Viewing Month: November 1970

Tabell’s Market Letter – November 06, 1970

Tabell’s Market Letter – November 06, 1970

Tabell's Market Letter - November 06, 1970
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II,'I , / /.' -. .. ,/' '/ (t ,'(,'.1'. .JOg STAT, rOAD PfHNcrTON, KW J.ERSEY 0851,0 tllvlS10t Of' IH STOCI' f XCHA'I;a; November 6, 1970 We hQve in recent lssues of this letter, on the theme that ;tock se\ectlon is, in most C,Jses, a far more Impc.ital't ingredIcnt of invc–'stment success than guesses as to the course, often not foreseeable, of the market J. whole. It IS (-1 lesson easIly forgotten, especially at I a tIme like the present v/llen l11t- market ouUcor. IS, at best, c.louded. Yet It is one that can easlly he reenfcrced statlstlcally. I For example, we have now only partially recovered from the severest bear market of the past four decades. Yet it wouJd have been quite possIble to have purchased a portfolIo of stocks at the very top of that bear m.)rlct and tlll have a respectable profit today. Tne follovllng table, based on Standard & Poor's group mdices sho\…s the performarce of the best actll1CJ 20 Qut of 91 groups from theIr average , pnce of Decen1ber, 1968, tile monih the TiJmk0t made its hIgh, to the end of lost month. Cha1l2…. F/58-JO!(1 Change 12!6G-JO/70 12/68-10/70 Chan.9.12!G8-JO!70 I 0 ;, FollutioJControl 35.3 MAil Order ClectriculEquip. -4.3 Brewers -6.8 Coul 28.9 Soft ..rink.s 4.2 Au Conditioning -5.0 AppllanC'E's -8.1 C03metlcs Vt'lrietyStoreb -3.7 -5.1 Nat'IGilsDISt. 10.7 S02lPS -12.4 Mobile Homes -5.2 Nat'l Gas PipeL -10.4 DJ ugs 5.9 HetalJ Stores -2.4 Packaged Foods -6.6 Grocers -11.2 It Is an mtcresl.lng t6.Duta1wn. The best perfOlming nine arc actually up for the period. The toptcn show Q 10 aV12fug0 gain, anrl the group ao., .l '111101e shows a 2 average proht–a reasonably cum- mEndable perJOlmance the marh.0J environment. Nuw the above comments may be justly cnticized on th'e bosis that they are, after all, hmdslgbt, but they me not entlrely an cyercise. Let us suppose, that, in May, 1970, the investor had deClded that an mtermedwte hal been and had sought to construct a list of purchasE's. Let us suppose, morcover, that he arbltranly ;dected the tVIE'l1ty groups that had gone down the least if the bear market. The selE'ctions ;'u1d have been the group', in the table below t which shows -pch c;mup's bear mcuket decline, hs pGrcentage advance from M,y to date, and its performance rank out of all 91 groups from May to du.te. ;; Cbilnqe lUG(l-S!