.. 6 Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,'wld I OFFICES COAST TO COAST CONNECTfC BY DIRECT PRIVATE WIRE SYSTEM TAB Ell'S MARKET lEnER September 16, 1955 The market extended its gains during the week and the Dow-Jones indus- trial average reached a newall-time high at 485.73. This average is approach ing its short term objective of 490 and may need some consolidation. The 470 level should furnish near term support. The rail average pushed through a lOG of overhead supply to reach a fractional new high at 164.89 compared with the June high of 164.59. Perhaps a more decisive penetration is needed and this may occur either shortly or after a consolidation. An upside penetration would -indi-c-a-te -a pos-sef-bcle 172—-l'J9. i-f they– peFlet-rate, a safer trading opportunity than the industrials which have already advanced sharply. The market of the past week clearly illustrates the futility of paying too much attention to the various averages at this stage of the market pat- tern. Individual issues moved ahead sharply and the industrial average ad- vanced ten pOints and yet, from Monday to Thursday, the total number of daily declining stocks of 1860 almost equalled the daily number of advancing stocks of 1896. This, together with other breadth-of-the-market indications of waning upside momentum dictates the advisability of a rather cautionary attitude despite the seeming strength in the averages and spectacular runups in individual issues. It warrants a continuation of the policy of lightening commitments on strength in both overvalued and below average issues and confining purchases to seemingly undervaluei situations that are selling at realistic price to earnings ratios and are sl-owing reasonable yields and have strong technical patterns with a minimum dcwnside risk. Issues of this type are continually reviewed in this letter anJ remain suitable for longer term and intermediate term holding in capital appreciation accounts. In investment accounts, there is no need to disturb sound holdings. The long term trend of prices is still toward higher levels. In trading accounts, the situation is different. This stage then of the omr agrokeota;ifsOratutrrfae dtoer's paradise – handful of stocks that are really moving. – , f I GENERAL RAILVIAY SIGNAL StatistiCS Perhaps more than any other industry Current Market Current Dividend Current Yield Funded Debt & Pfd. Common Stock Net Per Share,1955 Net Per Share,1954 59 2.50 4.2 None 337,587 shs. 3.50 (E) 3.25 the railroads of America are faced with a problem of cost control. Competition from other carriers,federal regulation and other factors have necessitated comprehensive programs on the part of rail carriers to trim operating expenses and protect thinning profit margins. Heretofore, the major effort in this Sales, 1955 Sales, 1954 17,000,000 (E) 15,990,000 direction has been dieselization,the replacement of antiquated steam loco motives by up-to-date diesel equip- Market Range,1955-52 60i' – 25 ment. On most of the country's major Preferred issue to December 31, -1955. be redeemed – – carriers, these programs are either complete or well on their way. Now — the raii-men are beginning to slash at another item — track maintenance One of the best ways of cutting down maintenance of way is to eliminat surplus track — by making one track do the work of two, or two do the work of three or four. New elec tronic developments, similar to those whicr,' have revolutionized the business machine industry, are making this possible. Most important of these new developments is CTC, Centralized Traffic Control. Under this system, one man can keep watch over miles of track, with the movement of each train plotted on an elect-ronic board in front of him. By pressing a button he can accuate switches and signals many miles away and arrange for two high-speed trains approaching each other on a single track to pass on a high-speed siding without either train having to stop. By means of this system it often is possible to make one track -2- and a few sidings handle the same amount of traffic that two tracks handled before. The savings provided by CTC are often astronomical. If it is installed when track is due to be replaced, replacement costs of 30,000 per mile of track can be eliminated. In an average case, maintenance of one track instead of two may save a railroad 2000 to 3000 annually per mile. From this it should be obvious that CTC can pay for itself in many cases within a very short while. In addition to CTC, new electronic signalling and switching equipment can help railroads to effect great savings in yard costs, enabling one or – .,,– -twG,,–men-tG-Har.ld 1e-a–l-lsw-it G-h.;ingand-c-las s 1-fy-ing-on,., Itis also possible that CTC can be applied to industrial plani traffic controls and airport and highway controls. All electronic switching devices made in this country are manufactured by two companies Union Switch & Signal and General Railway Signal, which cross-license all patents between each other. Union is a wholly-owned subsidiary of viestinghouse Airbrake and accounts for a fourth of Irlestinghouse I s business. General Railway Signal almost entirely is in the switching business and the 337,000 shares of common will be direct beneficiaries of any growth