Walston-Hoffman &. Goodwin SAN FRANCISCO, CALIF. NEW YORK, N. Y. PHILADELPHIA, PA. LOS ANGELES, CALIF. BAKERSfiELD BEVERLY HILLS EAST ORANGE, N. J. LONG EACH MODESTO OAKLAND PASADENA SAN DIEGO SAN JOSE . SANTA ANA EUREKA FRESNO HAGERSTOWN, MD. HARRISBURG, PA. PITTSBURGH, PA .0. RlVERSIDe' SACRAMeNTO SEATTLE, WASH. STOCKTON VALLEJO TABELL'S MARKET LETTER 35 WALL STREET. NEW YORK 5. N. y, Digby 4-4141 HOTEL WALDORF.ASTORIA PL. 96860 At Thursday's close of 212.13 and the intra-day high of 212.67, the Dow-Jones industrial average was very close to the 1946 closing high of 212.50 and the intra-day high of 213.36. The 1946 high, in turn, was the highest price since the 1929 high of 386.10. The rail average remains backward. At Thursday's close of 56.23, it was considerably below the 1946 high of 68.31 and had even failed to penetrae the March 4th intra-day high of 57.00. However, I expect the rail average to penetrate the March high Shortly and to reach at least the 60-62 level. The release of March earnings later in the month should help the rails in their repeated attempts to reach new high territory. , SinCe June, 1949, I have conSistently stressed the fact that the marKet leaders would be the better grade, dividend paying issues and cer- tain special situations and that one of the main motivating forces behind this market was.the abnormal spread between the yields on high grade common stocks and high grade bonds. This spread must be narrowed. The nine months advance from the June lows has partially corrected the spread but I still b.elieve it will be narrowed further. High grade common stocks with long records of uninterrupted dividends are still available at an average yield of 2 5!oBnly s to l ig 2 htly 3/4. under 6 in I believe contrast with yields. on high grade bonds of the average yield on high grade common stocks will drop to an average of 4t to 5. At the 1946 high, the average yield was about 3.3. In terms of the three market leaders, this should mean p,rices of – American Telephone 170-175 General Motors 95-100 U. S. Steel 40 I believe these prices will be reached before the market reaches an important top. I continue to believe that high grade issues are underpriced. In contrast to the buoyant action of the better grade stocks, many speculative favorites of 1946 are still languishing near their lows of the past three years. Many of these issues are undoubtedly undervalued but until a larger number of speculatively minded buyers enter the market, they may spend considerable time in building. up base patterns. One group of sp.eculative issues, however, appears to have completed its accumulation and is ready to move ahead. This group is the airlines. We oiginally recommended this group over a year ago. The group has had a fair advance since that time but still indicates higher'levels. In the field of special situations, we were fortunate last year in recommending such issues a American Seating, Brooklyn Union Gas, Cities Service, Standard Gas 4 preferred, and White Sewing Machine, among others. I believe there will be similar situations in the market during the corning year. American Export Lines, Central Foundry, Electric Boat, General Tire, Miss6uri-Kansas-Texas,pfd., Penn-Dixie-Cement, and Shamrock Oil & Gas are candidates. , In the field of backward issues that are selling near the lows of the past three years, but showing substantial yields, are Allied Stores, , Allis Chalmers, ,Columbian Carbon, Fairbanks Morse, Montgomery Ward, Schenley. i 'and Twentieth Century-Fox. These issues have all built up substantial po- . tential accumulation patterns but as yet have given no indication of when they are going to mov,e. Aprii 6, 1950 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum is not to be construed as an offer or solicito!ltion of offan to buy or sell any sec.urltlel. From time to time Walsto,n, Hoffman & Goodln may have an interest In lome or all of the lecunhes mentioned herein The foregoing material hal been prpar.d by us al !I matter of Informafln only. It IS based upon information believed reliable but not necessarily complete, is not guaranteed as accurate or final, and Is not Intended to foreclose Independent Inquiry. . '- … ….. — – —