/Q .!!Z7 0-Juirj nun)' Cnanqc Chunge J2/6&-5/70 0/70-10/70 Rank Blewero; 6.5 -10.4 88 Soaps -14.4 ;)9.5 22 Pollution Control .J 6. 3 ., 27.3 11 Pilckog9d 'oc.ds -1(.5 9.2 48 -0.5 12.9 38 Variety St01 C,3 -16.6 24.4 14 Drugs -6.3 1- 3.0 37 Leud & Zinc -8.7 86 Goal BiscUlt Bacry -11. 0 44.8 3 -12.4 1.0 J 75 El ectrical IqUlp. -17.7 Retell Stores -18,7. 16.3 30 24 Db1iJ1ers Air Cond1tioJllDQ -13.0 -13.5 ). J 9.8 19 44 Merals-M,sc. BUSiness I…1ach. -18.4 -19.0 ;7.8 9.0 54 51 Mail Order 8.1 4 Telephone -19.2 -6.1 83 CIgarettes -13.7 -128.2 8 Nat'l Gas Dist. -19.7 12.2 41 The results shov.fn by Hns rather SImple-minded rr,ethod are ImpressIve. The investor would have cho,s(m four of the top ten industry Groups based on subsequent. performance ano twelve of the groups chosen would have been in the upp8r 5090. The average gain of 111 would h.1ve been eminently re- spectable. ., The performance would, of C0l'rS3, not hnvc been Bf.. good as couJd have been ilchlevcd by perfect foreEnght. Tho twenty groups uctllally performinq best from May to date, vnth an average 31 gal'l, are ' shown belm';. J, Chi3nge Chcmgc 0- Change 5/7U-Date lvTobile Homes 2L70-Dte 5/70-Date 2L70-Date 85.9 Vending Macil, r-29. 2 Pollution Control of 27.3 Leisure Tlmc 23.3 .,' OJ – Crude Coal Soft Drinl-.s t57. 4 44.8 33.1 Oil Woll Much.; 2 B. 9 Gold Mlllln'J Cig,lIttes 12 B. 2 011 – DomestlC' Srn.ingc; &LOdn -127.9 Variet'y Gtorc 26.4 ROOlOg Wallbd 23.2 – ;5.5 Mall Ordcr 1-22.0 24.4 Appliances 21.4 ,. Oil Int' 30.0 Home rum. 27.6 Dl!.count Stores 23.1\ Rubber 19.9 Yet — a suggested in rhe leave — superior marlet uctlOn tends to persist over tllTlE' and abovc tables arc useful for man'! than hlstoflcal purposes. It is, 111 lIkely, bused on the record, tnal from the above llsts of above-average ,the market Jeaders of the conung months may well mcrge.. 1l,NTH 0 NY W. TAB IL L Dow-Tones a.m.)771.43 S&P (1100 a.m .. 04.08 DELF,JlELD. HARVeY, TI\BE!.!. AViT'mn ,) L tlo Sh, t t . r, 0- , .., , .. I C ,..,to ,/)ed' .,..!f ., k bv, ' vl ' 'o.y ,n I,' I'f '''I'' t-'! -,., v ,. r , 1 1,,- ,h (,,,,v ,,.he f,., or 'I.r r … Y h,l.. 11 c r'!,,,c Ihn w,eB ,','r .. … r'-,',. I u. 11.1 JL'L ,. 0 … t ,-.,..,,' ;. 1 'h, , .. Air' ,,,,'e .. … An. CKOO i.)., .'., rt…… ,''yI,, \ 0,',, ,, I ,1.'' ',- ' I , Jf ,,,, I ,', P'( 0,' .J'. ''', P' , n,t …. 'I 0. C,.., B J I ' ',11 'f ' 'I Itj,r I n.1 II, , 10, n,,' OM.\, ,n 'ty h) ff'fu,1 ,om CI,( f., ,.! .I ,VJ' Y I ,1'-, I 1 h, r 'Ill – '\ tI j n. 1 C. h I, ,'0. I, 'he 0 llu!-''nl aJv'lcr, mdY aJy, '(, ,, ,,' Iy, 'I d ,IrN C1,C'.. .,' I'V ny QI,' ,11 ,nil.)' Ir (r 'n ;….., C11,01 iJ'l .. – –

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Tabell’s Market Letter – November 13, 1970

Tabell’s Market Letter – November 13, 1970

Tabell's Market Letter - November 13, 1970
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE – November 13, 1970 What determines stock prices The apparently-simple-minded questIon has a number of fairly complex answers. A number of academic savants would have us believe that prices con- 'stHute- a–basically wheel. – The more orthodox view is that prices are, after all, determined by fundamental developments, i. e., earnings, dividends, and the level of economic activity. The naive answer — that prices are, quite simply, determined by supply and demand — tends to occur to very few other than market technicians. Market commentators ignoring this simple explanation are thus pressed to find reasons in news events for everything the market does. The 1962 decline, for example, had to be explained In terms of some unkind things the late President Kennedy had to say about U. S. Steel, and the subsequent recovery, in turn, was Justified by the successful ending of the Cuban missile criSiS, whereas, in fact, neither of these things had much to do with the market action of that year. By contrast, in the past month, there has been abundant news truly sig- nificant for the course of the economy in 1971. The general level of stock prices, however, is precisely where it was last August. Let us recount some of the finanCial developments of the past thirty days. As we moved into October, major corporations began to release third-quarter earnings figures which were, in general, disappointing. The market began to move lower to an intra-day low of 746 at the end of the month, then promptly reversed itself and moved up sharply. The reversal took place at exactly the point where any sensible analYSis of the demand and supply forces could have said it should have occurred. Having failed to go down in response to bearish news, the market then had two bullish events to stimulate it — the settlement of the GM strike and the –'''Tongawaitea''CIroinrr-th,nl1scounttalef61lowed–by- -an- eight-point rally early Wednesday — preCisely to the top of the trading range which had con- tained it for three months — and then fell back, dropping 23 points from mid-day on Wechlsday to early Friday. The fact — disconcerting as it may be to those who make their living analysing such things as quarterly earnings, auto strikes, and the rediscount rate — is that these factors are totally irrelevant to the short-term course of stock prices. Demand and supply forces have been in balance for the past three months, holding the market steady at a level roughly between 740 and 790 on the Dow. They have held it there, despite the plethora of fundamental develop- ments which could have, under different circumstances, moved prices sharply one way or the other. The 740-790 price level, as a matter of fact, has perSisted even longer. This is also the general area that contained prices from mid- January to the end of April, earlier this year. In other words, with the exception of May, June, and July, demand and supply have been in balance at this level for all of 1970. Now, sooner or later, one of two things will happen. Either demand for stock at these levels will exhaust the up-until-now-inexhaustible supply, and prices will mover higher. Or, alternatively, the suppliers of stock, largely unwilling so far this year to accept lower prices, will become willing to do so. As we have noted before, there is little point in guessing, in the absence of clear evidence, which event will occur. We can, however, make some estimates as to the possible extent of a move in either direction. – -Oidhe-dowiiside;-'the-risk is-;-leCus te-st of By'thfs we do-not mean, necessarily, the intra-day low of 627.46. What we do mean is a move back to the May- June trading range of 728-665, where the Dow held for all but five days last summer. On the upside, it must be noted, the prospects are a good deal more substantial. As we suggested above, the present price level is one that extends back almost a year now. If this whole year has, in fact, constituted accumulation, a substantial upward move in prices is indeed in prospect and indeed, a move to all-hme highs would be feaslble. The resolution of the current impasse will be provided by the development of individual patterns as they unfold. A substantial minority of stocks, including a great many marginal glamour issues, have patterns suggesting that the lows of last summer may be tested. A number of patterns, however, suggest relatively little downside risk and, in some cases, sub- stantial upside potential. Whatever develops, however, the risk/rewarq ratio for common stock purchases appears favorable at the present time and would increase greatly were the market to move lower. Dow-Jones Ind. (1100 a.m.) 762.80 ANTHONYW. TAB ELL S&P (1100 a.m.) 83.70 DELAFIELD, HARVEY, TAB ELL \M T ff1 R . No or eXpre'IOn of opmlon or any other malter herein contamed IS, or 's 10 be deemed to be, directly or Indirectly, an ,offer or the OIlCIIOllon of on offer to buy or sell any security referred to or mentioned The moiler IS presented merely for the convenience of the subSCriber While we believe the sources of our mformatlon to be reliable, we In no w.ay represent or guarantee the accuracy thereof nor of the statements mode. herein Any action to be token by the sub ,cnber should be based on hIs own investigation and Information Montgomery, Scott &. Co, as a limited partnership, and Its partners or employees, may now have, or may later toke, pOSitiOns or trades m respect to any securlhes mentioned In thiS or any future Issue, and such pOSition may be different from ony.vlews now or hereafter expressed In thiS or any other Inue Montgomery, Scott & Co, which IS registered With the SEC as on Investment adVisor, may give adVice to Its Investment adVisory and other customers mdependently of any statements made In thiS or In any other Issue – – –

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Tabell’s Market Letter – November 20, 1970

Tabell’s Market Letter – November 20, 1970

Tabell's Market Letter - November 20, 1970
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TABELL-S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE November 20,1970 In a generally sloppy performance, the stock market moved sideways to lower last week with the major averages remaining in the oft-cited trading range that has contained them since August. The commonly noted reason for the weakness 'wa-s-a sharp drop irFth-.l'FRB industrtaJ–production index, — – – – — causing a number of commentators to express doubts as to whether the powers that be are sufficiently sensitive to rising unemployment and other deteriorating e con 0 m i c indicators. Sue h com men t s, in our view, reflect an improper understanding of the effects of monetary and fiscal policy on the economy. The tools work — but not instantaneously. The results of applied policy do not manifest themselves until sometime after the application, and the time lag with which various economic indicators respond varies. It is, for example, a matter of history that stringent monetary restraint was applied throughout most of 1969. It is equally a matter of record that money has been easier since the beginning of 1970. The sensitivity of various economic sectors to alternate restraint and stimulus has been diverse. The most sensitive sector was the stock market which responded to monetary restraint by declining sharp- ly last May and which, under monetary stimulus, has since recovered. The rate of inflation, just now beginning to decline, was the next major sector to respond to monetary stringency. The last, unfor- tunately, will be unemployment, which has continued to rise to new highs and will probably continue to do so for most of 1971. Finally, however, the results of continued monetary expansion will be felt here also. It is at least an arguable premise that the administration has some understanding of this sort of timing, coupled with a rather strong vested interest in seeing an improving economy in 1972, when it will again present itself to the voters. If one theorizes that, at some point in 1971, when the outlook for the following year becomes clearer, the stock market will begin to look ahead, then 1971 could amarJet-y'earThls-ha'beenth1cas-e-fnprevious regimes as stuay of — – –'– the stock market in the four years of each presidential administration since World War I shows. The percentage change in the Dow-Jones Industrial Average for each year since 1917 is set forth in the following table, with the column headings referring to the first, second, third, and fourth years of each presidential administration. FIRST YEAR SECOND YEAR THIRD YEAR FOURTH YEAR 1917 -28.73 1918 17.45 1919 28.32 1920 -31.76 1921 10.53 1922 21.68 1923 – 3.09 1924 22.69 1925 33.87 1926 1.71 1927 28.75 1928 48.22 1929 -17.17 1930 -33.77 1931 -52.67 1932 -23.07 1933 66.69 1934 4.14 1935 38.53 1936 24.82 1937 -32.82 1938 28.06 1939 – 2.92 1940 -12.72 1941 -15.38 1942 7.61 1943 13.81 1944 12.09 1945 26.65 1946 – 8.14 1947 2.23 1948 – 2.13 1949 12.88 1950 17.63 1951 14.37 1952 8.42 1953 – 3.77 1954 43.96 1955 20.77 1956 2.27 1957 -12.77 1958 33.54 1959 16.76 1960 – 9.34 1961 18.71 1962 -10.81 1963 17.00 1964 14.57 .8189 1966 -18.94 1967 15.20 1968 4.27 Average 3.88 Average B.Ol Aerage 4.49 – – –0 The average stock market-year-to-year performance-in-the 55 years since 1917 has been a 6.4 advance, and the median performance an 8.4 rally. As the table shows, however, the average advance for the third year of each presidential administration has been considerably above this I average and, indeed, nine of the 13 years since World War I have produced advances above the median. The recent record is even more interesting. The market has advanced, with one exception, in the third year of every administration smce the first Roosevelt term and in every year since 1951, the advance has been a healthy one. It is, by contrast, in the first and second years of most administrations that stock market damage has tended to be done. Since 1929, every major bear market, i.e., 1929, 1937,1946,1953, 1957, 1962, 1966 and 1969, has begun in the initial years of an admmistration. Since present economic policy suggests an upturn beginning somewhere late in the second half of 1971, it will be interesting to see whether the pattern of the bullish third year again holds good. Dow-Jones Ind. 0100 a.m.) 756.16 ANTHONY W. TABELL S&P (1100 a.m.) 82.97 DELAFIELD, HARVEY, TAB ELL AWTmn No statement or expreSlon of oponlon or (lny other molter herein conlolned IS, or to be deemed to be, directly or Indirectly, an offer or the sollcltollon of on offer to buy or sell any secvrlty referred to or mentioned The matter 15 pre5ented merely for the convenience of the subscriber we believe the sourccs of our Information to be reliable, we in no W(JY represent or guarantee the accurocy thereof nor of the statements mode herein. Any octlon to be taken by the sub Scriber should be based on hl5 own Invcstigallon and information Montgomery, Scott & Co, os 0 limited partnership, and .Is partners or employees, may now hove, or may later take, posillons or trades respect to any securities mentioned In thIS or any future Issue, and such position may be .dlfferent from any views now or hereafter expressed In this or any other Issue. Montgomery, Scoll & Co , which IS registered With the SEC 0 on Investment adVISor, may give advlCfl to Its Inveltment adVISOry and other customers mdependenlly of any statement! mode In this or In any olher Issue

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Tabell’s Market Letter – November 27, 1970

Tabell’s Market Letter – November 27, 1970

Tabell's Market Letter - November 27, 1970
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE November 27,1970 Mr. Eric Hoffer, the distinguished longshoreman-philosopher, has a provocative article in – — …-l .- York TimesM''igjlzine. .- – – – – It is part of Mr. – — Hoffer's thesis that –A-me. rica-,… in……t-he second half of the Twentieth Century, is entering 01'1 a post''industrial age. The mid-19th Century through the mid-20th Century, he feels, constituted the era of industrial revolution, a revolution of which this country was in the vanguard and which resulted in unprecedented levels of affluence measured in terms of production of goods. This revolution, however, may now be complete and, having mastered its techniques, we may be in the process of reverting to many of the cultural patterns of pre-industrial society. In Hoffer's words We are returning to the rutted highway of history, which we left 100 years ago in a mad rush to tame a savage continent and turn it into a cornucopia of plenty. We see all around us the lineaments of a pre-industrial pattern emerging in the post-industrial age. We are rejoining the ancient caravan, a caravan dominated by the myths and magic of elites, and powered by the young . There is statistical substantiation for much of Mr. Hoffer's thesis. Industrial production has, in the past 30 years, become a less and less important component of our economy. Total manufacturer's sales, as a percentage of G. N. p have been declining ever since World War II, and a smaller and smaller percentage of the American work force is now engaged in the tradi- tional blue-collar occupations. Meanwhile, the provision of services rather than goods tends to assume a greater and greater role on the economic scene. The transition is even greater than that reflected in the available statistics. Many of today's fastest growing occupational categories bear an interesting similarity to the crafts which characterized pre-industrial society. Consider, for example, the computer programmer ,..,..-..,,,….1 – skills are ap'plicable in almost any and his tends toward those skills rather than toward his employer. He is, in essence, a skilled laborer, not at all unlike the journey- man carpenter of the 18th Century. Now societal change is inevitably reflected in the stock market, and the decreasing importance of industrial production is no exception. It is probably no accident that the Dow- Jones Industrial Average has performed worse than the market as a whole for a good part of the past five years. Moreover. as classic heavy-industry stocks assume a less and less important investment role, the investor increasingly is being offered participation in a whole host of service industries, industries not available in the public market place a decade or two ago. It is now possible to purchase equity mterests in advertising agencies, stock exchange firms, tax preparation services, computer software concerns, and real estate brokers, and it will probably be not too long before doctors and law firms are permitted to incorporate and offer securities to the public. As securities of this nature become more and more prevalent, it becomes incumbent on the investor to recognize both the potentialities and the problems. Let us consider for a moment, purely as an example, H. & R. Block, Inc., the tax preparation service. Over the past ten years, the company's revenues have increased more than 100 times. Earnmgs per share have moved from 2 to 1.17, and the price of the stock 1S 200 times its price at the beginning of the decade. It should also be noted, however, that Block, now selling in the market place -for 55 per,share-,-had a.book,value,-as of last April'30throf-I,S9;- – -, — — Thus, both the opportunities and the pitfalls become obvious. A serV1ce company unlike, let us say, an electric utility, has little need for capital. The opportunity for growth in an industry which requires large amounts of brick and mortar is, of necessity, limited by the ' equity d11ution ultimately necessary to pay for those bricks and mortar. Such a limitation is not present in a company which, with a fixed capital requirement of a few square feet and some desks, can turn out a highly expensive product. On the other hand, should the demand for given service be reduced or the service itself be obsoleted — or, and this is a totally new factor in security valuation, should key personnel leave — the stock holder is left with only a miniscule asset value to protect his investment. We are, in short, creating a whole new class of security in which both the rewards and risks are inherently greater than those to which we have become accustomed. The challenges. that this sort of security possesses for investment policy will be formidable indeed. Dow-Jones Ind. (1100 a.m.)774.64 ANTHONY W. TABELL S&P (1100 a.m.) 85.13 n1ArT'fflfl DELAFIELD HARVEY TAB ELL I, l I '40 statement or expression of Opinion or any other molter herein conlcllned IS, or IS 10 be deemed to be, directly or indirectly, on offer or the s.ollcllol10n of an offer to buy or sell any security referred fa or mentioned The molter IS presented merely for the convenience of the subscriber While we bel,eve the sources of our information to be rehable, we In no way represent or guarontee the accuracy thereof nor of the statements made herein Any action to be token by the sub- SCriber should be based on hiS own InvestigatIOn and information Montgomery, Scott & Co, as a limited portnershlp, and Its partners or employees, may now have or may later lake posilions or trades 1n respect to any secuflltes menl!oned In this or any future Inue, and such pOSItIOn may be different from any views now 'or hereafter In this or any other Issue Montgomery, Scoll &. Co, which IS registered with the SEC as an llvestment advIsor, may give advice 10 Irs Inveslment adVISOry and other customers tndependently of any statements mode In Ihls or In any other issuo

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