in demand for electronic signalling devices. On this basis the shares of General Railway Signal seem to have attraction for long-term holding. General Railway Signal was established in 1889 and has long been a major producer of railway signalling equipment. Reported earnings over the past five years have averaged 3.73 with last year, as could be expected due to railroad results, a poor one at 3.25. However, there is a strong indication that the downward earnings trend has reversed itself. For the second quarter of 1955 the company showed 93 cents a share, an annual rate of 3.72. Backlog has increased to a point 65 above the end of 1954 and this should begin to manifest itself in earnings shortly. With railway Signal demand still in its infancy, the future looks extremely promising. Aa-jor-newerd-ero-was- one- road amounti1g to million. New York Central will remove two of the four main tracks in 185 miles between Buffalo and Cleveland and install CTC. This may set the stage for Similar elimination by major roads. Another plus factor is that reported earnings during the years 19511953 do not tend to show the true earning power of the company. During those years the company operated at a huge profit margin and was subject to heavy excess profits tax. Reported earnings for the three years were 11.21 or an average of 3.73 per share. Had the present 52 tax rate then beenin effect, per share earnings would have averaged close to 6.00. It can thus be inferred that, given an increase in demand,such as that foreseen, earning power can be increased conSiderably due to widening profit margins. Furthermore, the company will, in all probability, be 'able to increase production without a dollar spent on additional plant. It is now operating on a full one-shift capacity. vlere demand to justify it, it would be very easy to add another shift. With demand increasing and no capital expenditures called for, all benefits accruing from increased sales will pass on directly to the common stockholder since there is no debt or preferred. This,together with the small commoncapi talization,iso.f great benefitto th,……commonholder. – The lack of any capital reqUirements, together with an excell'ent working capital position, insures the continuance of the high 60 payout ratio. With the outlook pointing to generous future earnings and dividends,plus stable and continuing demand,General Railway Signal appears to have exceptionally attractive long-term prospects. The technical pattern is very constructive with a long-term 140-150 indicated. Over the near-term, the objective appears to be 64-69. There is support around 50-48, thus offering a small downside risk with a huge upside potential. This recommendation, as are all the recommendations of this letter, is for long-term holding and not necessarily for trading purchases. ; EDMUND vi. Tf,BELL VlAL.3TON & CO.

Walston 5- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA.' LOS ANGELES SAN FRANCISCO LUGANO ISw,hed.,d) OffiCES COAST TO COAST CONNECTEC BY OIRECT PRIVATE WIRE SYSteM EDMUND W. TABELL INSTITUTIONAL LETTER September 21,1955 On the constructive side of the market picture is the continuing good business news. This will result in some excellent third-quarter and full- year earnings reports and a considerable number of dividend increases and year-end extras. Earnings on the Dow-Jones industrials are estimated at 36-38 and dividend payout at 20-21. These figures compare with 28,40 earnings in 1954 and dividends of 17.47. These are increases of 34 and 20 for a outs will truly also i remarkable year ncrease sharply lyovreirse1.95R4.ail and utility earnings and pay- The important question,of course, is whether or not the market has sub- stantially discounted the excellent business conditions and earnings pow pre- vailing. At estimated earnings of 38 and a dividend payment of 21, the in- dustrial average at 485 is selling at a price-to-earnings ratio of 13.6 to yield 4.6. These figures are unfavorable when compared to the PiE .ratio of 7.7 and a yield of 6.9 atthe 1950 lows, but relatively favorable when com- pared with 18.5 dustrials today PIE are and 3.4 yield a selling at about t the the sa1m9e45P-1IE946rahtiioghys . i In eld fact, the inas they were at 408 at the beginning of the year in anticipation of first quarter earnings. It is only when we move away from the bUSiness background and move into action that we begin to see signs that indicate that a certain amount of caution is necessary. Breadth of the market charts continue to indicate waning upside momentum. Market Action Inc., a service that special- izes in this type of technical work, has a series of eleven weekly grap.hs of breadth of the market. Only one of these graphs, the action of the Dow- Jones industrial itself is favorable on a long term basiS. The others are either doubtful or unfavorable. They include work on such things as issues traded, highs and lows, upside and downside volume, advancing and declining stocks, odd lot trading, member trading, etc. The trend of other sectors of the market also indicates caution. The rail average, as contrasted with the industrials, has not reached a decisive new high since June. However, this average is close enough to the 165 peak to decisively penetrate into new high