TABELLS MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHANGE March 26, 1971 Two weeks ago in this space w scuss, at some length, theheavy oved supplywhich- – . 'exTstea-arotind'the gel area- of'890930intlffiboWJOn'es Indli'rtriai'S.- -SInCe that t!m'e, the- oe' – — havior of the market, as it traded in the supply area, has been absolutely typical of an overwhelming demand for stock running head-on Into an equally powerful level of offerings. In this l1gh—r;–last week's performance was absolutely normal. On March 18, the Dow reached its high to date at an intra-day figure of 922.30. Three successive days of mild decline finally led to a lO-point rout in Wednesday's trading, and this continued early Thursday as the 900 level was repenetrated on the way down and an intra-day bottom of 889.03 was reached. Then demand reasserted Itself and the market recovered almost all of its earlier losses in Thursday afternoon's activity, continuing the advance back up through 900 on Friday morning. The most logical market expectation, at least for the near term, is more of the same, It is our belief that, at present levels, the market is undergoing what is, by all odds, Its most important test since the rise began last May. In a sense, what has happened over the past 10 months is that the market has removed the element of irrational fear that became a part of the stock price structure during the terminal phase of the 1969-1970 bear market. The bulk of stocks have now returned to what could be called a normal price level — one which does not include fear of what lies ahead but which, conversely, does not reflect undue optimism about the future. In other words, for the first time the advance has reached a stage from which It could be turned back. We emphasize could, because we do not think it will be — this optimism being based on the view that the economy is improving to a greater degree than the cynics would have us believe, It is this improvement, we think, that is not yet reflected In the price structure, and, if, as, and whe!1 ,.nimprovin9sn.9my.mat.!'rializes, !t ,can ,weJ.btl!.I,..ReJ-Lect,-i,j)1 btjI..sg\lltY.llrjes . …, In such-an environment, -attractlv-e inestment opportunities Can- be found in those areas where a good deal of fundamental optimism is, in fact, justified. Such is the case, for example, among a broad spectrum of Issues which are In a position to benefit from the drastically-changed monetary climate of the past year. Many investors, especially those who have been concentrating on the amazing performance of the stock market, failed to note the equally dynamic drop of interest rates, especially short-term rates. Three-month treasury bill yields have dropped from over 8 in January, 1970 to under 3.5 recently, and federal funds from 9 to 3. All of this has, of course, been a reflection of the huge infusion of money into the economy, and a sluggish demand for loans, which has produced a meteoric rise in bank reserves and in the monetary base. Paradoxically enough, the most Important beneficiaries of this trend will be money lenders. Despite the fact that the interest rates which they charge for loans are declining, banks will benefit from widening profit margins due to even greater reductions in borrowing costs and the availability of additional funds which will enable them to handle the credit needs of secondary as well as prime clients. Also in a position to benefit from the greater availability of credit will be savings and loan issues. A high rate of savings gives the S & L's more money to lend, and lower interest rates, which have the effect of reducing monthly mortgage payments, make more families eligible for mortgage credit — all this taking place during a period of huge pent-up demand for housing, Insurance com- panies also, enjoying capital gains from their stock and bond portfolios, should do well under anti- cipated conditions of continued monetary ease. A number of financially-oriented stocks have attractive technical patterns. In the banking area, Chase ,Manhattan Corporationv(57) .has ,a -nearterm -objective of.77.followed .-by higherlevels with —-I strong support in the low 50's. Chemical New York CorpOration (66), with support at 60, has a 90- 104 price target. Among savings and loans, the quality issue in the industry, First Charter Financial (48) has an Intermediate-term price target of 70 with support at the 45 level. Great Western Flnancial (27) also appears technically attractive with a preliminary 40-50 price target. In the insurance field, Aetna Life &.Casualty (58) has an 80-92 objective and Travelers Corporation (37) has a 50-80 poten- tial. We think that financial stocks should form an important part of conservative investment port- folios in 1971. Dow-Jones Ind. (1100 a.m.) 905.19 ANTHONY W. TABELL S&P (1100 a.m.) 100.04 DELAFIELD, HARVEY, TABELL AWTmn No stalement or expression of opinion or any other motter herein contomed IS, or ., to be deemed to be, directly or indirectly, on offer or the sollCltahon of an offer to buy or sell any security referred to or mentloncd The mailer IS presented merely for the conVCllcn. of Ihe subSCriber Whde -Ne believe the sources of our tnformatlon 10 be rellcble, we In no way represent Of guarantee Ihe accuracy thereof nor of the statemenls mlde herein Any odlOn 10 be token by the subscriber should be bosed on hiS own Investlgahon and Information Janney Montgomery Seoll, Inc, as a corporation, and ItS officers or employees, moy now have, or may later toke, poslltons or trades In fesped to any securilles mentioned In Ihl5 or ony future .ssue, and such pOSition may be different from any views now or hereofter eypressed In thu or any other Issue Jonney Montgomery Scoll, tnc , whICh IS reglltered With the SEC as on Inveslment adVisor, may give adVice 10 lIs InvestmCnt adVISOry and othel customers Independ!!nt!y of any statements mode In thiS or In any other Issue Further Information on any security mentioned herein IS available on request

————————— — —– TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIYISION OF MEMBER NEW YORK STOCK EXCHANGE MEMBER AMERICAN STOCK EXCHNGE April 2, 1971 Tax reform is a subject much in the news of late. It has been suggested that a major program for over!2hauling the present tax s,cture. will be poposed th ne!.,;,.ure b the .Nixon AdmistratiO, an .,….. – – there'are'afew observers -who-wIll-not agree– whatever tlielr blases as to the shape reform sliould take — that change is long overdue. This is particularly true, in our own opinion, of the way in which we have chosen to tax corporate profits. The eloquent Dr. Henry Wallich, Yale Professor and Senior Consultant to the Secretary of the Trea9..lry, has made a valuable contribution to tax reform discussion in an article in the April Fortune. In it he dis- cussed VAT, which is not a brand of Scotch, but the value-added tax, a device particularly popular in Western Europe. VAT, quite Simply, consists of a tax levied at a fixed percentage rate on all sales, but with the tax paid by suppliers deductible. Since the tax is effectively imposed only once on a given stream of income, it becomes, in reality, an actual percentage tax on G. N . P. VAT has long been one of our favorite proposals, and Professor Wallich states its case eloquently in his article –which we wholeheartedly recommend. He despairs, however, of being able, in p'actice, to sub- stitute VAT for the corporate income tax entirely. In this connection, we have our own favorite radical pro- posal which, we think, could make for both a more efficient tax structure and better alloci'tion of economic resources. That proposal is quite Simply to raise the corporate income tax to 100, with dividends as a deductible item. The effect of this, naturally, would be to eliminate the current corporate practice of retaining earnings and to force all profits to be paid in the form of dividends to stockholders. To understand the need for this sort of radical