—- Walston &- Co. INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABEll'S MARKET lETTER August 5, 1966 The market slide abated this week, ostensibly under the stimulus of the steel price rise. The Dow-Jones Industrials, after reaching an intra-day low for the year of 827. 28 on Tuesday, advanced almost 19 points in moderately active trading on Wednesday and Thursda The rise continued at a somewhat slower pace on the final day of the week with an intra-day peak of 860.57 being reached. At the low of this week, the Dow had reached the 840-825 range which we had en- visioned as a possible downside objective for the Index. At that point, various short term in- dicators had reached sharply oversold territory, and the general market was as deeply over sold as.it.had been at any time since the bottom position of this nature, a rally toward the overhead supply in the 870-880 area would appear to be a plausible expectation. Ability to push well into this area on the present move and the to hold would have to be considered extremely bullish insofar as the general market is con- cerned, although there is no definite indication at the moment that this will take place. In last week's letter we pointed out that, while the recent decline had been exceeded in severity by only three previous downswings in the post-war era, it had, nonetheless, been quite selective. As we suggested, a great many stocks are, today, selling at higher levels than they had been earlier in the year – despite the fact that the Averages were then conside ably higher. In this sense, action is very much reminiscent of the first three quarters of 1960. During this time the Averages were in an almost continuous downtrend – approximatin the current one in extent – but a great many issues moved up quite sharply. We continue to feel that the action of individual issues will be Averages. As most investors should be aware, the presen 0 than that of the g es not date back only to last February when the DJI made its high. Aaa so, in;luding some of th highest grade issues available, reached their peaks uch as teen months to two year ago in late 1964 and early 1965. These stockm e b n rrective phase for the entire inyervel1.iEg.period and, in many ent levels. On the other side of the-c; e ave a! pre.s- e -m stocks-iii such diverse industry group as Office Equipment, O ( a continued to move ahead despite the weakness in the market, and s s n deterioratbn. In short, it is still not 2hard to find attractive is u c , especially since the recent weakness has brough a great many stoc t t 0 upport levels. Regular rea titer will have noted that we have not, during the recent de- cline, followed the poli astically reducing the number of issues in our recommended list. This policy, of c e, has be en in line with our feeling that stock selection is more im portant than the trend of the Averages. By and large, we have been pleased with the perform- ance of most stocks in our list, and we will continue to follow the policy of considering is- sues individually rather than making drastic changes due to general market trends. In a de- cline such as the recent one, however, there are in any list certain stocks which turn out to be particularly susceptible to downward market pressures. In such cases, our general policy is to ascertain whether the original reasons for recommendation are valid. In most cases, if the technical and fundamental situation has not changed, it is best to hold such stocks or average down, pending further developments. Two issues from our Recommended List come to mind. Parke Davis (28), suggested last April at a price of 36 1/2, moved to a low of 27 earlier this week. At that level it had just about reached the downside objective of a short term top formed in May and June. We originally suggested the issue on the basis that the expiration of Chloromycetin patents in October had been drastically over-discounted, and we still feel that this is the case. The co pany's present dispute with the I n t ern a 1 Re venue Service does not, we believe, fundamen tally alter the situation. General Dynamics (46), which reached a low of 44 1/2 vs. a high of 66 1/2, is pre- sumably under pressure due to weight difficulties with the Navy version of the F-111 Fighter Unnoticed in the furor has been the fact that the Air Force version which will account for the larger portion of the contract, is proceeding on schedule with initial production under way. Although the technical picture has deteriorated somewhat, earlier earnings estimates of 5.75 for 1966 still appear valid and the stock appears cheap at present levels. Dow-Jones Ind. 852.39 Dow-Jones Rails 219.62 ANTHONY W. TABELL WALSTON & CO. INC. AWT' amb This market letter 1& published for your convenience and Information and Is not An ofter to eell or R solicitation to buy any eeeurities dlBCUSsed. The informatIOn WlLII obtained front sources we believe to be reliable. but we do not gUarantee its accuracy Walston & Co.. Inc. Rnd Its officers. dIrectors or employees may have an interest In or purchase and sell the securities referred to herem. WNSOI