territory and indicate 172-179. The London industrial average has been acting poorly also and it is ten weeks since it reached its high of above 220. It is now around the recent low of 194T. he bond market has been acting poorly and has been in a downtrend since last year. This ultimately should have an effect on the stock market. The following excerpt from a recent Investment Report published by Arthur Wiesenberger & Co. on The Three Step and Stumble Rule is very interesting. The rule states Whenever three successive rises occur in anyone of the three rates set by the monetary. authorities the investor should beware, for some time there- after the stock market is likely to suffer a substantial, perhaps serious setback. There has been no exception to this rule in the whole history of the stock market since the establishment of our Federal Reserve System, Today, modern governments attempt to control the supply and price of credit in an effort to keep their economies on an even keel. In this country the monetary authorities endeavor to control credit'(apart from pronounce- ments and propaganda) through 'open market operations' – that is by buying or selling bonds, notes and/or bills – and by fixing three rates (1) the margin required for stock purchases, (2) the amount of reserves the member banks must carry with the Federal Reserve bankS and (3) the rate at which member banks can rediscount paper at the Federal Reserve banks. The 'Three Step and Stumble Rule' simply means that when and as a period of bUSiness expansion and stock market rise has lasted sufficiently long, and gone suf- ficiently far, for the monetary authorities to make three successive moves to alter credit conditions, some kind of reversal is in the offing. The significant point is that now, for the first time in 7 years, we have had 3 upward steps in the rediscount rate. Does that, in accordance wi th the rule, portend trouble for the market lve are inc lined to think so – but probably not immediately. There is a very definite lag in the effect of banking credit and monetary conditions on the stock market. This lag has varied all the way from 2 months in 1920 to 14 months in 1929. While there is no sign of any immediate vulnerabilitY,I continue to ad- lv\lorcicaete raiseca,Iutiloouoks afottritaudpeo.sAsifbteler rsoemtuernfutrothethre time and possiblYosom level beI'o''F' e t hfue r ther lnnO a.u TIr;s If nct reS1Jme ri (ofIJtruea offer or so.lldt,',on of offers to buy or lell F rl't'ttIn6JlitJPfJd-fN1'.I.!..fasWalllomndU&erCoof, oflrTf.o!IrIImV aptlloHnIMornlytherHeofI,I may have an Int'rut In some or all of the SeCUrities me,ntloned herein The m Inr.ot Intended to foreclose Independent InQUirY upon information believed reliable but not necenar,iy complete, 15 not guar.!n ted on -VV-filJlJ.L V 0 0; v V. .1 -……-…………..

Walston &- Co. NEW YORK NEW YORK STOCK EXCHANGE ANO OTHER LEADING STOCK AND PHILADELPHIA LOS ANGELES SAN FRANCISCO OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE wIRe EXCHANGES LUGANO ISw,t..,IdJ TABELL'S MARKET LEnER September-23, 1955 The rails, after failing in last week's attempt to decisively penetrate the June high of 164.59, are again in the process of attempting an upside breakthrough. Friday's high was 164.65. Ability to decisively penetrate the over five-month trading area in the rail average would indicate an upside possibility of 172-179. The Dow-Jones industrial average reached its short term upside objective of 490 at the week' high of 489.94 and while there is no indication of an immediate top, some consolidation may be needed. The 470 level is a strong support level. The rails, if they penetrate upside, would seem to offer better near term profit possibilities than the indus- 'is -possible that–the–rndustrial- average-mi'ght hord-in' roughry – – the 490-470 range for a time while the backward rails catch up. The over-all pattern after that possible occurrence would then give some indication of the direction of the next move. Of course, all discussion of averages is academic. Particularly in short-term trends, individual stocks even in the same group will have diverse price action. The intermediate pattern remains the same. While there is no indication of immediate vulnerability, many individual issues have reached upside ob- jectives and I would continue a policy of lightening capital appreciation accounts on strength when upside objectives are reached. Below is a summary of my recommended list. While some of these issues have advanced sharply since our last compilation, I suggest continued hold- ing as the ultimate upside objectives are considerably above current levels and there are support points not too far below the market. In cases where two objectives are mentioned, the lower objective is the nearer term poten- tial followed by a resting period and possible attainment of the higher ob- jective over the longer term. Present Price Price Recom. Yield Aevice Alleghany Corp. 10 – A-n-e-gheny-Lutnum—-5-S— Allied Stores 61 American Chain 46 Amer.Potash B 98 Assoc.Dry Goods 35 Barber Oil Black & Decker Calgary & Edmonton 55 77 17 Celanese 24 Chain Belt 55 Cities Service 62 Coca-Cola 135 Colgate Palm. 58 Cornell Dubilier 33 Cutler Hammer 72 Dow Chemical 57 Dresser Ind. 48 Eagle Picher 38 Gen'l Rwy.Signal 62 Hall Printing 24 Hewitt-Robins Joy Mfg. — 39 – 61 Magma Copper 115 Monsanto Chern. 