Tabell’s Market Letter – August 30, 1963

– Walston &Co. I nc .. l1rmltI''' Xrll' I'm I. Stock Errhanlf NEW YORK SAN FRANCISCO LOS ANGELES PHILADELPHIA CHICAGO OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET LEnER August 30, 1963 The magic year 1929 has always stood out as a sort of benchmark in financial affairs. Likewise, the Dow-Jones Industrial average has been the most widely known baro- meter of what the market is doing. Investors will remember the banner headlines in No- vember, 1954 when, just a little more than 25 years after the beginning of the 1929 crash, the Dow pushed through its 1929 top. Since then, of course, the 1929 high in the Industrials has been left far in the dust. By contrast, only a handful of statisticians noted something that happened a week ag On Friday, August 23rd, the Dow-Jones Utility average closed at 144.37, just 27t;! under its 1929 peak – the closest it has ever gotten to that level. Also interesting 'is the action of the Dow-Jones Rails. This ina ex- is -sTill 710 under irideed,-nasfailed-to bette its 1956 peak. Thus, the prosperity enJoyed by the industrial stocks over the past 35 years has not, necessarily, spread to their rail and utility cousins. A close examination of the action of the three averages is worthwhile in order to see when the divergence occurred. The follow- ing table gives the levels of each average at major tops and bottoms since 1929. Industrials 10 Change Ra iIs Change Utilities 1929 High 381 189 145 1932 Low 41 -89 13 -93 17 -88 1937 High 194 373 65 400 38 124 1938-42 Low 93 1946 High 212 -52 128 19 -70 11 -71 68 257 \\y 0 44 300 1948-9 Low 162 1953 High 294 -24 82 41 112 Cf 2 -27 54 69 1953 Low 255 -13 91 48-11 1956-7 High 521 104 181 75 56 – – 6 2 – – — –17 81 95 38 1960-1 Low 566 -17 1 -25 84-11 1961 High 1962 Low 536 7 17 15 -25 136 62 103 -24 Current 729 177 53 144 40 At a glance, it a seen that the Utilities' difficulty go es back in large part to the pre-war years. The ine in the depression was almost as great as that of the Industrials but the subsequent recovery much smaller, and the drop just before the war, a good deal sharper. As a result, in 1942, the Utilities made a new low more than a third under their 1932 bottom. In the war and immediate post-war years, the Utilities tended to reflect their conservative nature, and while, generally, they declined less than the Industrials in bear markets, their rise during bull markets was much smaller. Beginning about 1959, however, the relative performance improved quite sharply and, as can be seen, they out-performed the Industrials in the 1960-61 upswing and in the one from 1962 to date. They have noW ex- ceeded their 1961 high by a considerable margin. By contrast, the Rails' trouble has been a persistent vulnerability to bear markets. The table reveals that,in almost every rise since 1932, the Rails' performance has compared favorably with the Industrials. Likewise, in every bear market until last year they had managed to act considerably worse than the Industrials. However, they followed their 1962 performance with an upswing considerably stronger than that of the Industrial Average with the result that the carriers, like the utilities, are.well above their '1961 high. Thus, the fact that the two less-used averages are still below their 1929 peaks is attributable to their poor performance a number of years ago. The Utilities, as we have note have been out-performing the Industrials since 1959, and the Rails began doing so in 1961. It will be interesting to see if this trend continues and if, eventually, a relationship more like that of the 1920's prevails. Dow-Jones Ind. 729. 