Walston &Co. Inc INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 12, 1966 , Earnings multiples have, historically, been the subject of a great deal of theorizing. On the one hand, the financial community has been beset of late with a horde of academic types armed with complicated valuation models which prove their favorite stock is worth 43-1/2 times earnings. On the other hand, the popular reaction today to low earnings multi- ples is to point out that, after all, earnings are expected to decline in 1967 and the current low level of stock prices only reflects this fact. One is reminded of the hordes of experts wh assured us that stocks were dangerous in 1949, because the inevitable post-war depression was about to come crashing down on our heads. Historically, at least, most theoretical justi- fications for price-earnings multiples have been notable chiefly for their inaccuracy. It is just possible that a more relevant approach to earnings multiples may be to. com pare their current levels to levels achieved in the past. The following table attempts to do this for the thirty stocks in the Dow-Jones Industrial Average. In the first column are given estimates of 1966 earnings. Succeeding columns show the price/earnings ratio which prevail ed at the lows of 1949, 1953, 1957 and 1962, historical low points in the stock market. Fol- lowing this is the level the stock would sell at if 1966 earnings were capitalized at those mul- tiples. If the resultant price is about the same or higher than the recent price, given in the last column, the figure is underlined. The table is worth a glance. It shows, for example, that 23 of the 30 stocks are cheap er today than was the case at the 1962 lows, and half of them are cheaper on an earnings basis than was the case at the 1957 lows. It is necessary to go all the way back to 1953 to find a case when the majority of stocks had lower in this case, 9 of the 30 stocks are lower today than was then the case. Amazing e fstocks can be bought cheaper today than was the case in 1949. Allied Chern. Earn. 3.25 1949 PIE Price 10 32 1/2 1953 PIE ,T–J'!-/9 4 52 1 9 13 2 PIE Price 16 52 Close 8/12/6 387/8 Amer.Tel&Tel 3.60 15 Amer. Tobacco Anaconda 10 5 Bethlehem Steel 3. Chrysler 5.75 DuPont 9.00 Eastman Kodak 4.10 11 General Elec. 4.60 8 General Foods 3.85 9 General Motors 6.50 4 Goodyear 3.50 5 Intern'l Harvester 4.00 5 Intern'l Nickel 4.90 10 Intern'l Paper 2.60 3 Johns Manville 4.50 6 Owens-Illinois 3.70 12 Procter & Gamble 3.45 8 Sears Roebuck 2.50 7 Std. of Calif 5. 60 5 Std. of New Jersey 5.25 6 Swift & Co 3.75 6 Texaco 5.15 4 Union Carbide 4.1010 United Aircraft 6.00 9 U. S. Steel 4.50 4 Westinghouse El. 3.50 5 Woolworth 2.65 11 1 8 23 99 45 367/8 345/8 26 171/2 20 49 73/4 27 443/8 -27 5/8 171/2 28 31 1/2 22 1/2 205/8 41 54 18 17 1/2 29 1/8 4 15 54 18 647/8 53 41 9 283/8 13.i!… 7 73 1/2 6 63 9 94 1/2 32 1/4 77 3 101/4 8 27 1/4 10 34 31 1/2 8 46 5 28 3/4 9 51 3/4 37 17 1653/4 19 1851/4 17 1653/4 1811/2 15 61 1/2 17 693/4 23 943/8 128 12 55 21 965/8 18 823/4 943/4 13 50 12 461/4 19 73 1/8 72 1/4 8 52 13 91 11 77 78 l/E 4 14 12 42 14 49 7 28 10 40 13 52 10 49 11 53 1/4 15 781/2 8 203/4 14 363/8 15 39 41 3/ f 847/.8 27 1/8 9 401/2 14 63 14 63 13 48 1/8 11 403/4 15 55 1/2 513/4 66 14 48 1/4 14 48 1/4 21 72 1/2 653/E 11 271/2 11 271/2 20 50 531/4 8 44 3/4 10 56 11 615/8 62 5/8 8 42 12 63 12 63 67 5/8 7 261/4 13 483/4 12 45 463/4 8 41 1/4 10 51 1/2 12 613/4 685/8 17 693/4 20 82 17 693/4 551/2 6 36 6 5 22 1/2 7 36 19 114 31 1/2 13 58 1/2 77 40 9 31 1/2 18 63 18 63 46 1, 14 37 1/8 11 29 1/8 13 34 1/2 215/8 Jj)ow-Jones Ind. 840.53 Dow-Jons Rails 214 .54 ANTHONY W.TABELL WALSTON & CO. INC. AW letter 18 pubhshed for your eonvemenee and infonnatlOn and is not f\n offer to sell or 1\ to buy any aeeuritles dlseussed. The Ln- -formation was obtained from sources we Ix.heve to be reliable, but we do not guRrRntee its BccurRC), WRIston & Co.. Inc Rnd Its officers. dlref'tors or employees may ht'LVe an mterest in or purchase and sett the securities referred to herein , WN.SOI