48 Montana-Dakota Util. 29 Pacific Petroleum 12 Pan-Amero World Air 19 Raybestos Man. 58 Robertshaw-Fulton 30 Simmons Co. 47 Sinclair Oil 58 United Fruit 56 Western Auto Yale & Towne 29 68 3 3/4 38 30-33 40 26 59 39 16 31-37 30-35 38 122 60 21-22 57 38-40 33 22 59 16-17 25-30 47 75 31 26 11 11-13 42 21 36 46 47-50 25 45 – -HH(oilrda-fCfo5rI'11J2s.-1S7u. ppS-uoprtp-oartt aSTt '850. . 5.0 Hold for 98. Support at 57-55. 5.4 Hold for income. Support at 41-39 2.2 Hold for 120-150.Support at 88-85 5.1 Hold for 45-65.Support at 33-31. 3.6 Hold for 80-115. Buy at market. 2.6 Hold for 135. Support at 68-64. – Buy for long term speculation. 2.2 Hold for 34.Support at 22-20. 4.6 Hold for long term 78. Support at 3.2 Hold for 81. Support at 55. 3.7 Hold for 200. Support at 130-125. 4.3 Hold for 73-100.Support at 54-50. 6.1 Hold for income.Support at 30-27. 4.2 Hold for 120-140.Support at 65-60 1.8 Hold for growth.Support at 54-50. 5.2 Hold for 70-85.Support,at 43-41. 4.7 Hold for 61 to 77.Support at 33-3 4.0 Hold for 140-150.SuPP9rt at 50-48 5.0 Hold for income.Support at 20. 5.1 Hold for 85.Support at 35-33. 4.1 –Hold -for 75150Support at 55-50. – Hold for 200.Support at 100-90. 2.1 Hold for growth.Buy at 43-40. 3.5 Hold for 45-60.Support at 28-25. 0.8 Buy as long term speculation. 4.2 Hold for 27-45.Support at 18-17. 5.2 Hold for income.Suppprt at 53-51. 5.0 Hold for 40-46.Suppo'rt at 28-26. 6.3 Hold for 71-96.Suppqrt at 43-40. 4.5 Hold for 65-89.Suppdrt at 55-52. 5.3 Hold for 86.supportfat 55-52. 5.5 Hold for income.Support at 28-27. 4.4 Hold for 105.Support at 60. ED/lUff') 'oN. 'f1'!rELL J – I \, J

Walston &- Co. I MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK ANO COt-iMODITY EXCHANGES I NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw …Id) OFFices COAST TO COAST CONNECHC BY OIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER September 30, 1955 The market, in one day, lost almost the entire August-September advanc from 445.67 to 489.94 that took thirty-one days to accomplish. Then, in a quick two-day reversal, it regained the normal two-thirds retracement to rally back to 475.13. The rails also almost covered the complete range of a five-month trading area between 165 and 150 in one day. Thus, in three days, the market completed a full cycle that usually take a month or two to acc,omplish,..Both -averages at Monday' of' !t!J6.74 and 150.67 held above the August lows. There are apparently three courbes now open to the market. (1) The market could advance to a new high in both averages shortly. (2) The market could hold in a trading area bounded roughly by the August lows and the September highs for a long period of time and break out on the upside. (3) The market could shortly penetrate the August lows. The first course might result in an advance to about the 500 level. It seems difficult to envision an advance much higher than that on the basis of the present technical patterns. It might also result in a deeply overbought condition. The second course would be the most constructive one. It would result in building up re-accumulation areas that would result in eventually higher price levels. There would be no indication of the upside objective of such a pattern until it was completed, but it would undoubtedly indicate con- siderably higher levels. The third course would result in a price decline to the 420-400 level in the industrials and 125-120 in the rails. Of course, this pattern could broaden before the lower levels. !'!oyld downside penetration , occurs. In that event, some'w-hat Just which one of the three patterns occurs is, of course, not yet certain. However, a check with other types of technical work indicates that the market has shown signs of waning upSide momentum for quite some time. For example, while industrial average was reaching successively new highs, the volume has been steadily declining. This is also true of new highs and advances and declines. In fact, before this week's break, at the high of the market, there were almost as many stocks declining as ad- vancing on a ten-week movi'Dg total. Market Action, Inc., a service that specializes in breadth-of-the-market action, has a series of eleven graphs based on this type of technical work. Its September 23rd compila- tion showed only one graph favorable with three unfavorable and seven doubtful. Of course, these indicators could improve and change the picture at a later date, but present action dictates a certain amount of caution. The fact that the possible thirty-pdint potential advance in the market is countered by a potential seventy-point decline makes it ap- parent that the investment odds are relatively unfavorable at this stage of the market pattern. This letter has been advising lightening accounts on strength and continues to do so. Would also advise switching out of issues with unfavorable investment odds into Situations with- more favorable pat' terns such as the issues in my recommended list. This list, which was reviewed last week, contains only issues that, over the longer term, have a wide upside potential and a relatively minor dO\mside potential. EDMUND 11. TABELL \!!f,LSTON & CO. 0, I II I i I I ! .Lua..

Walston 5- Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,t…l.nd I OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM EDMUND W. TABELL INSTITUTIONAL LETTER October 5, 1955 In the space of six trading days, the market has completed a full cycle that would normally take one to two months to accomplish. The initial 43.20 decline in the Dow-Jones industrial average from the 489.94 intraday high of Friday, September 23rd, to the 446.74 low of Monday, September 26th, was completed in one day. Only two days were needed to bring about the usual two-thirds retDacement to the September 28th high of 475.13 and only three more days were needed to complete the first testing of the lows at the October 3rd low of 454.85. It is expected that price action will be at a more leisurely pace from here on. The price of a common stock is mainly determined by four factors. These four factors are earnings, dividends, money rates and a very intangible factor called investor sentiment. It is this last factor that causes the industrial average to sell at fifteen times earnings at one time and at seven times earnings at another. It is too early to assess just what damage has been done to investor sentiment by President Eisenhower's unfortunate illness and the probability that he apparently will not run for a second term. Certainly the initial market reaction was violent but, as time goes on, a calmer view may be taken. Business continues at a high level and excellent third quarter and yearly earnings reports are expected together with a large number of year-end extra dividends. Whether these favorable elements in the investment picture will be offset by a possible unfavorable investor psycholocy is still uncertain. Price behavior or technical patterns furnish the best clue to investor sentiment in a given time period. That is why I maintain a very extensive portfoliO of technical work in an attempt to anticipate price movements that might eventually be brought about by a drastic change in investor sentiment. The technical pattern of the market was potentially vulnerable before the unexpected news development of ten days ago. Some other unexpected news would have eventually caused a decline even if the President's ill- ness had not occurred. Now that the decline and the subsequent retracement has taken place, the market is still potentially vulnerable. Recent action of the market has formed a pattern that may turn out to be what the techni- cians call a head and shoulders top. The left shoulder was formed at the July high of 471.73, the head at the September high of 489.94 and the right shoulder at last week's high of 475.13. This right shoulder may take some time to broaden. The left shoulder consumed a time period almost eight weeks. This vulnerable pattern would be confirmed by a decline below the August and September lows of 445.67 and 446.74. In assessing the chances that such a downside breakout will occur, we must turn to other technical gauges of breadth-of-the-market action such as volume, advances and declines, new highs and lows, odd lot trading, and so on. Without going into detail, these indicators are mainly unfavor- able or extremely doubtful and it would appear that the technical odds favor a downside breakout within the next month or so. If such a breakout occurs, the downside objectives would be 430-420 followed by a possible 400-385. Comparable figures in the rail average would be 140-135 followed by a possible If the lower figures are reached, it would mean an erasure of the entire 1955 advance and create an excellent long term buying level. Of course, this potential pattern could change. The most constructive development would be the ability of the average to hold above 445 and work in a trading range between 445 and possibly 480 or so for six months or more. This would form a re-accumulation pattern that would eventually indicate substantially higher levels. Such a development is pOSSible, but the technical indi- cators appear to favor a downside penetration of the August low in the not too distance future. EDMUND If. TABELL W.LSTON & CO.

Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO Swa…l.,d I OffiCES COAST TO COAST COt..lNECTfi BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lETTER October 7, 1955 There is nothing new in the technical market pattern. Volume has falle to the level prevailing before the unfortunate news of President Eisenhower' illness. The important pOints to watch are the hugust intra-day lows of 445.67 on the Dow-Jones industrials and 150.14 on the rails. Ability to hold above these levels followed by a long trading area would be constructive. A downside breakout would indicate 430-420 followed by a possible 400-385 in the industrials and 140-135 followed by a possible 125-120 in the rails. There are four factors which make up stock prices, and the price of a given stOCk-at any time-represents the first three of these elements,namely earnings, dividends and money rates are to a great extent,absolutely measurable and if these were the only factors affecting price, price fluctuation would be far less violent than is actuallv the case. It is the fourth factor which makes for a great deal of wide fluctuations. This factor is investor confidence. Investor confidence can represent the difference between a stock's selling at ten times earnings and twenty times earnings. It explains the fact that although corporate earnings generally rose during the period 19461949, the market declined. And it explains to a great extent the bull market of the past year. A dramatic demonstration of the impor-t2nce of investor confidence was afforded by the terrific one-day break in the market following the news of President Eisenhower's Sickness two weeks ago. The public was supremely confident of the political future with the continuance of a Republican administration. When this prop was suddenly removed, prices declined sharply. The most important lesson learned from the market breakwas the great extent to which prices depended on investor confidence of the continuance ofa favorable investment climate rather than on already demonstrated earnings. A further example of this fact is provided by the following table showing the Dow-Jones industrial average and seven leading stocks. The first two e-o'\umns show the-a-v-era-ge-pri-ee–to-earn-ing-s, ra-t-i-es – for-19S4, 0nlya year ago, and the average over the past ten years. The third column estimates 1955 earnings. The fourth column shows the current price and the following two columns show what the price would be if these earnings were capitalized at 1954 and at ten-year average multiples. 