aviation Bigelow Sanford Borg Warner Cities Service Commercial Credit Cooper Bessemer Denver & Rio Grande Eastman Kodak Eastern Airlines Electric Power & Light Firestone Tire Firth Carpet Flintkote Fruehauf Trailer Hewitt RobinS, Inc. Holland Furnace Inter.Min. & Chern. Intertype Corp Closing 3/4/49 38 5/8 25 1/2 6 1/4 33 28 3/4 47 1/2 40 5/8 50 3/4 26 22 1/4 43 3/4 15 3/8 21 7/8 48 1/4 15 5/8 25 1/8 18 7/8 19 22 1/2 24 5/8 26 Closing 3/4/49 Johns Manville Joy Manufacturing Kresge, S.S. Lowenstein Niagara & Hudson Paraffine Companies Penn-Dixie-Cement Pressed Steel Car Radio Corp Reynolds Metals St. Regis Paper Schenley Sears Roebuck Shamrock Oil & Gas Sharon Steel Shell Union Oil Sperry Corp Stand.Steel Spring Sylvania Electric Wheeling Steel White Sewing Mach. Youngstown Sheet 37 1/4 38 36 1/8 22 1/4 9 1/2 19 3/8 19 3/8 6 3/8 11 7/8 20 1/8 7 7/8 26 1/8 36 1/4 29 1/4 33 1/2 33 1/2 26 1/4 14 7/8 21 1/2 42 5/8 19 1/2 66 1/4 Burlington Mills has been dropped from the recommended list. If held, would dispose of this issue on strength in the general market and transfer to other issues in the list. March 4, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thll memorandum b not to be con.hued al an offer or solicitation of offen to buy or sell atr( securittes. From tTmtI fo time Walston. Hoffman & Goodwtn may have an tnterest In lome or all of the seclJl'itIel mentioned er.ln. The foroQoln9 material has been prepared by VI al a matter of Information only. It Is. based upon Information believed reliable but not necessarily c.omplete, 11 not Quarameed as accurate or final, and is not Intended to foreclose Independflnt Inquiry.

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. DIgby 4-4141 The airline issues have, in the last few months, shown much better technical action than the general market. This is a rather interesting commentary on public psychology because none of the common stocks of the airline companies listed below, with the exception of Eastern Airlines and Pan-American Airways, have paid dividends in the last two years, Further- more, with the exception again of Eastern Airlines and Pan-American, they have all shown sizeable deficits over the past two years, In most in- stances the airlines made their highs in late 1945 or early 1946. As noted in the table below, the declines have been extremely drastic with some issues, at their lows, selling at 1/6 to 1/10 of the levels reached in 1945-1946. Of course, just why the airline stocks sold as high as they did is another mystery of the market. In the 1945-1946 period the airline issues were selling at 20 to 75 times earnings in direct contrast to today when a great many stocks in other groups are selling at 2 to 5 times earnings. This is an example of the extremes of optimism and pessi- mism of public investment or speculative psychology. Last Sale High 1945-1946 Amer.Airlines 3 pf. 60 9S Amer. Airlines 9 liS 19 7/S Braniff Airways 7 3/4 37 1/2 Capital Airlines 6 3/4 49 3/4 Eastern Airlines 15 3/S 33 1/2 No.West Air.4.6 pf. IS 27 1/4 Northwest Airlines 9 5/S 63 1/2 Pan Amer.Airways 9 29 Transcontinental & W. 11 United Air.4 pf. 72 3/S 79 120 7/S United Airlines 12 3/4 62 1/2 Western Airlines – 6 40 1/2 1945 High Low 1945-1949 47 6 liS 6 1/4 3 7/S 137/S 16 S 1/4 S 9 5/S 57 1/2 9 5/S 5 Convertible into Shs. of Common 4.76 1-1/2 4 Regardless of the seemingly unfavorable fUndamental background of the airline issues, I believe that selected issues in the group offer possibilities of substantial price appreciation over both the longer and intermediate term. There are definite long term growth possibilities in – the industry and the individual issues will undoubtedly sell at a higher price to earnings ratio than the general market. Obviously, this group will have its appeal to the investor or speculator seeking long term capital gains rather than income. On this baSiS, I recommend the follow- ing issues. For the more conservative purchaser in a speculative group, I believe that Eastern Airlines, Northwest Airlines preferred, and United Airlines preferred are the outstanding issues. Eastern Airlines has shown earnings for every year since 1936. These earnings have ranged from a low of IIi a share to a high of 1.46. The technical pattern is good. At present price of around 15 1/2, Eastern is still selling close to its low of the last five years while American Airlines has appreciated 50. , Both Northwest Airlines preferred and United Airlines preferred are not earning their dividends at the present time and are paying out of surplus. Nevertheless, they offer definite speculative possibilities due to their convertibility into conon stock. If, in the unlikely event that the common stocks of thes.e companies again reached their 1945-1946 