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Walston &Co. INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges OFFICES COAST TO COAST AND OVERSEAS TABELL'S MARKET LETTER August 19, 1966 In our market letter of December 23, 1965, with the Dow selling at 966, we attempted to assess the ouUook for the coming year. We started out by saying – (The) ouUook for 1966 corporate profits is almost uniformally roseate.. We are inclined to believe that the cor- porate profits ouUook for 1966 is quite adequately reflected in the prices that are being paid for stocks today. We are, therefore, less impressed by the generally good profits ouUook than we are by the number of potential psychological factors which could disturb market librium at some time during the year, i. e., tight money, balance of payments problems, Viet nam, etc. It is a market, we think, where psychological factors will predoininate more and more. – – -. . Following an assessment of the technical picture as it appeared at that time, w'e c'on' cluded with the thought that – It is very difficult at the moment to find arguments for a sus- tained rise in stock prices from these levels and it is equally difficult to find cogent reasons why a decline of serious magnitude should take place. The logical forecast, therefore, seems to be tqat there will be very little change in the popular averages from their recent levels. The 1965 range on the Dow-Jones Industrials was 974. 16 high and 832.74 low. It seems prob- able that 1966 figures will be fairly close to these. So far both limits have been exceeded by modest amounts. We do not, however, cite the above figures as part of an attempt to win first pJ;'ize in a uessing game. We do cite it as evidence of the extent to which the wheel has come full cycle in a relatively short period of time. It was incorrect to become wildly bullish in early 1966 ased on corporate profits for one very simple reason. Jilfofits picture was al- ready reflected in the price of most common stocks. It is n f to become quite loomy about the future course of stock prices due st r ,Vietnam, and fears f inflation followed by a recession. The point is that f thes ngs constitute not so uch a reason for stock prices to move an 'on of why stock prices are hereyey If were .e f e mic uncertainty eguities would not be available at their e. . Now we are as reminded ad nauseam. We do n n to economic uncertainties of which we are how or whether all of these difficulties will be resolved and one else does either. Rather than engage in a frui less attempt to pre t i e, it seems to us much more important to try to gauge the investment odds Jj ffer ya stock market with the Dow-JOnes IrldustFial Average hovering around the 800 Ie Future prices e determined by two factors, – the then current level of earnings and the price earnings ratio which the market at that time is willing to apply to those earning It is certainly too early at this point to say what 1967 earnings may be, so in the table below we are providing four different earnings estimates ranging from a 100/0 improvement over es- timated 1966 figures to a 250/0 decline — equivalent to the severest profit decline in the post- war period. These earnings are capitalized at four different levels – the 1951-53 'average of 10.7, the current one of 14.2, the 1954-58 average of 16.2, and the more'recent 1958-1965 average of 19.2. Thus, we arrive at the prices shown and their percentage difference from current levels. 1951-53 Aver. Current 1954-58 Aver. 1958-1965 Aver. 10.7 14,2 16.2 19.2, 66.00 (1966 plus 10) 706 (-120/0) 937 (16) 1069 (32) 1267 (570/0) 60.00 (same as 1966) 642 -200/0 852 ( 60/0) 972 200/0 1152 (430/0) 54.00,(1966 less 100/0) 577 (-290/0) 767 (- 5) 875 ( 8) 1037 (280/0) 45.00 (1966 less 250/0) 450 (-440/0) 639 (-21) 729 -10 864 ( 7) All that the table shows, is that, if one is to predict a sizable decline, in stock prices from their present levels, one must also be willing to predict either a decline in corporate earnings of record proportions and/or a return to valuation standards which have not existed for thirteen years. Any investor who sincerely believes that either of these events will come to pass should certainly divest himself of common stocks. We prefer to think that the recent stock price weakness has brought more stocks close to attractive long-term purchase levels than has great number of years. Dow-Jones Ind. 804. 62 Dow-Jones Rails 202.55 AWTamb ANTHONY W. TABELL WALSTON & CO. INC. This market letter is published for your convenience and infonnatlon and lS not an offer to sen or solicitation to buy An,. IleetJJities The in- formation WAS obtained from Bmnees we btlleve to be rehable. but we do not guArantee ita aCcuracy WAlston & Co Inc. And Its ofl'lcers. dlrectorB or cmpiOJees may have an mterest in or purchASe and sell the securities referred to herem. WN.801

ALe W—-a–l–s-tIoncn.–&—C–o–. INVESTMENT BANKERS MUTUAL FUNDS MUNICIPAL BONDS Members New York Stock Exchange and Other Principal Stock and Commodity Exchanges TABELL'S MARKET LETTER OFfiCES COAST TO COAST AND OVERSEAS August 26, 1966 Although interrupted by a sharp rally on Wednesday, the Dow-Jones Industrial Average continued its slide last week, reaching a new intra-day low of 776.27 on Friday. This level constituted the lowest figure seen for the index since early 1964, and capped a decline of 22.4 from the 1966 high of 1001. 11 reached some twenty-nine weeks ago in February. On a percentage basis, therefore, the decline ranks as the third sharpest dip in stock prices in the post-war period, being exceeded only by the declines of 1946 and 1961-62. At this stage of a market downswing,it is invariably futile to try to guess as to what the exact low pOint in the Averages may turn out to be. Certainly, no indication has yet appeared of any renaissance of buying power which.will be necessary to spark a reversaLof.the present,drop.in.prices .. It . seems far more sensible to make an objective to judge whether stock prices indeed have retreated to a point where they are objectively attractive on a long-term basis. The major burden of the last two issues of this letter has been to point out the fact that investment grade stocks were inherently cheap when judged by any historical standards. In our letter of last week we.gave projected levels of the Dow-Jones Industrial Average based On various multipliers of 1967 earnings. The figure rather conclusively showed that current prices apparently discounted anything short of a major recession in 1967. In the previous week's letter we tried to suggest that a great many of the 30 stocks in the Dow-Jones Indus- trial Average were, at their then existing prices, at lower levels in relation to earning powe than they had been in some years, in a few cases lower based on earnings, than they had bee in 1949. At the present time a study of the technical patterns on a great many investment grade issues strongly tends to suggest that they are at or major lows. The foregoing is certainly not true of all stocks at th certainly does hold good for a great number of issues. The stock markeBe s two rs has been a highly selective one, both on the upside and the downside. the' n the Dow was reached in February 1966, the high in a great many men ad' sues in the Dow was reached t.trOllfiJhout 1 . . ' b to point that two markets have been eXlshng s – a marKet lIT glamour ana speclalty issues, and a bear market h-S i This latter bear market is a good bit more than six months old. In t c 0 many stocks, it is more than two years old, and the declines ee l e suggest that a major correction may be fairly close to being com t Let us amplify s ta e a bit further. Although the Dow made its high in Februar of 1966, only 9 of the 3 D omponents actually made their post-1962 highs during 1966. Allied Chemical reach s high as early as December, 1963. American Telephone, Chrysle General Foods, International Paper, Procter & Gamble, Standard Oil of New Jersey and Texaco all reached their bull market peaks during 1964, two years before the high in the Do and the remaining issues reached their peaks at various times during 1965. The dips in individual issues, since peaks were reached one to two years ago, have been sharp. Chrysler has declined 510/0 from its high, and three stocks in the index have de- clined 400/0 from their bull market peaks. Another 16 stocks have declined 300/0 or more. These percentage declines are in some cases comparable to those which took place in 1962. The most important factor to note, from a tedinical point of view, is. that these sharp declines have, in most cases, brought investment grade issues to, or close to, their long-term downside objectives. Noneofthis is.intended to suggest that a rally in these issues is immi- nent. It is rather intended to mean that a substantial group of issues are completing correct- ions of long-term importance and may well be approaching major lows. When these issues are coupled with the whole host of stocks which have, throughout the decline, held up rather well and maintained relatively favorable long-term technical patterns, it becomes possible to say that more stocks are now attractively priced on a long-term basis than has been the case in a good many years. Dow-Jones Ind. 780.56 Dow-Jones Rails 195.03 ANTHONY W. TABELL WALSTON & CO. INC. AWTamb This market letter is published for your eonvenienee and information and ill not I\n offer to Bell or tI. i8OIkltatlon to buy any eeeurities dlseussed. The in- formation was obtained from sources we believe to be reliable. but we do not guarantee its aeeuraey Walston & Co, Ine. and lts offieers du'edors 01' employees may have an Interest In or purebase and sell the seeunties referred to herein, ' WNSOl