surgery, it is necessary to understand what is wrong with the present system. Its central shortcoming, in our opinion, is that, last year, some 45 billion (total after-tax corporate profits) was deployed without being in the least subject to the disciphne of the market place. The net effect of the present system is to create two classes of corporate earnings — one — privileged, and one subject to profftS(rumost -Sti\lollhon last vyieratuaillsytacxoendfisocnacteorayt taxation. -roughlY' a -T5h0eurnadteis. trTihbeuiteedaRinodrteiorl-lg-'e2f!.S.cothrpeorsaatme'e–'–'-1 50 lopped off the top, after which the reCipient of the dividend pays a tax of between 20 and 70 on the dividend income he receives. For investors in the top tax bracket, this involves a total tax of 85 –or a case where, of 6.66 of corporate profits, 1.00 is returned to the owner of the bUSiness, and 5.66 goes to the taxing authorities. This is not even the worst obj ection, for the most pernicious effect of the present system is on resotrce deployment. A manufacturer of, say, buggy whips WIll normally retain some portion of hIS post-tax proht and reinvest it — in most cases in expanded buggy-whip capacity. He will not use the earnings, for example, to enter the computer peripheral bUSiness because he has spent his enhre life in buggy whips, and knows little about computers. And he will be disinclined to pay a higher dividend because the entire system conspires to make a dollar of retained earnmgs worth more than a dollar of distributed earnings. This process tends to go on, until the buggy whip manufacturer goes out of business taking large sums of his stockholder's money down the drain with him. Had our manufacturer been forced to pay h,S earnings in dividends to stockholders, they, at least, would have had the option as to whether investment in buggy whips or computer peripherals was in their own best interests. In practical terms, our proposed system would have less effect than migh't be expected on total tax revenues. Pre-tax corporate profits last year (third quarter-annual rate) were 84.4 billion, of which 38.9 bilhon was paid under the present corporate-profit tax, 25.4 billion was distnbuted as diVidends, and 20.1 billion was retained. Suppose, the entire 84.4 billion, 59 million more than was the case last year, had been distributed and was subject to tax. Assuming an average 40 tax rate, this would pro- duce 23.6 billion in personal income tax revenue to make up for the 38.9 billion lost from the present step'– -'coi'porafetax.-The15'bllnondifferenceis–wherEl'ProfeSsorWallich'S'VajueaddedFtaxmigti'iWell into the picture. The major objection to thIS system, of course, would be that the corporate community would have to find some way of replacing the 20 billion of stockholder's money, which it is now deploying without consulting with those stockholders. The answer, of course, is that they could obtain it quite Simply by the flotation of new secunty issues. We trust we are not overly proud of our own industry, if we state that Wall Street is admIrably equipped to handle the distribution of such lssues at minimal cost — the hnancial community's historic function and something it has always done rather well. And it would then be the free-market, rather than the whim of corporate executives which would determine where newly- generated capItal was employed and at what cost. We think, in summary, that forced distribution of corporate profits, elimination of the corporate income tax, plus a possible value-added tax, would oonstitute not only a meaningful tax reform, but would be a stimulus to more efficient allocation of scarce capital resources. Dow-Jones Ind. (1100 a.m.) 905.35 S&P (1100 a.m.) 100.53 AWT'wn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL \ No statement or elpreSSlon of opinion or any other motter herein contOlned IS, or I to be deemed to be, directly or indirectly, an oHer or the sollcltotlon of on offer to buy or sell any security referred to or menhoned The motter IS presented merely for the conVCllence of the subscriber While oNe believe the sources of our mformotlon to be reliable, we m no way represent or guorantee the accuracy thereof nor of the stotements mude herem Any action to be token by Ihe subSCriber should be based on hiS own mvestlgallon and Information Janney Montgomery Scott, Inc, os 0 corporotlon, and Its officers or employees, may now have, or may later toke, pOSitions or Irades In respect 10 any secUrities menlloned m thiS or any future Issue, ond such poslhon moy be different from any Views now or hereafter expressed In thiS or ony other Issue Jonney Montgome.y Scali, Inc, which IS registered With the SEC as on mvestment adVisor, moy give adVice 10 lIS mvestment adVisory and alhel customers mdependently of ony stotemenTS made In thiS or m any other Issue further information on ony security mentioned herein IS avoilable on request

————————————————– — TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMeER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCI( EXCHANGE April 8, 1971 That friendly beast, the 1970-1971 bull, shook off another one of his normal periods of lassitude –and -began rattling Ms-cage'ag-ain-late lastweelC'After a2 -1/'2 week-periOd -oCdullrre'SS'-going–back— ….. to mid-March, the market put on a reasonably good rally on Tuesday and Wednesday wlth the Dow reaching a new intra-day bull market peak of 925.94 confirmed by an intra-day high of 209.82 in the Transportation Index. Volume climbed along with prices and Wednesday's trading saw more than 22 million shares change hands. Now it must be admitted that the momentum of November-February is no longer with us. As a matter of fact, the uptrend channel, which had contained the Dow since the November lows, was broken on the late-March decline. In the Tuesday and Wednesday rallies, advancing stocks out- numbered declining issues by, roughly, 800-500. Investors will recall that earlier in the rise. surges to new highs were invariably accompanied by well in excess of 1,000 advancing stocks. However, faulting the market on thi.s pOint is like criticizing a driver who has slowed from 100 miles an hour to 80 miles an hour for making no progress. Probably one of the most important determinants of investment success is adjusting one's psychol- ogy to the current phase of the stock market cycle. This is often a difficult thing to do, for the enttre nature of that cycle mitigates against having the proper mental attitude. How many investors went rushing out to hock the family jewels and buy stocks last summer — starry-eyed in the realization that equities were cheaper than they had been in over a decade That wonderful commodity, 20-20 hindSight, tells us, of course, that this conclusion was correct, but last May, with Armageddon a pparently at hand, there were precious few who actually believed it. It has been pointed out that bull markets generally consist of three phases. The first consists of -Jlothlng.morethanthe.JJndOi!lgoftheungerV'alJJation.broughtcabout.bythe.peviousbear -mar-ket..In ' the second phase, the market begins to discount a changed set of economic conditions. And, in the third phase. of course, it begins to discount not the future but the hereafter. The difficulty in maintaining one's psychological equilibrium during each of these stages is com- pounded by the naive persistence of the belief that, over the short run, fundamentals determine prices. Admittedly, over the long run, they are the sole determinant. But for the intermediate term, price is determined by a combination of fundamental factors and the extent to which the market has already adjusted to those factors. Thus, in the first phase of a bull market, we are invariably beset with lamentations about how the market has moved too fast, how it has outrun any foreseeable improvement in corporate profits, and how it is in need of a correction. (Any resemblance in the foregoing to the comment we have been