32 Dow-JoneslRails 176,8'1hilfl! 170 Rlhi\b' ANTHONY W. TABELL WALSTON & CO. INC. Thill market letter IS not. lind under ('''ntamer) herem .s not J.llnrnntce.\ no Clrcumstnnces to IICI'\IrfH'Y o. IS to be 1'0n..tl ued as an the ,r\1a'nnluofIfhellllJ!toth..eel.leuUI! II SuhCllnlll11 til hill' .In)' n(lt. nc\ unltrl 1\0 ('eUlllle 1erCI rell i., tll he tv hel CHI tontilled The Inr, matmn m', n relllC'Ientn' loy Il Co. Inr All ..f opinIOn OIl' suhJNt to ('hnn!!1' \\.thuut ',111'1. Wahtlln & ell, 1m. HIHI Otrlrelb, Dllec\.us, Stod.. huJdcr; unl\ thereof, JJU.chn'iI', sell aad may hn\e nn Interest In the t.eClIrltleo; mentlllnel\ he,ell! mll.J..et \e\t', II Intended IIlId merely II t.'cner,\\. mrormlll c.,mmcntary on lillY to cll;y market ond not a'l n comillete AddltwllllilllrurmntlOn …. llh lL…. lloClt \ lIn\- !etclled to helCII1 WllllloC u,pn request \\ \ If)) EDMUND W. TABELL'S RECOMMENDED LIST QUALITY & LONG TERM GROWTH Caterpillar Tract. Corning Glass Crown Zellerbach Du Pont General Motors Gulf Oil Close Qual- 9/9/63 itl 43 1/2 A 190 3/4 A 51 A246 1/2 A 76 1/2 A 49 3/4 A Comment Hold Hold Hold Hold Hold Hold Close Qual9/9/63 ity Int'l Bus. Mach. 4561/2, A Minn. Mining Mfg. 63 5/8 A Penney, J. C. 45 3/4 A Royal Dutch 46 7/8 A Stand. Oil of N. J. 70 5/8 A Woolworth 72 A- Comment Hold for 500, Hold Hold Hold Hold Hold l PRICE APPRECIATION Close Qual- Close Qual- 9/9/63 Comment '9/9/63 Comment Air Products 62 1/8 B Hold Kerr McGee 39 1/4 A- Hold Atchison. Top. SF 29 A- Buy-Hold Korvette 32 5/8 Hold-Buy at 30 Beaunit Corp. 25 3/4 B Buy-Hold Litton Ind, 80 3/8 B Hold-Buy at 75 Burlington Ind. 38 B Hold McDermott, JR 25 Buy-Hold Burroughs Cenco Clark Equipment 27 7/8 53 42 1/4 B B A- Hold McKesson Rob .. 463/8 .Hold-Buy 50-48 Midland Ross 65 Buy-Hold Newmont Min, 81 A- Hold B Buy-Hold A- Hold Cluett, Peabody 50 3/8 B Buy-Hold Northwest Air 58 3/4 B – Hold Consol. Coal 46 1/4 A- Hold Copper Range 24 1/ 4 B Buy-Hold Denver, Rio Grande 21 B Buy-Hold Disney, Walt 41 3/4 B fbld – Buy 42-40 Pittston Co 62 1/2 Raytheon Co 20 7/8 SRcehylnuomldbseMrgeetral 32 5/8 62 1/8 B Buy-Hold B Hold B Hold Buy-Hold Elec. Storage Bat. 55 5/8 B Hold Stevens, J. P. 36 1/4 B Buy-Hold Ex-Cell-O 39 1/4 A Buy-Hold Stewart-Warner 34 1/2 B Buy-Hold First Charter Fin. 43 3/8 Buy-Hold Storer Broad. 42 B Buy-Hold Fruehauf Trailer 29 3/4 B Buy-Hold Sundstrand 23 B Buy-Hold General Mills 37 1/4 A Hold for 40 Swingline A 37 3/8 Buy-Hold Great North. Paper 45 B Hold for 55-60 Union Bag-Camp 40 1/2 B Buy-Hold Int'l Min. Chern. 58 1/8 B Hold.Buyat 55 Kansas City So. Ind. 43 1/2 A- Buy-Hold Kern County Land 70 A Hold for 85-90 Umted Fruit 24 1/4 B Buy-Hold U. S. Plywood 62 1/8 A- Hold-Buy at 55 Univ. Oil Prod. 35 3/8 B Buy-Hold LOW-PRICED SPECULATIVE Close Qual- Close 9/9/63 Comment 9/9/63 Audio Devices 13 3/4 B- Buy-Hold Microwave 11 1/4 Braniff Airways 12 3/4 B Buy-Hold Murphy Corp. 19 5/8 Campbell Chibou. 3 5/8 C . Hold National Can 17 3/8 EI Paso Natl Gas 18 3/4 B Hold. Buy 17-16 Pacific Pete 11 1/4 Foote Mineral 12 3/8 B Hold Penn. R. R 20 1/2 Great West Fin. 20 1/4 Buy-Hold Reeves Bros. 15 5/8 Hewlett Packard 21 7/8 B Buy-Hold Seaboard World Air. 6 Intern'l Packers 15 1/2 B- Buy-Hold Sperry Rand 15 1/2 Mesabi Trust 14 5/8 Hold for Income Univ. Match 16 1/2 September 10, 1963 Varian Assoc. 23 3/8 Quality Comment B Hold Hold for 25 B- Buy-Hold B- Buy-Hold B- Hold. Buy at 19 B Hold for 21 C Buy-Hold B Buy-Hold B Buy-Hold B Hold.Buy-at 20-18 , – – — .- – – – – – – —