Tabell’s Market Letter – April 03, 1958

Walston &- Co. —–Inc —– Mern ben New Y o,'k Stock El'change NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST CONNECTED BY DIRECT PRIVATE WIRE SYSTEM TABELL'S MARKET LETTER Fort Myers Beach, Florida, April 3,1958 The warm sands of a Florida beach far from the ring of the telephone make Ion range thinking much easier. This is particularly true when one considers what these sands were worth ten years ago and what they are worth today. In our investments as well as in our speculations we are often much more con- cerned about the nearer term outlook than we are in long range planning. The shorter and intermediate term fluctuations are important, but the great majority of really large stock market profits have been made by first judging the long term trend correctly and then uSing.the shorter-range m.ovements as a c9rollary t9 the.main.objective… The longer range trend of stock market prices, in my opinion, is toward higher levels. If this reasoning is correct, the main objective of the investor or long range speculator today is to slowly accumulate stocks in companies where the longer term out look favors continued growth and where prices are temporarily depressed by lower immediate earnings. I say that the longer range trend of prices is toward higher levels because of two main reasons. First, because the favorable longer-term trends of population growt , rising standards of living and new research products have produced a growing population with increasing desires and the ability to obtain these desires. These developments are fundamentally sound and while they probably were overdiscounted at the stock market highs of 1956 and 1957, the longer term trends in population, standard of living and research continue to indicate growth. The second reason is inflation. Whether we facts must be faced. In my opinion, facts indicate that a slow i i i continue. At times there will be slight temporary deflationary cks' e present, but the main trend is inflationary. Governmental po 'cies 'ate a certain extent by political reasons are partially responsible. nee finance a growing economy, .' –cIevelopmenf of new'markets in'und 'inorderto ob'tiiinou'r dePleted raw materials are other r on. t6itneet the challenge of Soviet Russia While e 0 ok for stock market prices is favorable, I do not anticipate any im t' te advance nor do I expect all stocks at a later date to participate in a oad market rise. There will be many stocks selling much lower ten years fro w, just as there are many stocks today selling much lower than ten years ago despr e the fact that the stock market averages have advanced more than 2000/0. I continue to look for a trading range for the balance of 1958 and probably into 1959. The Dow-Jones Industrials, now 440.50, will probably continue to range in about the 480-420 area and the Standard & Poor 500-Stock Index, now 41.48, will probably range in the 45-39 area. Best immediate price action will be shown by the consum er goods stocks like utilities, tobaccos, food chains, drugs, soft drinks, etc. The reason for their strength is ,obvious. The soft goods companies have shown in- creasing earnings in 1957 and will continue a favorable showing in 1958. Other groups are slowly basing out and, while 1958 earnings may still be in a declining trend, a reversal hoped for in 1958. Bugding papers, would, be among the groups in this category. The heavy industry groups probably will need a longer period of time to consolidate and base out and might in the meantime reach new low territory on unfavorable earnings reports. However, if the long term trend is toward higher levels, price weakness should be welcomed as an opportunity to buy sound, growth equities at attractive price levels. The next eighteen months may be the last opportunity to buy stocks on the present 525-415 range before they advance to a higher plateau. EDMUND W. TABELL WALSTON & CO. INC. Tlml tn!ll k('t lctt('T , .. not. nnd unner no is to be construcd IS, an afl'eT to sell or n sohCltahon to huy nny securItIes referred to hereIn The wfO! mahan (nnlnmcd n'll'w 15 not ,nmruntced liS to aCCUlIlC Of find the furnishIng- thereof IS not, find undel no clnumsutllcc,q to be construed as, n rcprChcnta ('Ill hy \\'nl'ltoll & Co lnc All expresSIOns of OPinIOn nrc IlllhJcct to \\lthout notlCe. Walston & Cu. IIIC, anti OITlcerll, Stockholders alld l'.llll'luycc'l iherc)f, )ulchn;e. sell and mny havc an interest III the mentIOned ht'IClIl ThiS markC't letter mtended and merely as a general, llIflmnl commcntllry II d,ll' to day mdrket news and not ns n complete Ad.htwllul ,nfolmatioll ,th respect to nny !'ccurlttCB referred to herem wlll bc fUIIII'.. h('lj IlPn rCIlllcst X 301