hearing for the past six months is intentional). None of the chanters of the foregoing incantations recall that, before the rise which worries them so deeply, the market had declined to a level which was objectively ridiculous. Now it is our belief that the current upswing has moved into the second phase mentioned above, and it is the purpose of this letter to offer a few suggestions on the proper psychology for the in- vestor to adopt First of all, we think, as we get into the second and perhaps the third quarter, earn- ings are going to begin to improve, and as they do improve, invariably the consensus comment is going to change. The former worry-warts will suddenly become optimists, and we will be told that stocks should certainly not be sold, because, after all, the fundamentals are getting better. It will be conveniently forgotten that the Dow is already up 300 points in recognition of those better fundamentals. -Looked at another waY, it-isonlynecessarytoglance atacnart oCtheaverages for the past five years to see that, in the past, whenever the Dow has moved to the middle to upper 900' s, it has tended to be a rather good sale. It might be worthwhile bearing this sobering fact in mind, as invest- ment deCisions are made in the months ahead. Now, none of the above is intended to indicate pessimism, bearishness or even a belief that the market is likely to move lower on a short-term basis. It is simply to suggest that a great many stocks, at least, have returned to what can be called a normal price level. And from such a starting pOint, one has to be more sure than ever of dramatically improving fundamentals before a given issue can be considered particularly attractive. In purely technical terms, the current market phase is where selectivity begins to rear its ugly head. It is a period where portfolio switching becomes more im- portant and, where, in the case of a fair number of stocks, profit-taking should be conSidered. And, while the investor remains aggressively committed and watches his portfolio value rise, he should be prepared to regard an increasing level of bullish comment with a progressively more jaundiced eye. Dow-Jones Ind. 920.39 ANTHONYW. TABELL S&P 102.10 AWTmn DELAFIELD, HARVEY. TABELL No statement or expression of opinion or any other matter herein contolned IS, or IS to be deemed 10 be, dlfectly or indirectly, an offer or the SOI'Cllatlon of an offer to buy or sell any security referred to or mentioned The mailer 's presented merely for the converlence of the subscriber While we bellcve the sources of our Informahan 10 be reltoble, we In no way represent or guarantee the accuracy thereof nor of the statemenh ml,lde herein Any action 10 be token by the subSCriber should be based on hiS own Investlgallon and Information Jonney Montgomery Scott, Inc, as a corporation, and Its offICers Of employees, may now have, or moy later toke. pOSitions or trades In respect 10 any seCUrities men1!oned In Ihls or any fuTure Issue, and such pOSItion may be different from any views now or hereafter expressed In this or any other ISsue Janney Montgomery Scott, Inc, which IS regIStered With the SEC as on investment adVisor, may give adVice to Its Investment adVISOry and other cvslomers Independently of any Slolemen!s mode 1M thiS or 1M any other Issue Further ,nfarmatlon on any sccuflly mentioned herein is available on request

TABELL'S MARKET LETTER -; 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE April 16, 1971 The events of he week once more proved the wisdom of the old Wall Street adage, Don't fight !hl''' .2n,e ,!gai,!erstratighe,remE!.n2-011s stg..,gf,!ho.lesencE!ui!J,6S'.!,h,,– Jones Industrials, in five consecutive rising sessions, reached a new bUll market high of 945.69 on an intra-day basis. Less than II months after the lows of last May, the Industrial Index has now tacked on in excess of 300 points. This advance was confirmed by the Transportation Index which reached an intra-day peak of 221. 71. The only cloud on the horizon remains the utilities — still essentially unable to make any progress and lagging well below their peak of last January — a high attained when the Industrials were almost 100 pOints lower. We stress, again, the folly, in this kind of environment, of waiting for corrections. Interruptions in the upswing have, since the end of last year, been conspicuous by their absence, and we think this will continue to be the case until the market is a good deal closer to its ultimate objective. The only sensible course of action in a bull market is Confucius 0 apocryphal recommendation to relax and enjoy it. It is money, of course, that fuels bUll markets and it is an interesting exercise to try to identify where the money fueling this one has come from in the past and where, in fact, it may come from in the future. An examination of the pertinent statistics reveals quite clearly that the impetus for the rise so far has come almost exclusively from the activity of the institutional investor. In fact, to a degree unprecedented in any bUll market since World War II, this one has been almost exclusively a product of institutional buying. The only area of institutional activity for which actual statistics are available is, of course, the mutual fund industry. It is interesting to note that the funds, from August of last year through February, have made net new purchases in excess of 2.2 billion. This is roughly 25 more than …the ,amounttheydnvested–in'thecomparablestageof,theI9-661968 'buUnlarket-Itis;-wethink;a – . – , fair assumption that the action of the fund industry reflects the activity of the other larger segments of the institutional investment fraternity (pension funds, banks, etc.). While all this institutional investment has been going on, all the available eVidence indicates that individual investors have not only failed to contribute to the rise but, indeed, have, in all proba- bility, been net sellers. The odd-lotter, for example, has been dumping some 300,000 shares of stock per day on the market on a net basis ever since December. Odd lot sales have consistently been run- ning at more than twice purchases for four months. The ratio that has r before been attained, or ever approached, in over 40 years of odd-lot trading history. Moreover, there is scanty evidence of any buying activity on the part of the individual round lot investor. New York Stock Exchange margin debt reached a peak of over 6-1/2 billion in May, 1968, six months before the market reached its high. It declined steadily to a level of under 4 billion around the lows of last summer and since that time has done little more than move up to just over the 4 billion leveL The present bUll market is the first one in the post-war era where margin debt had not risen to a new high within a few months after the advance began. In the present instance, far from being at a new high, margin borrowing is hovering around two thirds of its 1968 peak and this in the face of a fairly substantial reduction in margin requirements last summer. ' It is clear, therefore, that it has been institutions and institutions almost exclusively that have provided the spark for the advance to date and it is, at least, an arguable contention that the indivi- dual investor must begin to bear his share of the load if the advance is gOing to continue a good deal further. A large part of institutional activity to date has consisted of losing the huge cash reserves. …. -that h'ad 'been l;uiltup as of fast' su'mmer. M'uh.al Funds, fo-;-;;api, have reduced their cash position from over 12 to 7 as of February. Obviously, this process cannot go on indefinitely. Moreover, there is historical precedent to expect the level of mutual fund cash inflow to flatten out since it is at this stage of a bull market that fund redemptions generally increase. It is interest- ing to note, for example, that in February such redemptions were over 90 of sales and the funds, as a group, had one of the