, Walston-Hoffmon &. Goodwin SAN FRANCISCO, CALIF. NEW YORK, N. Y. r' … 'BAKERSF1EU) ….u;… BEVERLY H'ILls'l-TE'AST dUNGE. N' LONG BEACH MODESTO OAKLAND PASADENA SAN DIEGO SAN JOSE SANTA ANA PHILADELPHIA, PA. LOS ANGELES, CALIF. —'- …..EUREKA fR..E..S…N. O HAGERSTOWN, MD-.- ..H.A. RRISBURG, PA.., PITTSBURGH, PA RIVERSIDE SACRAMENTO SEAnlE, WASH. STOCKTON VALLEJO TABELL'S MARKET LETTER 35 WALL STREET. NEW YORK 5. N. Y. Digby 4-4141 HOTEL WALDORFASTORIA PLna -b8bO In a mixed market on Friday the Dow-Jones industrial average, aided by a thirteen-point run-up in Allied Chemical, reached a new intraday high at 216.17 and a new high closing at 215.31. In addition to Allied Chemical, television issues were again strong on publication of very favor- able earnings statements. The balance of the market did little or sold off fractionally. 322 issues advanced while 573 declined. The rails for the past week have again put in a disappointi',g perform.l.nce and still remain in the long 53-57 range in which they have held since early 'February. Up until today, recent leadership has been confined to the better grade issues. Strength in the television shares on Friday, together with some low-priced issues, has caused nervousness in market cirCles. However, recent earnings statements issued by some of the television companies have been quite astounding and, despite sharp run-ups, most teleVision stocks are selling on a very low price-to-earnings ratio reflecting the possible temporary nature of the earnings. There are only two happenings that 'would Signal extreme caution. One would be too sharp a continuation of the advance with volume of climactic proportions. The other would be a downside penetration of the recent trading range by the rail average. As yet, neither of these two things have happened. While the higher grade investment stocks and some special situations have moved ahead sharply, the main bulk of the market has done little or nothing marketwise and a great many issues are selling considerably below their 1937 and 1946 highs. I am listing below a group of fifteen issues in this category. Some are dividend payers – others are not. Most all of them are speculative, some of them to a very great degree. They, however, like the airlines which we have been consistently recommending, have one thing in common. They have all built up large potential base areas and could eventually signal wide percentage moves. At the moment ,there is no indication when such a move will take place. These potentially bullish patterns have been present for a long time and these stocks may continue in their trading ranges for quite a while. However, if the potentially bullish patterns work out they could eventually have a sizeable move. 20,000 invested in equal number of shares of these stocks would have been worth 51,200 at 1937-1946 highs, or Slightly more than 2 times present prices. This does not imply that these highs will again be reached but these stocks could show wide percentage appreciation. AP12rox .Price 1242 Div. 1937-1246 High American Radiator Baltimore & Ohio Central Foundry Elastic stop Nut Electric Boat Eversharp Gray Manufacturing R-K-O Spiegel, Inc. Sunshine Mining Union Asbestos & Rubber U.S.Foil B United Stores, 2nd pfd. Wayne Pump Wyandotte Worsted 15 3/4 11 1/2 10 3/4 9 18 1/4 10 7/8 10 1/2 7 3/4 9 3/4 10 3/8 12 1/2 17 5/8 11 15 1/4 11 1/2 1.25 nil .60 .70 1.50 .25 nil .45 nii .66 1.50 .60 1.10 .25 1.50 29 1/2 40 1/2 17 3/4 18 35 3/4 57 3/8 24 1/2 28 1/2 39 7/8 24 23 3/8 30 1/2 20 3/8 50 3/4 25 3/8 Eversharp paid nothing in 1949,but will pay 251 in May, 1950. , April 14, 1950 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN ThhulsemaenmiontrearnedSu'!minIfsenmot to Oor be all coofnsttbruesdecausrmani omffenrtoiroMlodl1hceitraetu!.o\.n I T0e offers t.o b foregolnq uy m, doern.aIel IIhiIlIInybleneurpIrtlefeisalrFe'daoimb'lltIIsumsneoattloiIInttimemnaedteteWdr atOlosoftofInenr'feodHremosfaeftmloIannndeo&pnteyGn.doeIotndtwIsiinnbqaumlieraydy. upon information believed reliable but not necessarily complete, IS not qua ran ee as accura e o r . …

