Tabell’s Market Letter – March 20, 1959

Walston &Co. —–Inc —– Members New York Stock Exchange 'fIt NEW YORK SAN FRANCISCC LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND ABROAD TABELL'S MARKET LETTER March 20, 1959 With apologies for subjecting the reader to guessing games, this letter would like to pose the following query What do these stocks have in common Aluminum Co. of America, Coca-Cola, DuPont, General Motors, International Nickel, International Paper Kennecott, Standard Oil of New Jersey, Westinghouse Electric, Union Pacific. The first obvious point of Similarity is that all the foregoing companies are leaders in their respect ive industries. The second point, which, at first glance, may not be so obvious is that, with the Dow-Jones Industrial average selling at 610 vs. the 1956-57 high of under 525, all of these stocks are selling well under their previous bull market peaks . This is nothing more than another. way of. t.hat the query, What is the market going to do is the'most fruitless of all investors' questions. The investor buys and sells stocks, not the market. The security analyst recommends stocks, not the market. It is the task of this letter, therefore, to recommend securities where value seems to exist. In 1948, the writer was lucky enough to predict that the Dow-Jones Industrial aver age would reach 500 by the mid-1950s. The prediction, however, would have proved wort less had it recommended United Shoe Machinery (then 52, now 51), or Underwood (then 45, now 28), as vehicles for participation in that growth. Another way of pointing out the same thing is by utilizing the supposition that the investor could buy the Dow-Jones Industrial average, and furthermore that he could ac- curately have predicted everyone of the thirteen major swings that have taken place from June, 1949, to date. On this basis, assuming the investor had bought at every bottom,and sold short at every top, he would have netted 78,000 on a 10,000 investment after pay- ment of taxes. Obviously, this would be impossible, Upssible in 1949,how ever, to have put 10,000 into Standard Oil of New Jerse T would be worth 55,000 after taxes, and an investment in I.B.M. bas' ould be worth 114,000. Theoretically, our investor could have a bit sophisticated. He mig t .. boughLStanc!arcLOilof N.J. m 1949, to Alcoa in-August 1954, in al Electric in January, 1952 DavifnflJUne-lll57, Corp. in December 1958. On that 00 mvested would be worth 619,700 after payment of all taxes. e still further, had he bought Dana Corp. in June 1949, switche a . e!-'in April 1953, to Lorillard in June 1957, and to Zenith in Sept b 9 w now have 3,665,000 after payment of taxes. In any case, he had a f i d n' rably better investment results by 'seeking out individua stock values than by ryi guess swings in the Dow-Jones Industrials. Nor is the st of different industries any substitute for the analysis of individua stocks. Again going back to 1949, it was possible to choose between three stocks in the Railroad industry selling at 18 per share, Pennsylvania, N. Y. Central, and Denver & Rio Grande Western. Pennsylvania is still selling at 18, N.Y.Central has advanced to 27, and Denver Rio Grande Western adjusted for a 500/0 stock dividend, and a three-for- one split, is now selling for the equivalent of 297. The same principle has held true in recent years. For example, both Wilson and Swift & Co. are now selling around 38. At their respective 1956 highs, Wilson was at 17, and Swift was at 50, Northwest and Easte Airlines both sell around 42. At their 1956 highs, Northwest was at 17 and Eastern at 57 All of the above statistics are valueless unless their current lesson is heeded. This lesson is a very simple one, it is that the investor should cease worrying about the rapidity of the markeFrise and the possibilityof-a correction, and,turn,his attention to indivldual stock values where they exist. I ended last week's letter by saying that the upside potentials of all of the issues in my recommended list could be found m my Technical Analysis of 1,100 Common Stocks, and was available to clients in all Walston offices. What I meant was that it is available for perusal by Walston clients. Our representatives only have one copy. EDMUND W. TABELL WALSTON & CO. INC. '!1rket letter III not, lind under no circum;tnnCf! 1; to be Cf)fllltrued nil, an offer to hell or II sohclwtlOn to buy any referred to herelll The lIlformabon c()ntulIl(!d ,hereIn IB not gunrnntcetlnll to accurllCY or compietene–s lind lhe furnl91unv thereof I not, linn unil(!r no ClrcumstanCC9 I to be construed II. a reprcsentll- t!on by \\ alston & Co, Inc All e'lpreS'lon9 uf nplIllon are sllhJect to change Without notice 'Ya1ston & Co, Inc, and Officers, Directors, Stockholdcrs Rnd F mllioycc'l purchase. sell and mdY hnve an Interest III the securIties mentIOned herelll Thl9 market letter III mtended and presented m(!rely as a gell(!ral fIunrfnolrlmlhneld cuopmonmerenqtaureyston ilny to day market new Hn.! not as a complete Adciltumnl informatIOn Ith respect to any securitieS referred to herem will WN J01