smallest cash inflows in recent years. Lower cash reserves, coupled with a stabilized cash inflow level, it seems to us, should combine to make the funds a less potent market force over the next half-year than they were over the past six months. It is the individual investor, therefore, who will have to take up the slack and it will be interesting to see if he does so. Were the individual buyers simply to increase his margin debt to 1968 levels, this would provide a dollar purchasing volume greater than the 2.2 billion contributed by the funds in the past six months. The present constitutes the longest period of bull market conditions on recent record during which the individual investor has firmly retained a clamp on his purse strings. A loosening of those purse strings could well provide the fuel for further market strength. Dow-Jones Ind. (1100 a.m.) 938.52 ANTHONYW. TABELL S&P (1100 a.m.) 103.36 DELAFIELD, HARVEY, TAB ELL AW'f.I!totemenl or expre.lon of Opinion or any other matter herein contained IS, or IS 10 be deemed to be, directly or indirectly, on offer or Ihe solicitation of on offer 10 buy or Mlil ony security referred to or mentioned The molter IS presented merely for the convellencc of the subscriber While we believe the sources of our Informo- tlon to be relloble we In no woy represent or guarantee the occurocy thereof nor of the statements mude herein Any o(;'lOn to be token by the subscriber should be bosed on hiS own 'lnvestlgotlon and Information Jonney Montgomery Scott, Inc, as a corporation, and lIS officers or employees, moy now have, or moy later toke, positions or trades In respect to any secuntles menlloned In thiS or any future Issue, and such pOSition moy be dlffereot from any views now or hereofter expressed In thiS or ony other usue Jonney Montgomery Scott, Inc. which IS registered With the SEC os an Investment adVisor, may gIVe adVice to I!S Investment odvlsory and athel custamers Independently af ony statements made 10 Ihls or In ony other Issue Further InfarmatlOn an any security meollaned herein IS avollable on request

TABELLS MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEM8ER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE April 23, 1971 We commented in last week's letter on the astounding lack of participation in the bull market to date sector.on the part of the individual investor — citing a few figur.es,suggesttng .haLJhe ;imlletus for ,the,market– rise had come-almosnotallyfrom the instituti;naT inone sensef course, it is unfair to sepirate institutional and so-called public trading, since the institution is, in reality, nothing more than a finan- cial intermediary providing a conduit through which public investment funds can be channeled. The be- havior of the institutional investor, therefore, is — in the long run, at least — dictated by the behavior of the individuals who entrust their funds to him. This is particularly true of the mutual fund industry. Open-end investment companies are, by their very definition, continuously selling and redeeming shares, i.e., receiving funds from and paying funds out to the investing public. It is, thus, the behavior of that public which must eventually determine the action taken by the mutual fund industry in the market. Recently the behavior of the mutual fund share holder has been a wee bit disquieting, and we suggest that his future actions are worth keeping an eye on. Since 1954, when the figures first became available, total mutual fund assets have increased from 5 billion to a peak of 54 billion in November, 1968. With the market rise, this figure is again being approached. A goodly portion of this increase has come from the continuous influx of new funds for invest- ment. Never, since 1954, have mutual fund redemptions exceeded mutual fund sales in anyone month so that the industry, as a whole, has been in a position of continuously having new cash available for new purchases. In the short run, of course, it can and occasionally has sterilized this cash inflow by building up cash reserves rather than investing the new money. In the long run, however, the industry has been virtually forced to be a net buyer of stocks, a circumstance which has something, at least, to do with the rising trend of prices over the past 15 years. Over the shorter term, the behavior of the mutual fund public has fallen into a discernable pattern based on stages of the stock market cycle. Historically, that behavior can be divided into three phases, running . roughly ..as…follows-. as. . 10 uiiZ – . ' …..–..,…… – -.- -… (I) During bear markets, sales generally tend to decline as the public becomes fearful of declining prices. But, as a counterbalance to this, redemptions slough off also, due, apparently, to public reluctance to redeem shares at a loss. Thus, sales declined from 361 million to 133 million in January-September, 1962 but redemptions which had been over 100 million in early 1961 dropped to 73 million at the bear market bottom. In 1966, sales dropped by 200 million, but redemptions again paralleled this decline. The same thing happened in the recent bear market where new sales declined from 875 million in January, 1969 to 303 million in May, 1970. Redemptions, however, also fell, dropping from 396 million to a low of 167 million last summer. (2) As the market recovers, sales tend to improve rather sluggishly but redemptions increase sharply re- flecting, evidently, the willingness of the fund investor to sell when he gets even. In the first 18 months of the 1962-1966 upswing, redemptions rose from 51 million to 110 million and during the comparable period of 1966- 1967, they increased from 132 million to over 300 million. This is paralleled by the recent experience. Fund redemptions last August were 167 million. From that point, they have risen to an all-time high of 424 million last month. (3) During the latter part of bull markets, redemptions continue to rise but generally sales begin to advance at a faster rate, increasing the cash inflow of the industry and providing an impetus for continu- ation on the upswing. This stage has not yet occurred in the present case. As suggested above, the public's behavior to date has been absolutely normal — but with a difference. In 1963 and 1967, when redemptions increased as the market advanced, they tended to average around 60 – of sales. In the 11 months since May, 1970, they have averaged 75, and in three months have been in exces s ,0f.9 O-,includingthe,las t,two. monthsreported,.–.,F ebruary. and .Marc.h…..The. fund, industry, .her,……… fore, for the past two months, has been in a position where virtually no new cash has been comingin It — has been able, in the short run, to ignore this lack of new money and has been a heavy net buyer, having invested 2.5 billion since August despite a cash inflow of barely 1 billion. This has been done by draw- ing down on cash reserves which had reached a peak of 4.8 billion last July and are now down to 3.3 billion. Now these reserves are still at a relatively high level and, based on past experience, the industrycCll probably draw on almost another 1 billion of this cash. Moreover, at some point, we should enter the third phase referred to above. Thus, sales should pick up and cash inflow should again increase. Until evidence that this is occurring takes place, however, we think the behavior of the mutual fund investor should be watched carefully. If recent tendencies perSist, this behavior could well force a change in the historic stance of the fund industry in the market place. Dow-Jones Ind. (1100 a.m.) 938.31 ANTHONYW. TABELL S&P (1100 a.m.) 103.33 DELAFIELD, HARVEY, TABftL AWTmn No statement or expreulon of opinion or any other matter herein contolned IS, or IS 10 be deemed to be, directly or Indirectly, on offer or the sol,cltotlon of on offer 10 buy Of sell any security referred to or mntloned The mailer IS presented merely for The conver-Ienee of The subSCriber While we believe the sources of our information TO be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action to be tokn by the subSCriber should be based on hiS own Investlgotlon and Information Janney MonTgomery Scott, Inc, as a corporaTion, and Its officers or employees, may now have, or may lalr lake, posItions or trades In respect 10 any securities mentioned In thiS or any future Inue, and such pOSition may be different from any Views now or hereafter expreued In thiS or any other Issue Janney Monlgomery Scott, Inc. which IS registered With the SEC as an Investment adVisor, may give adVice to Its Investment adVISOry and othel customers Independently of any statements mode In thiS or In any other Issue Further Information on any security mentioned herein IS ovodobl on request

————— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION Of' MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE April 30, 1971 Diligent readers of the Wall Street Journal must, over the past week, have been buoyed to un-;..,, paralleled.heights 'of 'euphoria.-On 'April-21;the 'lead 'headl1Mreaa Onward and 'Upwarcr-EX'perts' rk;vj – Say it is Just a Matter of Time Until the Dow Index Hits 1,000. In yesterday's issue we were pro- vided with a rationale for this optimism when the lead story revealed that first-quarter earnings for 573 companies rose 8.4 as compared with the first three months of 1970, the first year-to-year rise since the middle of 1969. The article went on to suggest the probability of continued improving profits for the remainder of 1971. We trust we will be forgiven a somewhat cynical suggestion that by the time a piece of investment news reaches the front page of the Journal, it may be a bit late to base investment policy there- on. This is in no way intended to be a criticism of Dow Jones' excellent publication. It is only to draw a distinction between forecasting and journalism, which are two horses of radically different hues. The journalist who checks his sources and reports facts. will seldom, if ever, be wrong. The forecaster must take considerably greater risks and will often wind up with egg on his face. It is, unfortunately, to the forecaster as much as to the journalist that the succes sful investment manager must refer in order to formulate profitable investment policy. The two WSJ articles, therefore, invite some comment. Insofar as the prospect of the Dow's hitting 1,000 is concerned, we find ourselves in total agreement. Attainment of that figure should hardly be difficult constituting, as it does, a mere 5 advance. In fact, due to the construction of the Index, all that would be needed is for each Dow stock to tack on three points from Thursday night's close. Thus, the prospect of a new high, with the Dow, as it is today, at 950, is singularly unstimulating . The time to take advantage of that prospect was, of course, last year. – s u Now we do mmeneveali nngottchlaati'mtllt'ehDatowou, rooywrrniifaor1e9c7al,stwinCglUplraoldieuctieidrtiangblwinitdliin-ngewflapsehaKofs.i'lWluemdinoa. rtieoent'lna's-tow-e-v-er,….-,..I- that honest reading of technical and fundamental indicators, as time went on, suggested the increas- ing likelihood of that eventuality. Thus, we were able to suggest on May 29 (DJI 700) that the effective bottom had been reached, to indicate on August 28 (DJI 761) that the bear market was most likely over, to consider on October 16 (DJI 767) at least the possibility of a new high, and to state on December 4 (DJI 805) that such an outcome was indeed most likely. We mentioned, at that time, a target of 1065 which is the forecast we have used ever since. Likewise, in regard to earnings, we suggested on September 25 (DJI 761) that earnings would probably bottom out in the fourth quarter of 1970 and advance in the first quarter of 1971. Now our intent here — honestly — is not to vaunt our own record. We could, we readily admit, have cited an equal number of our past forecasts which have turned out to be gloriously wrong. We are venturing only to suggest that the items now appearing in the financial press are more explanations of why money was made in the stock market in 1970 than reasons why it will be made in 1971. For when we attempt to forecast rather than report, problems indeed arise. We are in a bUll market, there is no doubt of that, and it is equally indubitable that there is no sign of deterioration whatsoever. Certainly, the most probable short term prediction is that the market is headed higher and will, in due course, exceed the 1,000 leveL Beyond that point, we see through a glass darkly, and in this connection we would like to recapitulate a number of pOints we have raised in past letters. The first is the fact that the secular uptrend which provided the market framework of 1942 to 1966 was decisively violated two years ago. The present slope of the secular trend, as best we can measure it, is flat. This makes forecasting a price level beyond the 1,000-1,100 level a difficult -task..Secondly, as.theDow-moves ahead-to around'1050,7as we thinkit'will,-itsyield'based.on past – l2-months dividends will approach 39'0. This is a level which has turned it back in, reading backward, – 1966, 1962, 1959,1946, 1938 and 1936. Now, with the excellent earnings outlook, dividends will, of course, be raised somewhat, but the desire for corporate liquidity will mitigate against wholesale increases. There is, moreover, the eVidence cited in our last two letters of declining cash reserves on the part of the institutions who have fueled the market so far, coupled with no indication, as yet, of increased public participation. This, of course, history tells us should come later, but the point is it has not yet manifested itself. Recent monetary policy also raises troubling questions concerning the economy and inflation, on which we expect to be commenting in future issues. All these things make a forecast at this point in time a rather difficult task. And, luckily, for the investor, one is not really needed. If he is fully invested and the market is likely to be higher in six months, there is little point in his worrying where it will be a year or two hence. This being the case, we ourselves would prefer not to peer too far into the murky future until the portents become clearer. Dow-Jones Ind. (1100 a. m.) 944.63 ANTHONY W. TAB ELL S&P (1100 a.m.) 104.20 DELAFIELD, HARVEY, TABELL .llalemenlAW'f or expreulon of opinion Of any other molter herein contolned IS, or 1 to be deemed to be, directly or mdHect!y, on offer or the SOllCIloilon of on offer to buy or sell any, security referred to or mentioned Tne matter IS presented merely for the convertence of the subSCriber While e believe the sources of our informa- tion to be rellob e, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any action to be token by Ine SlJbscnber should be based on 1'1IS own investigation and InformOllon Janney Montgomery 5011, Inc, 0 a corporohon, and lIS officers or employees, mol' now have, or may later toke, poslttons or Irodes In respect to any SeCUTIties mentioned In thiS or any futlJre ISsue, and such pOSlllon moy be different from any v,ews now or hereafter expressed In thiS or any other ,uue Janney Montgomery Scott, Inc, which IS registered wh Ine SEC as on Investmenl adVisor, may give adVice to ,IS Investment adVisory and olner customerS Independently of any statements mode In Ihls or In any other ISSlJe Further information on any seaHily men1toned herein IS aVOIloble on request

