– – – – – – —- – – – – – Walston &()o. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMOOITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Swih.d,nd I OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER October 2, 1953 The market appears to have regained its equilibrium and the past week's session was an orderly one. Both averages continued their moderate .advance followed by a consolidating period later in the week. As I have said before, I believe that the market, despite the action of the averages, has been in a re-adjustment period for two and a half years. While the industrial average only reached a high of 264 in February, 1951, many individual groups and stocks reached their highs at that time ,and have been in a downtrend ever since. At each successive high in the averages of 277 and 281, reached in 1951 and 1952, and finally 295 in Janu- ary, 1943, more groups topped and joined the downtrend so that the average group has been in a decline for two years regardless of the fact that the averages only reached their high early this year. I expect this re-adjustment to continue for a while longer — possibly well into 1954. The technical pattern of individual issues suggests that while many have reached or approached buying levels, they may have to spend considerable time in rebuilding base patterns before a long term advance is . indicated. A number of groups still indicate moderately lower levels while other groups still remain in an uptrend. This selective pattern is not new. tt has been the pattern since February, 1951 and we may have to go through more of it before the base is formed for the broad advance that I expect will occur in the last five years of the present decade. In terms of the averages, if this means anything, the present inter- mediate term advance should continue for a while longer to possibly the 275-280 level. It might top out in November or early in the next year, de- pending on the amount of tax selling and shifting. It may be followed by another decline. Whether the average will actually fall below the 254.36 low of September is problematical and not too important. Certainly, indi- vidual issues will make new lows. However, from a technical point of view, it appears that even the issues that still indicate somewhat lower levels have witnessed the larger part of their decline. What type of stocks should be bought today Should you buy the blue chip issues that have suffered only a mild decline such as Union Carbide, 'General Electric, National Lead, International Paper, Scott Paper, duPont, . General Foods, etc There is something to be said for the purchase of this type of equity. They have shown excellent technical action and still indi- cate higher levels. They are the type of issues that are being bought by institutional investors and, of course, that is why they have shown above average price action. Furthermore, they will not face the problem of year- end tax selling. Or should you buY the issues of above quality but which have suffered rather severe declines from their highs Issues like Deere & Co., American Cyanamid, Food Machinery and American Viscose come to mind. There is some- thing to be said for this procedure too. From a technical point of view many issues of this type have reached or are approaching their downside objectives. Many of them are selling at historically low levels and, at present dividends, are offering good yields. However, on the unfavorable side, they may need considerable time to build up re-accumulation patterns. It appears that they should not be bought on strength but rather during periods of market decline. They could be subject to year-end tax selling and shifting. It appears that the wiser policy may be a combination of the two. Purchase of the better-grade equities on minor weakness is recommended. Would also use a portion of available funds to slowly pick up the more cyclical issues during periods of market weakness. Would also keep a por- tion of funds liquid to take advantage of possible later buying opportunities in issues of this type. , .' EDMUND W. TABELL WALSTON & CO. This may memor1ndum is not have an int.,.d in tsoobee construed or .,1,' of as an offer or solicitation of offers to buy or sell 'Iny securitlu From time to time th. lecuritiel me.ntioMd herein The fore90lng material has been prepared by,! Wahton & Co, as a matter of orrnfarnmy aphaorntnoernlytherIet oif b,lISed upon Informotlon believed reliable but not necenolHlly comPlete, IS not guaranteed as accurate or finol, and Ii not Intended to foreclose Independent inqLmy

— Walston &- Co .. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,t,ld I OFFICES COAST TO COAST CONNECTEI BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER October 9, 1953 I will be away on a bUSiness trip for the remainder of October. Quoted below are excerpts from an address which I made in Los Angeles on October 8th. Printed copies of this talk will be mailed to you next week THE COMING ADVANCE IN COMMON STOCKS With the various stock market averages recently reaching new low territory for the past two years, the title 'of my talk may seem to you a bit premature. However, I am not talking about tomorrow, next week or next month. I am talking about the next few years. I believe we are very near the start of a long term advance in the price of common stocks that will bring the various stock market avenages considerably above the levels reach- ed in 1929. Before this happens, there may be some f'urther irregularity si- milar to what we have witnessed over the past two and a half years. It is possible that the average will drop a bit below 250 to maybe 240, but that means little to the long term investor if the average reaches 500 or 600 over the next few yearso I believe it will. The next six or nine months may be the last opportunity to buy common stocks ,on the very favorable price to earnings and price to dividend ratios that prevail todayo Any further weakness may be the last buying opportunity because sometime in 1954 the market will start a rise that will carry considerably above 386 high of 1929. This prediction, like my 1948 prediction 'is based on a technical approach, but there is plenty of fundamental and statistical backing for it. The coming advance, in my opinion, will continue to be selective. In the earlier stages, the leaders will be the grO\th stocks !l.nd investment issues that were the leaders of the 1949-1952 rise. I would concentrate for the time being on stocks of companies in growth industries such as banks, electric utilities and natural gas. If I could buy only one chemical stock, I would buy Union Carbide. It covers a pretty wide segment of the chemical fieJd and is the second largest company in the industry, The following better-grade growth issues seem to have appeal at present price levels, both from a fundamental and technical approach. They are Bendix AViation, International Paper, National Lead, Aluminium, Ltd., Pfizer, American Viscose and Food Machinery. Some of these issues have had a rather sizeable price correction and are near reasonable buying Jevels for long term holding. There is not much time left to discuss the newer and more speculative growth industries. Some of these could be quite dynamic. There is plenty of romance in such industries as titanium, electronics, air-conditioning, atom- ic energy, hydraulics, powdered metals, helicopters, rare metals, glass ibers, gas turbines, automatic controls, ethical drugs, alloys, aluminum, detergents, pipelines, to mention Just a few industries. To mention a few individual stocks that are all speculative but have excellent potentials, I like Beckman Instruments, Greer Hydraulics, Piasecki Helicopter, Interpro- vincial Pipe ine, North Americ&n Aviation, Fansteel, Servo-mechanisms, Virginia-Carolina Chemical, Gustin-Bacon, Tracerlab and Gray Manufacturing. The long term technical pattern of the stock market is favorable. I believe the market is less vulnerable at the moment than at any time in the past two years. To the holder of the average stock, rather than the stock market averages, we have been in a bear market since 1951. I believe we are much nearer the end of this readjustment period than the start.After it is ended, I expect a much higher level of equity prices for a number of years. The next few months may be the last opportunity to buy common stocks at the favorable price to earnings and price to dividend ratios available today. There mayor may not be some further irregularity, but to the long term investor it will make little difference if he buys at 260 or 250 or 240 if the market, several years from now, reaches 500 or 600. I believe it will. Let's stop watching the tape and the averages and concentrate on buy- ing selected growth equities at the favorable prices and yields available today. EDMUND W. TABELL , (Written in Los Angeles,Calif.) WALSTON & CO. This may memorandum is not to be have a Inhones! in lome construed or all of as an offer or solicitation of offen to the IIcurities mentionec! herell! The buy or 11111 lIny securities From time to time 'ore90in9 material has been prepared by us Wo!II11on & Co, as a matter of oInr foarnmy atpioanrtnoernlytherIet ofi; based upon InformatIon believed reliable but not necenatlly comp.ete. IS not Ciluaranteed as accurate or final, and is not Intended to foreclose Independent inqUiry

. OL 3 -'L.. .. . .;. — – I 30 t4.J!/I. . ' . .' f