Walston.Hoffman &, Goodwin SAN FRANCISCO, CALIF. NEW YORK, N. Y. PHILADELPHIA, PA. LOS ANGELES, CALIF. BAKERSFIELD BEVERLY HIl!LS EAsT ORANGE, N. J. – LONG BEACH MODESTO OAKLAND PASADENA SAN DIEGO SAN JOSE SANTA ANA EUREKA .4. FRESd 'f-RAGERSTOWN, MD. HARRISBURG, PA. PITTSBURGH, PA. RIVERSIDE SACRAMENTO SEATTLE, WASH. STOCKTON VAllEJO TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5, N. Y. Digby 4-4141 HOTEL WALDORFASTORIA PLaza 96860 Regardless of the fact that the industrial average reached a new high on Wednesday at 216.32, there is considerable nervousness and bear'. ishness about the Street. The sharp run-up in the television shares has worried a great many people, It has been likened to the sharp run-up in the airlines in late 1945 when this group also broke through previous highsinto new uncharted territory. However, there is one rather important difference. In the case of the airlines in late 1945 and 1946 these stocks were bid up on the baSis of an anticipated increase in earnings that never materialized. In the case of the television stocks the situation is somewhat different. Even though some of these issues have doubled and trebled in price in recent months, they are still selling at only 3 to 4 times the rate of their first quarter earnings. Of course, just how stable these earnings are is very questionable, but the sharp increases have caught the fancy of speculators and there has been tremendous activity in this type of issue. This has caused increasing nervousness among those more conservatively inclined. However, I believe that it is important at this stage not to lose sight of the main motivating force behind'the market. In my opinion, the most important reason why the market should work higher is the abnormal spread between the yield on high grade common stocks and bonds, High grade bonds are yielding 2 5/8 to 2 3/4 and there is little prospect of yields advancing. On the other hand, high grade common stocks are still available at yields of from 5 to 6, or more, The Dow-Jones industrials are yielding roughly 6 at present prices, This spread is wider than at any period in the last fifty years with the exception of 1917-1918 and 1942, which were years in which our war fortunes were at their lowest ebbs, and in 1931-1932 at the bottom of the depression. At the 1946 top the yield was 3,3 on the Dow-Jones industrials and stocks were selling at 17 and 18 times earnings. Today stocks in the Dow-Jones industrial average are selling at less than ten times earnings. Thus, the market, while it is historically high, is statistically cheap, This may sound like an old story. This letter has been reiterating it for the last year. However, it seems wise to mention it again in the face of current nervous- ness and uncertainty. I do not believe that this market will reach an important top until the better grade common stocks are selling at prices to yield at least the normal ratio of 4 to 5. Obviously, there will be corrections as a market that has advanced roughly 56 points is subject to correctionary declines. So far, the advance has been orderly and con- solidating phases have taken the place of technical corrections. In spite of the fact that the averages are selling at new highs since 1930, there are many stocks that have had little or no price advance from the June lows and are selling considerably below their 1946 and 1937 highs. Not all of these stocks are attractive purchases. Some may continue to move in relatively narrow trading ranges, in order to build bases, but others have already built up potentially strong base patterns and are in a position to move ahead. Some patience may be required in issues of this type but many of them are dividend payers and selling at extremely high yields. It is this type of issue, together with the high yielding investment-type issues,that offer the best and safest purchases at this stage of the market. Subject to technical corrections,I believe that this market should continue to work higher and that the minimum objective on the industrial average is 225 with a more likely objective of 250-260. At 260 the Dow- Jones industrial averages would be selling at prices to yield around 5 and at about 13 times earnings. This would appear to be a fairly normal ratio. EDMUND W, TABELL April 21, 1950 WALSTON, HOFFMAN & GOODWIN This memorandum I, not to be construed liS an offer or solicitation of offers to buy or sell any securities. From time to time Walston, Hoffr;olln & Good;in may have o!In Interest In some or all of the ,ecuritiel mentioned herein. The foregoing mllterial hal been prepared by us as a matter of Information only. It IS. based upon lnformlltlon believed reliable but not neceuo!Irily complete, is not guaranteed as o!Iccurate or final, end Is not Intended to foreclose Independent Inquiry.