I — …. . . . . T ——. TABELL'S MARKET LETTER – – – -'- — —– ——- — ——— 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK E)(CHANGE, INC MEMBER AMERICAN STOCK eXCHANGE May 7, 1971 Well it finally happened. The crisis, nay, the catastrophe, about which a whole generation of '-, ,. Cas sandras ohas .been 'prating 'for;lO-r-thesemany-yearsTfinallY'took'place–during -thei'irst'weekof May,1971. We had, in short, a real live run on the U.S. dollar. In the corridors of Whitehall and the Quai d' Orsay and on the banks of the Rhine, lamps were burning far into the night. In Zurich the gnomes were dancing nervously about their cauldrons. For as the European central banks this week ceased their support of the U . S. dollar, that ultimate horror against which we have long been warned — devaluation of the dollar in terms of foreign currencies — came a step closer to reality. And yet, the average perennial bear of the international money market must have felt, at week's end, much like a member of one of those religiOUS sects who are periodically predicting the end of the world on a specific date, when he awakes on the morning of the Final Judgement to find every- thing pretty much as before. The Dow-Jones Industrial Average wound up the week modestly lower than it had begun. At last reports from Washington, the dome was still on the Capitol, and on Nassau Street, Princeton, New Jersey, at least, bread lines appeared to be totally absent. What we are saying, of course, is that the stock market's response ins h ru g g i ng off the events of the week was probably the correct one. The result of this week's activity in European money markets will undoubtedly be upward revaluation of key European currencies, whatever techni- cal device for accomplishing this is finally chosen. This, in one sense, at least, will constitute the long-heralded dollar devaluation. And yet, the effect of all this on an economy where net ex- ports constitute less than 1/2 of total GNP will probably be something close to nil. A rise in the price of Volkswagens, after all, is hardly calculated to send Am e ric a n Capitalism into a tail- spin. There was, however, we think, a message buried in the events of the week and, herewith, –our'attemptto-ferretltout. . – – — – – — We suspect that it is no coincidence that the run on the dollar took place at exactly this point in time, and we think that the trigger for that run was a pronounced swing in U S. monetary policy which has become increasingly evident in the available statistics for the first four months of 1971. That this policy set off a certain sequence of events in the international money markets is a matter, to us, of little consequence. The implications of the change for the health of the domestic economy could, however, be serious indeed. Far and away the best short summary of this prospect is pOSited-by Milton Friedman in the May 3 issue of Newsweek. Dr. Friedman begins by pointing out that the rate of growth in monetary aggre- gates from January to March was the greatest for any two-month period in the past quarter century. This money explosion comes at the end of what had, in our view, been a period of highly rational and successful monetary policy in 1970, during which year monetary aggregates rose at a rate rough- ly compatible with the physical abilities of the economic system to expand. This rate of monetary growth contributed to an end of the slump in real GNP, a gradually declining rate of inflation, im- proved profits in the first quarter of 1971 and a recovering stock market. The effects of 1970 policy will undoubtedly continue through 1971, and further economic recovery along with reduced inflation should result, together with stabilized and ultimately reduced unemployment. And yet, while the essential rightness of last year's policy should have been apparent, there were and still are those, in our political society, who are continuously crying for more. To what extent recent federal policy constitutes acquiescence to these elements we cannot say. But if the trend – continues and 'we stress -the-word' if ;-it can -have, it seems to 'us 'only- tWo results, renewed 'in-' flation beginning in 1972, and/or another period of monetary restraint in order to undo the damage already done. Neither of these two effects bode any good for the stock market. Contrary to superstition, above- average inflation, in the short run at least, has tended to produce declining stock prices. And, as we learned all too painfully in 1969-1970, one of the conduits through which monetary catharsis reaches the economic main stream is the stock market. Dr. Friedman pOints out, and we agree, that two months do not make a trend and that it is entirely feasible for the Federal Reserve to return to the eminently sensible policy of 1970. With the warning of recent months already having been issued, however, future growth of monetary aggregates will bear even more than the usual close watching. Dow-Jones Industrials (1100 a.m.) 932.69 ANTHONYW. TABELL S&P (1100 a.m.) 102.59 DELAFIELD, HARVEY, TAB ELL AWTmn No Iolement or expreSoSlon of opinion or any other motler herein contOlned IS, or .s to be deemed 10 be, directly or mdlrectly, on offer or the sol,cltotlon of on offer 10 buy or sell any security referred 10 or mentioned The malter I presented merely for the Convel'lImCE of the subscrIber. While Ne belIeve the iKIurces of our Informa' tlon to be reilable, we ' no way represent or guarantee the accuracy thereof nor of the statements mode hereIn Any actIon to be talen by the subSCriber should be based on h,s own InvestigatIon and InformatIon Janney Montgomery Scotl, Inc, as a corporatIon, and Its offIcers or employees, may now have, or may laler toke, pOIIIOn5 or trades In respect to any securIties mentIoned, thIS or any future Issue, and such poslllon may be dIfferent from any views nON or hereafter expressed In this or ony other Issue Jonney Montgomery Scali, Inc, whIch IS regIstered Wllh Ihe SEC os on Investment adVIsor, may gIve adVice to It mvestment adVIsory and olner customers Independently of ony statements mode ,n thiS or m any other Issue Further Informallon on any securIty mentioned herein IS ovmlable on reqllest

– – ….- – – – – – – – – – – – -, TABELL'S MARKET !, L E T T E RL- 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW fOAK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE r– May 14, 1971 Equity markets continued to shrug off the machinations of European central bankers and moved last week in what was, essentially, a sideways drift in the general range of 930-940 On the Dow. Actually, it – .,Js.. amos.! two we..s .no..in,-e.–,-the. cmarketmade ,gs .most rece!'tJ9w,.clo.sirlg, at 93.30. 4LonMay3Jr three days of decline from the bull market high of April 28. The present level of the average, therefore, \ has some significance from a technical point of view. It is made even more significant by the fact that the Index is now bouncing along the lower end of the uptrend channel which has contained it since last November 18. Continued ability, therefore, to hold above the recent low would suggest a new leg up in the bull market without any further correction. A downside penetration, on the other hand, would indicate a possible 912, not the end of the world certainly, but the most substantial correction so far in the up- swing and a definite indication that the bull market had reached a more mature stage. We would not care at this point to make a firm prediction as to the direction in which the breakoutfrom the current impasse might take place. However, most short term indicators are in oversold territory in- creasing the odds in favor of an upside resolution and, in addition, market psychology, as evidenced by rising odd lot sales into the decline of a week ago, constitutes another favorable straw in the wind. All in all, the market remains in a healthy state, suffering only by comparison with its unusually strong techni- cal condition last summer and fall. Fortune magazine, this week, released the latest edition of its compilation of the -500 largest industrial companies and, as always, it was fascinating reading to anyone who cared to take the trouble to peruse it in some depth. We know of no other readily-available compilation of statistics which by itself can be more productive of provocative ideas than the 500, and its analYSis not only provides stimulus for further in- vestigation but also affords insights into whole areas of American industry. An exercise which is always interesting to us, for example, is to see who made the list and who didn't. The latter is often the most in- teresting statistic. There is little surprise in the fact that General Motors, Standard Oil of New Jersey, –Ford.,General Electrlc,andI BM.areth e.fi ve-larges tiRd ustrialmpanie s,butcen sidel'ingt-heirpromiRenc e., in recent stock market volume statistics, it is worth noting that Bausch & Lomb, Telex and Memorex, to pick three is sues at random, are cons picuous by their absence. Among the most interesting statistics that Fortune computes is each company's rank in terms of growth in earnings per share over a lO-year period. It is certainly not startling news that Xerox has the best 10year growth rate of any of the 500 companies. We would be willing to hazard, however, that most investors would have trouble naming anyone of the next nine without peeking at the footnote at the end of the page. These nine companies rank ahead of Polaroid (27). IBM (36). Texas Instruments (234). One derives the im- pression that the concept of growth about which many on Wall Street are so excited is often divorced from the statistical reality of that growth. Fortune also gives, as part of its compilation, ranks in terms of various other statistical measures of a company's finances, including industrial group rankings. One table lists median profit gains for major in- dustrial groups in 1970. If asked to guess industries which might be near the top of the list, many might choose Office Equipment & Cbmputers. As a matter of fact, this industry had the second largest decrease. The best profit gains in 1970 were shown by Tobacco and Mining. Profit margins have often been used as an indicator of a company's health. Here again the leadtng in- dustry, surprisingly, was Mining. Of the 10 highest-.-anked companies in return on sales last year, six were, in fact, mining companies. (Newmont Mining, Texas Gulf Sulphur, American Smelting, Phelps Dodge, and Hanna Mining.) Two other measures often used in analysis are sales per employee and sales per dollar of stockholders equity. The first statistic measures sensitivity to rising labor costs and the second is some indication of ability.to increase sales with minimum dilution. The industry which stands out clearly.. ———..- …… —- -.. ….. ..1 –… …… – . ' —. — in b.oth the……. — se cate- gories is the meat packing industry. Five of the first six companies ranked by sales per employee are meat packers as are seven of the first eight ranked by sales in relation to equity. Now, as noted above, this sort of thing is nothing more than a stimulus to further investigation. How- ever, the facts we have noted are only random samples of hundreds of equally interesting pieces of tnfor- mation that can be gleaned from a study of the 500. In these terms we think such study is a useful exercise. NOTE The next nine companies in order of 1O-year earnings growth were Koehring Company, Colt Indus- tries, Akzona Inc, Skyline Corp, American Petrofina, Pneumo DynamiCS Corp, Loew's Theatres, Capitol Industries and Gulf & Western Industries. Dow-Jones Industrials (1100 a, m,) 935,71 S&P (HOO a,m.) 102.50 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No sfotement or expression of opinion or any other matler herein contained IS, or IS to be deemed to be, directly or IndIrectly, on offer or the soliCitation of on offe' to buy or !.ell ony security referred 10 or mentIOned The matter IS presented merely for the convellenCE of the subSCriber While we believe the sources of our informa- tion to be reliable, we In no way represent or guorontee the accuracy thereof nor of the statements mude herein Any actIOn to be token by the subcflber should be bosed on hl own investigation and information Janney Montgomery Scoil, Inc, as a corporation, and Its officers or employees, may now have, or may loler toke, poslhons or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such position may be dlfferenl from any Views now or hereafter expressed In thiS or ony other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on investment adVisor, may give adVice 10 Its Investment odvlOry and othel customers Independently of any stotements made In thiS or In any other Issue Further Informotlon on any security mentioned herein 1 available on request

TABELL-S MARKET LETTER —— —– j 909 STATE ROAD. PRINCETON NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCK EXCHANGE – May 21, 1971 We suggested in last week's letter that a downside penetration of the 930-940 range, which had contained the Dow in early May, could produce a decline to around the 912 level. The penetration, 'unfortunately;'taCfk-plcrceb-eforeth8 cletterwa sii1the' hand s of omost'read ers; with–th-emarket'break – ..1…… ing sharply on Monday morning and posting, ultimately, a IS-point decline. Reaching of the downside target of 912 was accomplished with equal alacrity. This occurred some time between 11 and 12 dclock on Tuesday whereupon a brisk rally was staged, reaching an intra-day peak of 931. 42 on Thursday. An attempt to forecast the market environment for the remainder of 1971 finds post-war market history offering a variety of models. Not all of these are clear-cut bull and bear markets. Examples of these two phenomena abound, of course, but there are equally frequent examples of markets that fit into neither category. Reviewed below are some of the shapes the market for the rest of the year might take. 1) A Continued Bull Market. This must remain, by all odds, the most probable market assumption. An impressive array of fundamental and technical arguments can be marshalled in its favor. The most plausible point-and-figure objective for the Dow remains 1065, and the market remains locked firmly within the confines of the uptrend channel in which it has held since last May. The vast majority of technical indicators are now precisely where the textbooks tell us they ought to be, somewhere in the middle stages of a major upswing. And, from a time point of View, the less-than-one-year age of the present rise is mere adolescence for bull markets as measured by post-war standards. A continued advance similar to those of 1958-1959, 1963-1964 or 1967 must, therefore, remain the most likely forecast model. 2) A Major Bear Market. This, on the basis of evidence currently available, is the least likely probability. Distribution exists but, most assuredly, at this pOint, not of the magnitude to suggest a — major drop-on the order of 1962-i966or 1969-1970- ParadoxiCally, the more the maikefwere-to-dr6p- C from these levels, the greater would become the certainty that a buying opportunity was being presented. This leads us to the third probability. 3) A Surprise Decline. This is a not-uncommon phenomenon, consisting of a sudden quick drop in the averages which is, equally quickly, erased. The most obViOUS example was 1965 where, in May-June, the Dow dropped over 100 pOints in 33 trading days and then recovered to stage the final dynamiC upthrust of the 1962-1966 bull market. We are probably early in the game for this one, but it could occur, and its probability would be signaled by a drop below the 900 level. As suggested above, if such a drop were to occur at this stage, all downside targets suggested by current distributional tops would be reached, and a strong buying opportunity would be presented. 4) A Protracted Trading Range. This has been a fairly-frequent occurrence in the past, often lasting for considerable periods of time. Such a trading range can have either an upward or downward bias. For example, after a two-year bull market into September, 1951, the market spent the Fall of 1951 and most of 1952 swinging sideways back and forth. The bias in this case was upward with each swing producing a modest new high. The whole thing was capped off by a modest 13 decline in 1953. 