1954 lO-Yr. 1955 lve.PIS Ave.P/E Est. Ratio Ratio Earn. Current Price Price At 1954 Ratio Price At 10-Year Ratio Alum.Co.of Amer. 17.4 11.2 3.40 78 59 38 Crown Zeller. 13.3 7.3 3.00 56 40 22 Du Pont 18.0 16.9 9.00 215 162 152 General Elec. General Motors 16.5 8.4 12.6 8.1 2.60 49 13.00 138 43 109 33 105 Goodrich, B.F. 11.0 65 5.50 72 60 36 U. S. Steel 7.9 6.8 6.00 57 49 41 Dow-Jones Ind.Av. 11.9 9.9 36.00 460 428 356 It can thus be seen that,despite the favorable bUSiness picture, stocks COULD sell at lower prices than they are now selling. In many cases, notably Aloca,Crown Zellerbach and Goodrich in the table above, higher PIE ratios than the 10-year average are undoubtedly justified due to improving quality. Still, confidence plays a large part high multiples . It is to measure investor confidence that this office maintains a large portfoliO of technical charts and graphs. When these charts indicate, as they do at this time, that investment odds over the nearer term are relatively unfavorable, the investor should use periods of strength to dispose of heavily exploited commitments and switch to less exploited ones. Examples of such unexploited stocks are shown in the table below.Equally good examples could be drawn from some of the issues in our recommended list. AAmbbeor.tTt oLbaacbc. o 290..95 1161..45 72..0600 7416 6539 8430 Coca-Cola 19.2 20.2 6.50 125 124 143 Confidence is changeable as the wind and it should be recognized as being a large component of today's stock prices . ,…. , Wi

Walston &Co. MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK A.ND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO ISw,Idi OFFICES COAST TO COAST CONNECTfG IIV DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER October 14, 1955 Both averages declined below August levels and reached new low terri tory on Tuesday at 433.19 on the Dow-Jones Industrials and 144.07 on the Rai average. A normal technical retracement of the forty-two point decline from the October recovery high of 475 would bring the industrial average back to 455-460 area. Thursday's intra day high was 451.30. dicates The .downside p that -the -trena ;en'wehtriachtiohnas of the August been -up since lows by bothavragesn,i)win;. 1953, is now dowl1- The possibility that this might happen is why this letter turned cautious and advised taking profits on strength over the past couple months. The big questions at current levels are First, is the decline abou over; and second, should there now be any change in investment policy The answer to these questions can best be found by drawing a parallel to the action of the market back in 1946. In August of that year the market broke from its May high of 213.36 to about 185, thus signalling a Dow Theory bear market with a decline of about 13. This action was roughly paralleled by the 12 decline from the high of 489.94 to Tuesday's lows. In 1946, the market declined further to a low of around 160, thus completing a 20 decline. Roughly, parallel action in the current market would be a decline to about 390. This is a distinct possibility over a period of time, although some good support can be expected at around the 430-420 level. For a clue as to investment policy, however, the 1946 market must be examined a little more closely. A good example of what may be expected can be afforded by showing the 1946-1949 action of two stocks, Monsanto Chemical and Mack Truck. 1946 High Monsanto Chemical – -21 Mack Truck 38 3/8 1946 Low –l) 19 1/4 1947 High 21-1/4 30 1949 Low 9 1/2 – Mack Truck in 1946 had attracted a great deal of speculative in- terest and shot up sharply in value. At its 1946 low it had lost almost half of its value. In 1947, better than half the loss was regained, but by 1949 the stock had sunk to half the 1946 low and a quarter of the 1946 high. . Monsanto, on the other hand, while it declined almost as much as Mack in 1946, had recovered almost all its loss in 1947 and at the 1949 low was still considerably above the 1946 low. It would seem that the com- parative price action of these two stockS might afford a clue as to what may be expected over the next year or so and as to what policy the in- vestor should follow. The investor who purchases well-situated stocks offering sound value on any further declines in the market will be in a similar position to the 1946 buyer of Monsanto around 13 or 14. The value of his stock will fluctuate and he cannot perhaps expect any dynamic rise,but in the long run he will have made a sound investment. The buyer who attempts to buy over-priced speculative securities at current price levels in the hope he is picking up a bargain will undoubtedly find him- self asbadly paid in the-'20's- for Mack-Truck in late 1946. Investor policy then should be as follows Retain the cash reserve built up. Continue to utilize strength to dispose of overpriced and highly speculative holdings. During periods of weakness gradually use cash reserve to purchase sound, high quality common stocks offering good value. Although the dynamic price action of 1953-1955 may not be duplicated for some time, the investor will have reasonable safety plus a fair return on capital. EDMUND W. T;,BELL vlJ',LSTON & CO.