Walston-Hoffman &, Goodwin SAN FRANCISCO, CALIF. NEW YORK, N. Y. PHILADELPHIA, PA. LOS ANGELES, CALIF. BAKERSFIELD BEVERLY HILLS EAST ORANGE, N. J. LONG BEACH MODESTO OAKLAND PASADENA SAN 01 EGO SAN JOSE SANTA ANA EUREKA FRESNO HAGERSTOWN, MD. HARRISBURG, PA. PITTSBURGH, PA. RIVERSIDE SACRAMENTO SEATTLE, WASH. STOCKTON VAllEJO TABELL'S MARKET LEnER 35 WALL STREET. NEW YORK 5, N. Y. Digby 0\-4141 HOTEL WALDORFASTORIA PLata 96860 This past week saw the market, apparently successfuly, withstand another testing of the intermediate resistance level which presently stands between 210 and 212 in the Dow-Jones industrials. Time and again over the past months the market has presented a very uneasy appearance on the tape accompanied by expectations of a sizeable reaction among traders. However, as we have often stated, this is primarily an investment bull market, accompanied by relatively little speculation – at least to date. Markets of this tyPe avoid excesses both on the upside and downside. The industrial average this past week penetrated down into the 210-212 res- istance and the wave of investment buying in high priced motors, steels, chemicals, etc., was very impressive. The natural selectivity of a major rising market is very much in evidence and it would perhaps be worthwhile at this point to reduce or eliminate investments in certain stocks that have reached important objectives. These issues can at best be expected to spend some time in reaccumulation and the funds obtained perhaps employed in other I'lell situated stocks that have not yet made major moves. Three stocks on our recommended list that are candidates for profit-taking at this time are AffiRICAN CYANAMID. This has had one of the most spectacular rises during the past year. We originally recommended its purchase in the 38-40 range and the stock closed tonight at 70. It has exceeded what seemed its probable objective – 64 – and may possibly work somewhat higher. However, percentagewise it seems unquestionable that the major part of its present uptrend has been completed. INTERTYPE. We originally recommended this around 25 and it has fully realized its first objective of 43-45. It has reacted somewhat from its high around 45 down to tonight's closing at 40 3/4. Would expect it to at best remain in this 40-45 area for some tie to come. EASTERN STAINLESS STEEL Was originally recommended around II. It has reached its first objective at 17-18. Tonight's closing is 16. There appears to be heavy resistance in the 17-21 area which would prob- ably retard its further progress for some time to come. Would suggest for reinvestment or additional investment at this time certain stocks on our recommended list which are still at attractive buying levels. Among these, SOUTHERN RAILWAY, which closed tonight at 37 1/8, and recently showed an excellent earnings statement, should eventually sell at much higher prices. The second railroad is SEABOARD AIR LINE which closed tonight at 26. Seaboard also is showing excellent. earnings and paying a 50 cent quarterly dividend. Its recent ability to reach 26 indicates the possibility of an eventual 38-40 for the stock. Also on our list is DISTILLERS-SEAGRAM which closed tonight at 21 and now indicates 23 followed by an eventual 32. The fourth candidate for purchase here is WESTERN AUTO SUPPLY. This has moved up somewhat recent- ly to tonight's clOSing of 50t. Its recent ability to penetrate the 47 level promises an eventual price in the 60-70 area. April 28, 1950 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN This memorandum Is not hayo an interest in some to or be all condrued as an of the securities offer or solicitation mentioned herein. of The offers to buy or sell any seurltte1. From time to foregoing material has been prepared by. us al a timmaetteWr lioisftolnn,foHromfaff'Yl'ann o&nlyGooIdt IS.inbameady upon informa.tion beileyed reliable but not necellarily complete, is not guaranteed as accurate or final, and IS not Intended to foreciol mdependent Inquiry. ,. .,,,-' d