1955-1957 produced another market of the same sort with a somewhat more bearish bias. The April, 1956 high was later twice equalled but never exceeded and the period was culminated with the major decline of 1957. It is, in our view, not inconceivable that we might be entering into such a period, with our 1065 objective being reached or approached some time on one of the upswings. 5) A Selective Downswing.The.market from.the Summer. of 1959-through the Fall of 1-960 ,is-the best example of this one. As measured by the average, it could be called a bear market, with the Dow dropping well over 100 pOints over a nine-month period. It was unique, however, in the fact that a great many stocks totally ignored a major decline in the averages and went sailing ahead to new high territory during the entire period. Evaluation of relative probabilities of the above market environments leaves, in our mind, only one sensible investment policy at this point — a continued fully invested position. Such a position was uncomfortable last summer due to fears of a continued bear market. It is uncomfortable today in view of the 300-point rise which has already taken place. Nonetheless, the evidence, at the moment, suggests that it is the correct one. Dow-Jones Industrials (1100 a.m.) 923.83 S&P (1100 a.m.) 101.22 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expreulon of opinion or ony other maHer nerelll contamed IS, or 15 to be deemed to be, directly or mdlrectly, on offer or the solicltollon of on offer to buy or sell ony sec.unty referred 10 or menllOned The motler I presented merely for the conVCllCnCfI of the subscriber While -Ne believe the sources of our Informotlon to be relloble, we In no woy represent or guorantee the occurocy thereof nor at the statements mude herem Any action to be taken by the subSCriber should be based on hi! own Investigation and information Janney Montgomery Seoll, Inc, 0 a corporotlon, and Its officers or employees, may now hove, or may loler toke, posihons or trodes 1M respect to any securities mentioned In thiS or any future Issue, and such position moy be different from any views now or hereafter expressed In Ihls or any olher Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment adVisor, may give adVice to lIs Investment adVisory and other customers Independently of any statements mode In thiS or In any other Issue further Information on any security mentIOned herem IS available on request

;——–. ——l ,' . I TABELL'S MARKET i I LETTER 1 L 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE,INC MEMBER AMERICAN STOCK EXCHANGe .. … — The 1970-1971 bull market celebrated its first birthday last week but the celebration was not a particularly happy one. Monday and Tuesday saw sharp declines, with the latter day's intraday low actually bringing the Dow-Jones Industrial Average belOW the 900 level. Moderate firmness set in on Tuesday afternoon, and trading for the remainder of the week was desultory with the market, in general, drifting slightly lower, The slide from last April's highs has now carried the Dow down just under 5, on a closing basis, making it the most important interruption in the advance that has occurred since last August. It is, indeed, the first time s'ince last summer that the market has undergone what can, in the true sense of the word, be called a full-scale short-term correction. It is interesting to note that the weakness started from the April 28 high of 950.82. 950 on the Dow is, as it happens, a level which has had unfortunate overtones for the stock market for quite some time. Last April's high constituted the fifth time in the past s even years that this level had been attained or approached and, in each of the prior cases, in retrospect, the market turned out to be a rather'good sale. The first time the level was approached, the Dow reached an intra-day peak of 944 in May, 1965 and promptly reacted to an intra-day low of 832 the following mcnth. It recovered past 950 in the Fall of 1965, but topped out at 1000 in February 1966, plunging to an intra-day low of 736 the following Fall in the 1966 bear market. In the Fall of 1967, the 950 level was again attained, and this was promptly followed by a decline to 816 in March, 1968. 950was reachd.for the 4 – ….. 'fourth-timeiJn;eptem15er, T9'6SOTI a rally 'wnich carded abbvt990 ln'Oecemoer, 1968 -'fh'eafter-'- math of that one is unlikely to be forgotten. Thus the results of attaining 950 have been,to date, two substantial declines and two major bear markets. For reasons which we have detailed in past issues of this letter, we think the chances of a more favorable outccme this time are fairly good. A moderate decline on the order of 1965 or 1968 remains a possibility, but the sort of evidence which leads one to fcrecast a major drop is not yet, at least, present. Paradoxically, the course of action which would make the analyst's job easiest would be for the market to continue lower from present levels. Were a further drop below 900 to take place, one could buy into such a decline with, in our view, a great deal of confidence. Let us detail the reasons for this. Any market drop, and the ,pres ent one is no exception, is preceed ed by the formation of distributional patterns in a significant number of stocks. In the present case, such patterns have been forming in most issues for only the past couple of months and downside objectives are only moderately below current levels. A downside mOve, say, to 850, would cause the bulk of those stccks which had developed distributional patterns to move down to their objectives. From that stage, the degree of risk would be small. By contrast, a short-term rally from present levels would leave the picture murky for some period of time. Potential distributional patterns would be broadened, thus further increasing risk, and these patterns could be cancelled only after a decisive move to new highs. ,-,-We.,are returning, .for.theJirst .time in,18,months ,really ,t0.a,period,where'stockselect-ion'iS – cif extreme importance. From November, 1969 through May, 1970, investment success was achieved by being out of equities, and since that time it has been achieved by being in them — almost regardless of which ones. We have, in short, in the past year and a half, seen the two sorts of market where stock selection is a minor factor, the terminal stages of a bear market when all stocks go down and the initial stages of a bull market when all stocks go up. We are now returning to the more normal situation, when individual patterns are diverse. The investor can protect himself against the uncertainties of a confused general market picture by restricting his holdings to those issues which are close to support or which lack potential distributional patterns. Dow-Jones Industrial (1100 a. m.) 904.79 S&P (1100 a.m.) 99.19 AWTmn ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expreHlon of Opinion or cny other motter herein contolned IS, or IS to be deemed 0 be, directly or mdlrectly, on offer or the sol,cltotlon of on offer to buy or sell any security referred to or mentioned The matter IS presented merely for the converlence of the subscriber While we believe the sources of our Informa tlcn to be re\.oble, we \\ f'l0 way repreo.ef'l! or guoraf'ltee the occurac,/ thereaf nor of the 5.\olemef'lt5. mud, here'!'….. Any OChof'l to be tOKen by the subSCriber should be based on ha own Investigation and Information Janney MOf'ltgomery Scott, Inc, 6s 'a corporotlon, and lIs officers or employees, may now have, or may later take, pOSitIons or trades in respect to any securottes mentIOned In Ihls or any future Issue, and such pOSitIon may be different from any Views now or hereafter expressed In HilS or any other Issue Janney Montgomery Scolf, Inc, whIch IS reglste-ed With the SEC as on Investment adVIsor, may gIve adVice to Its Inestment adVisory and othel customers Independently of ony slatemena mode 111 tIS or In ony other Issue Further Information on any security mentioned herein IS ovallable on request