highs, Northwest Airlines preferred would sell at 94 and United Airlines preferred at 250 in contrast to present prices of IS and 72 1/2. Admit- tedly, this possibility is remote but these two stocks appear to offer more interesting profit possibilities than Amer.Airlines preferred which on the same basis would be worth 95 as against a present price of 60 1/2, These prOjections are based only on the value of the conversion privilege. From an extremely speculative point of View, I believe Western offers interesting percentage appreciation possibilities. EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN Thl, memorandum 11 not to b, construed ill an offer or solicitation of offen to buy or ,ell IIny securities. From tIme to time Walston, Hoffman & Goodwlmal have an Int.rest In .om. or all of tit securities mentioned h.,..ln. The foroliloll'lO material has been prepared by us liS matter of Information only. It Is'n u;' upon Information belloed reliable but not neeels.!!r!ly complete, Is not Quaranteed as accurate or final, and II not Intended to fonlClose Independent q ry.

TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 44141 As we 'approach the end of the first quarter of 1949, I Qecome and more convinced that my December 15th opinion, namely, that the for 1949 would be reached in the first three months of the year, will prove to be correct. Furthermore, I feel that the odds favor the probability that the lows for the year were reached on February 25th at 170.56 in the Dow-Jones industrial average and 46.04 on the rails. The industrial average has held above the November 30th low of 170.35 which coincides with my December opinion that the low of 1949 in the industrial average would not be much, if any, lower than the November low. My thought the rails would not sell much below 50 proved to be inaccurate 0 The rail average sold almost four pOints lower. What is the outlook from here on Taking the industrial average first, I believe we are in a minor uptrend that should carry to at least the 178-180 level where some temporary resistance should be encountered. After a correction to 176-174 and a broadening of the potential base pattern, I would expect a testing of.the 182-182t resistance. Ability to penetrate that level would be extremely constructive and indicate an intermediate uptrend to 195-200. All this could occur during, roughly, the second quarter of 1949. he rails, altRsUQ tH appear to have reached their lows… intermedrat upside progress may be a bit more labored than that of other groups. The rails appear quite oversold and any nearterm advance could be quite dynamic as there is little upside resistance between the present level of approximately 49 and the next congestion area between 52-54. However, there is strong upside resistance in that area and even if it is penetrated there is another upside resistance level at 58-60. The pattern on individual rail stocks in quite diverse. While I formerly favored the western and transcontinental roads, the technical patterns now suggest that some of the eastern, southern and southwestern roads have better intermediate term appreciation possibilities. The utility average possibly .has the most constructiye technical pattern. The average is now around 35. Ability to reach 362 would confirm the bullish potential formation and suggest an intermediate object- ive of 42. I It might be interesting to tabulate the possible percentage appre- Ciation, from present levels to the highest intermediate term upside po- tential, of the three averages Industrials Rails Utilities Now 1947-48 High Upside Potential POSSible 2f Rise 176 193 200 49 65 60 35 37 1/2 42 13 1/2 22 1/2 20 While this comparison favors the rails, it is not certain that the rail average will be able to penetrate the 52-54 upside resistance. In that event, the rise would be equal to only 10, based on a potential high of 54. These potential objectives are only for the intermediate term. Furthermore, individual stock patterns are quite diverse and selection will continue to be of prime importance. Suggest my recommended list of March 4th for individ'ual issues that appear to offer better than average appreciation possibilities over the intermediate term. March 11, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not to be construed liS an offer or solicitation of offers to buy or ,.11 any securities. From time to tIme Waldon. Hoffman & Goodwin may have an Interest In some or all of the securities mentioned herein. The fore;olng material has been prepared by lUI as III metter of Information only. It Is based upon InformatJon bell.ned rel1abl. but not neceuarlly complete, ,. not quaratrteed al eccurate or fin,,', and II not Intended to foreclose independenf inquiry.