Walston &- Co. MEMBERS NEW VORK STOCK eXCHANGE AND OTHER LEADING STOCK AND COMMODITY eXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw,'wl..d I OfFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM TABEll'S MARKET lEnER October 21, 1955 The market is showing favorable near term action and, with a continuance of excel-lent third-quarter earnings reports, could move somewhat higher to the 465-475 level despite the fact that it has now regained the normal twothirds retracement of the forty-two point decline from the recovery high of 475 to the low of 433.19. Starting in about mid-November, tax loss selling might start entering the picture and cause the usual irregularity and cross currents. Such selling was almost totally absent last year, but could be more important this year. ht the recent lOWS, more than half the listed . -issues weresel.ling mOI'e below.the 1955 – . ' As usual, individual issues will move quite independently of the general market. In our recommended list there are many issues that appear to have support levels quite close to the market and upside potentials of 100 or more. Long term investors should base their buying decisions on the action of these individual stocks and ignore the action of the general marke Below is a summary of my recommended list. vlhile some of these issues have advanced sharply since our original recommendation, I suggest continued holding as the ultimate upside objectives are considerably above current levels and there are support points not too far below the market. In cases where two objectives are mentioned, the lower objective is the nearer term potential followed by a resting period and possible attainment of the higher objective over the longer term. Present !rice Alleghany Corp. Allegheny Ludlum (.llied Stores j,merican Chain 9 56 57 42 Amer.Potash B Assoc.Dry Goods .Bar-ber .0i.L Black &Decker Calgary & Edmonton 92 – 5331-. 3165 Celanese 21 Chain Belt Cities Service Coca-Cora 53 56 126 Colgate-alm. Cornell Dubilier Cutler Hammer 57 33 70 Dow Chemical Dresser Ind. Eagle Picher GeniI Rwy.Signal Hall rinting Hewi t t-Robins Joy Mfg. Magma Copper Monsanto Chemical 53 47 39 2523 37 58 98 46 Mont.Dakota Util. 26 acific etroleum 12 an-Amer.World Air. 18 Raybestos-Man. – 56 Robertshaw-Fulton 28 Sil1'mons Co. 44 Sinclair Oil United Fruit 56 54 Western Auto Yale & Towne 30 61 Price Recom. 3 3/4 33-30 3830-33 40 26 59 3196 3137 30-35 38 122 60 21-22 57 38-40 3223 51617 25-30 47 75 31 26 H- 11-13 42 21 36 417 47-50 25 45 Yield f,dvice Objective 12-17.Support at 4.3 Objective 85. Support at 65.03 2.7 55 -3-9 2.9 0.6 2.3 4.7 3.6 4.0 4.4 6.1 4.3 1.9 5.3 4.6 4.7 6.4 5.4 4.3 2.2 03.89 4.5 5-.4 5.4 6.8 5.4 5.6 5.3 4.9 Objective 98. Support at Hold for Objectiv i e ncome.Support at 120-150.Support a4t 1 t 9. Support at 32-30. — ObJ-eet.80-H5-. Support at-50-4 Object.135.Support at 32-30. Buy for long term specuration. Object.34.Support at 20-18. Object.78.Support at Object.81. Support at 52-58. Object. 280.Support at 125-TIG Object 73-100.Support at 54-5 Hold for il'tcome.Support Object.120-140.Support at 65-j( Hold for growth. Support at 52-pi Object.70-85.Support at 4240. Object.61-77.Support at 36-33. Object.140-150.Support at 50-1 8 Hold for income.Support-at 20. Object.85.Support at 35-33. Object.75-150.Support at 54-5P Object.200.Support at 90. Hold for growth.Buy 'at 43-40. Object.45-60.Support at 26-24. Buy as long term speculatian. . Object.27-45.Support at 1716. – Hard for 'income Support Object.40-46.Support at 27-25. Object.7196.Support at Object.65-89.Support at 53-50. Object.86.Support at 53-52. Hold for income.Support 28-27. Object.l05.Support at 58-55. EDMUND W. T!iBELL WALSTON & CO.

I r' ; Walston &Co. — —– MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK AND COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGELES SAN FRANCISCO LUGANO (Sw;I,Id) OFFICES COAST TO COAST CONNECTEC BY DIRECT PRIVATE WIRE SYSTEM EDMUND W. TABELL INSTITUTIONAL LETTER October 24, 1955 Technical action has improved somewhat over the past week,helped by the first batch of third-quarter earnings reports and a number of dividend increases. Quarterly earnings, as expected, mostly will be favorable abd will continue to appear until mid-November. The market should continue to show advancing tendencies for the next several weeks. Some of our technical .indicators of volume are beginning to show signs that the decline is losing momentum. On the recent decline, the total downside volume of both the ten and twenty-five week graphs of Market Action, Inc. has failed to exceed the downside volume of the March, May and August declines. This action could change, but until it does, it must be construed as at least negatively favorable. It is possible that the market could rally back to the 465-475 level on the industrials. The rally objective on the rails is not quite as clear. ( This memOfdndvm Ii not to be 051 offer or sohcltation of offers to buy or iell f …f 1JV1e,to a. a & Co matter oj or …ny pMtnef thl'reof, mform'llton only It II may have an ,Meresl In lome or all of the securltlel mellt.oned herein. The ma !ccurate or f,al, and 15 not In ended to foreclosE! Independent 'nq …y bdled upon Information believed rel'lble but not neetHanl.,. complete, . not 9ues.an ee .n

Walston &- Co. — MEMBERS NEW YORK STOCK EXCHANGE AND OTHER LEADING STOCK ANO COMMODITY EXCHANGES NEW YORK PHILADELPHIA LOS ANGElES SAN FRANCISCO LUGANO (Sw,I..d) OFFIces COAST TO COAST CONNECTE& 8'1' DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LEnER October 28, 1955 Statistics SIMMONS Current Market Current Dividend Current Yield 47 3.00 6.4 Long Term Debt Cum.Pfd. (100. Common 4,092,000 -.1 15,-000. . shs. 1,158,236 shs. Net Per Share,1955 (E) 5.00 Net Per Share,1954 4.18 Sales, 1955 (E) Sales, 1954 150,000,000 139,110,000 Mkt.Range 1955-45 49 5/8 – 22 COMPANY At the current stage of the market, with the near-term outlook for stcc prices at best uncertain, defensive type equities should be h primary interest to the investor. Among the characteristics of such equities are a high-well covered Y.J-eld, arecord,ofcontinuing earrings and a history of relatively stable price action. When such a record is coupled with excellent long term growth potential, the stock deserves serious consideration. On this basis, the common stock of Simmons Company would appear to have definite attraction at or just below current levels. At the present time, Simmons Company is the leading factor in the mattress and bedding field. Through the use of aggressive advertising and sales promotion it has been able to maintain this position for many years, and despite aggressive competition it still maintains its relative sales standing in the bedding market. The name Beautyrest has over the years become a synonym for quality in the mind of the average householder. In recent years, the company has been having particular success in building up the Hide-ABed sofa to a comparable trade position. Widely separated plants in the United States and Canada, backed up by an extensive warehousing chain afford the company decided advantages in distribution and merchandising. hS a consumer goods field, the bedding industry' is in a particularly good to expand over- the next' few -have tended- to show a close correlation with consumer disposable income and growth of population. Current, the 20-24 age group, the group which determines the rate of family formation and to a great extent the number of new customers for home furnishings, is at the lowest level in a number of years. As the population and the number of new families grows, Simmons will be in an excellent position to grow along with it. In addition to this growth, Simmons offers excellent defenSive charac teristics. Currently the stock sells around 47 to yield 6.4 on the 3.00 dividend rat,'. This dividend is covered by earnings which have averaged better than over' til, past ten years and at no time since 1946 have been lower than 4.10. During this period since 1946, Simmons has almost doubled its book value to close to 50, has reduced funded debt and built up a net working capital of close to 40 per share. Moreover, despite increased costs, profit margins have been well maintained over the past five years. Further opportunity for growth is found in the company's large interest in foreign markets. Over 20 of 1954 earnings came from the rapidly growing Canadian subsidiaries and the company has plants in many European countries and in South hmerica. h new plant in Venezuela has been a recent addition. Another plus factor is the improvement in the textile picture. Although the company's Simtex Mills textile division provides 'only 20 of net sales, its operating results have an important ef.fect on overall profits. Better profits from this source point to a rise in overall mar- gins. Sales for the first half of 1955 were around 72.5 million vs.66.5 million a year ago and earnings improved to 2.35 per common share vs. 1.45. Best available estimates indicate that the company will earn sub- stantially better than 5.00 vs. 4.18 in 1954. FrGm a technical point of view, the stock has a long-term indica- tion of 96 and an intermediate term objective of 71. Good support is encountered at 45-41 where the stock should be bought for high, growing income, minimum risk and long term capital gain. AltEr lamb EDMUND \I.TABELL i.iiil.iL……….na U&ta ..mQ