SAN FRANCISCO, CALIF. NEW YORK, N. Y. LOS ANGELES, CALIF. BAKERSFIELD IIEVERlY HilLS EUREKA FRESNO RIVERSIDE SACRAMENTO SAN DIEGO LONG BEACH MODESTO SAN JOSE SANTA ANA OAKLAND STOCKTON PASADENA VALLEJO TABELL'S MARKET LEnER 35 WAll STREET, NEW YORK 5, N. Y. Digby 44141 I believe selected oil stocks, particularly during periods of market weakness, present an outstanding purchase at around present levels. From a fundamental viewpoint, I believe the sharp declines from the 1948 highs have overdiscounted the probable decrease in earnings in 1949. Oil stocks, in the past, have usally sold at a rather high price to earnings ratio. For example, as reported in a recent Journal of Commerce article by Dwight Moody, the average price to earn- ings ratio of thirty oil companies during the 1936-1939 period was about fourteen times earnings. This high ratio was due to the growth possibilities and the more or less depression-proof character of the industry. People usually heat their homes and drive their cars regardless of bUSiness conditions and, as the population grows, the demand increases. Today, however, these same thirty stocks are selling at an average of less than five times 1948 earnings, or about one-third of the 1936-1939 average. Also, yields are substantial, even though present dividend payments are at a record low ratio to earnings. At present prices, oil stocks appear to be discounting at least a 50 decline in earnings. Such a decline would appear to be out of line with the outlook. Crude prices may be cut in the near future but any such cut, if it devel- opes, should be only moderate. It would appear that 1949 earnings may be 15 to 25 below the record 1948 earnings. This drop would be largely due to the unusually mild winter and the rigid restrictions on the use of oil burners because of past shortages of fuel oil. This has resulted in a piling up of inventory ano price cuts in the East. In the West, extreme cold and storms have cut down driving and gasoline consumption. These situations are temporary and with increased oil burner installations and normal weather conditions, demand will again increase. Furthermore, even with a decrease in earnings, present dividends should be fairly se- cure as expansion outlays are jn a declining trend. The technical actio;1 of the oil group seems to bear out this fundamental background. The technical irldications of the price trends in the oil group have been rather accurate in the past three years. The group built up excellent base patterns in the period between October 1946 and early 1948. The upside objectives outlined by these base patterns were reached in mid-1948 and profit taking in this group was advised in this letter at that time. During mid-1948, distributional patterns were built up. The downside objectives outlined by these top formations were reached,in most instances, during the first two months of 1949. The dovmside objectives of the more important oil stockS have been given in past letters. The most recent compilation was presented in our letters of February 25th and March 1st. For the past few weeks, the majority of oil stocks appear to be in the process of forming another strong base formation. More time may be required to enlarge this pattern but, in the me.antime, most oil stocks appear to be in a buying area in the lower part of the 1949 trading range. As for individual issues, it is rather difficult to select he most favorble situations until the potential base patterns are finally completed. I have included Cities Service and Shell Union Oil in my recommended list. Thumbnail sketches are available They are recommended for intermediate term appreciation. Other issues with favorable patterns and near term trading possibilities include Mid-Continent Petroleum, Pure Oil, Richfield Oil. March 16, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN