Viewing Month: March 1972

Tabell’s Market Letter – March 03, 1972

Tabell’s Market Letter – March 03, 1972

Tabell's Market Letter - March 03, 1972
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'-'l– – .0- TABELL'S MARKET LETTER – 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER New YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE 'Is there any point to which you would wish to draw my attention' March 3, 1972 'To the curious incident of the dog in the night-time.' 'The dog did-nothingIn the night;time. . .. 'That was the curious incident', remarked Sherlock Holmes. Sir Arthur Conan Doyle, Silver Blaze We have always liked the above quotation,since the great detective's reasoning in this case often has a particular applicability to stock market forecasting. In a great many cases, the most in- teresting factor for market analysis is not that certain things are happening but that certain things are not happening. This is especially true at the present time. A great deal of market comment seems to regard it as peculiar every time the Dow stages another upward burst as it did again last week. Such comment often centers on the rapidity of the rise since last November and the need for correction or consolidation of that rise. And yet the curious fact of the stock market today is most certainly not the fact that it is going up. The stock market is a mov- ing object and the upward direction of the current move has been clearly established. The curious fact at the moment is that very little evidence of the sort of deterioration which would suggest the imminent end of that uptrend has as yet presented itself. Market analysis, it seems to us, must focus on different things at different times. Quite obviou&- ly, that analysis must take a different perspective in March, 1972 than it did in November, 1971 or April-May, 1970. During the latter two periods, with the market averages having moved sharply lower, the focus was on picking a point at which the market was likely to bottom. At the present time, the market technician is directing his attention towards an entirely different set of indicators — those which have historically indicated market tops. And, as we said above, the curious inci- dent,,atthe moment ,at, least ,,is.that, thes e-.indicatorsshow 'nos ign-of-amaj or top -being-imminent— Let us review a few of the more obvious such signs. In terms of a smoothed curve, an uptrend is rcognized as being in effect when an index, such as the Dow, is rising at a level above its own rising longer-term moving average. At the moment, the Dow, at around 930, is comfortably above its 200-day moving average of 884 and that average, flat for the last week or so, will inevitably, due to the nature of its construction, shortly begin to rise. In terms of its computed trend, the action of the Dow since May, 1970 can be described as an uptrend channel some 200 points wide, rising at the rate of some. 45 points per day. The current level of the index places it squarely in the middle of the current range of that channel which is now bounded roughly by 846 on the downSide and 1038 on the upside. Much has been made of the fact that breadth action over the past few weeks has been less im- pressive than formerly. For example, on Wednesday, with the Dow up over seven points, only 913 issues advanced whereas a figure well above 1000 advances might have been plausible earlier in the move. And yet, our indices of market breadth last week moved comfortably into new high ground along with the average, and these indices have succesively confirmed each consecutive new peak posted in the Dow. A failure to confirm could, of course, occur were the Dow to move above its April, 1971 high and breadth were to fail to follow. The whole point, though, is that this has not yet taken place. The object of this exercise is not to turn ourselves into an insufferable Pollyana. There are a number of reasons, and they have been amplified in detail in past issues of this letter, to expect that the present move may turn out t6 be limited in scope. This is a far different thing; however; ,;. from attempting to read into the present figures the fact that the move is over. Twenty-twenty hind- sight tells us that a major bottom occurred in May, 1970 and an intermediate-term bottom followed last November. The fact that we recognize these past events as buying opportunities should not lead us to believe that opportunities of a similar magnitude are very likely to occur in the very near future, probably not until we have passed out of the present cycle into a new one. The market is where it is today, 130 points up from the November low, and very little can be done about it. The point is that capital appreciation opportunities still exist, and it is the task of the investment manager to take advantage of them. Dow-Jones Industrial (1100 a.m.) 936.03 S&P (1100 a.m.) 107.46 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWTmn .-,,- – No statement or expreslon of opinion or cny other matter herem contained IS, or IS 10 be deemed to be, dlrec1ly or mdlrectly, on offer or the ollcltotlon of an offer to buy or sell (lny security referred to or menhoned The matter IS presented merely for the convel'lencp of Ihe subscriber While -Ne believe the wurces of our Informa- lion 10 be reliable, we In no way represenl or guarantee the accuracy thereof nor of Ihe statements mude herem Any ocllon 10 be loken by the subscriber should be based on hiS own Invntlgallon and information Janney Montgomery call, Inc, as a corporal lon, and Its officers or employees, may now have, or may laler toke, poSitions or trades In respect 10 any seC\Jrlt.es mentioned In thiS or any future Issue, and such poslhan moy be different from any views now or hereafter elpressed In thiS or any other Issue Janney Montgomery Scali, Inc, which '5 reglslered Wllh the SEC as on ,nvestment adVisor, may give adVice to its investment adVisory and other customers Independently of any statements mode 11'1 thiS or In any other iuue Funher InfOrmaTtOn on any seC\Jflty menlloned herein IS ava,loble on request

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Tabell’s Market Letter – March 10, 1972

Tabell’s Market Letter – March 10, 1972

Tabell's Market Letter - March 10, 1972
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-. . — . . -r———–' .– I TABELL'S MARKET LETTER – –.- .– —— 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVl810N OF MEMBER HEW 'VORIC STOCI( EXCHANGE, INC MEMBER AMERICAN STOCIC EXCHANGE March 10, 1972 This week, of all weeks, should be the one for us to indulge in a bit of flag-waving, perhaps reaffirming, along with one of our competitors, our bullishness on America. For the stock market -7. an! thIs. thEL!irs ttmei!l1!IlosJ-2l/ 'ars,-that w!laYl.beenabletosaythis has actl1eveilanewall-timehigh.– – – . —— – – – — ——.– Or it has, at least, if we look at the S&P 425-stock index (which posted the high a week and a half ago), the S &P 500 or the New York Stock Exchange Index. The reason, of course, that the event wound up in the second or third paragraph of most market stories instead of under the banner headlines one would normally expect it to produce is that the familiar Dow-Jones Industrial Average still lags behind the other indicators. The poor old Dow, as a matter of fact, has, on a closing basis, not even been able to breach its high of last April and, as we all recall, its all-time peak was posted, not in November, 1968 along with the other averages, but more than six long years ago in February, 1966. It is, nonetheless, that magic 1000 level that remains the high in most investor's minds, and the huzzahs will undoubtedly be deferred until such time as this bastion is finally breached. We haste to admit we think it will be. Since October, 1970, this letter has been using 1065 as an ups ide target for the Dow Jones Industrial Average and, des pite the doubts that 1a stye a r' s decline engendered, this target has remained a valid one. Which is, of course, to say precious little. It could, in fact, be attained were each of the 30 stocks to tack on some 6-3/8 points from its close of last Monday, a process which would not necessarily create a whole new race of instant millionaires. Actually, the final achievement of new peaks at this late date raises, we think, some fairly fundamental questions. The significant fact is not the new peak but the 2-1/2 (or more) years – hashich has ,-in fact,.tak.to gettherecentral fact ofxecent stock l!larke,t history.is,,s-,-…,..I'o.' -wehave sucigested-betore,-thai-fhe Dow spent 74 months es-sentially moving sideways and that the same is true, despite a slightly greater upward bias, of the other indices. As market tech- nicians we should, we suppose, content ourselves with furnishing these bare statistics, leaving the whys and wherefores to others. Yet we are unable to resist a few thoughts. We have suggested in the past that part of the reason may lie in the name of the Dow itself. It is, after all, an index of industrial stocks. And despite their broader bases, the other indices are weighted heavily in favor of large industrial companies. Basic industry companies have had their problems in years gone by. The so-called consumer movement is one, as is the growing public feeling that industrial companies, and their stockholders, should be responsible for the waste products of those companies. More fundamental is, perhaps, the fact that while the American economy has continued to grow, that growth has tended to be centered in recent years more in the area of services than of basic industrial output. These problems may serve, at least, as a partial explan3tion of why industrial stocks as a group have had their difficulties over the past half- decade. It should also be noted that they are highly likely to continue. An even deeper-rooted explanation, and one which may be more important to the future, exists. Critics of the American economy, naturally enough, fail to cite its achievements, and those achieve- ments have indeed been real. Our standard of living has created a poverty level which would make half the citizens of the world rich beyond dreams of avarice by their own standards. We have achieved this in the post-World-War-2 era with no serious economic depressions — only an ever- diminishing series of minor slowdowns. This has been accomplished at the cost oLan inflation , wnien ,-howeverserious it has appeared recently, is not, taken in a world context and over a long enough period of time, that disturbing. And yet, as proponents of that system, we cannot claim that, having achieved all this, we have attained Utopia. More and more, the question is being raised as to whether economic growth is the sole desideratum of the good society. And if growth as a goal continues to be called into question, questions will continue to be raised as to the stock market as a vehicle for participating in that growth. Now all of this, of course, is nothing more than mere speculation as to why the stock market has behaved as it has, and may continue to do so in the future. It is meant simply to underscore our long-held contention that investment management, always a difficult task, will continue to be so during periods of societal change. It will be a process of making hard decisions as to the level of the stock market and of the relative merits of individual stocks. It will not consist of sitting back and waiting for a possibly non-existent growth trend to bail one out of one's mistakes. Dow-Jones Industrial (1200 p.m.) 940.70 ANTHONY W. TAB ELL S&P (1200 p.m.) 108.63 AWTmn DELAFIELD HARVEY, TABELL ' No sttltement or expreulon of opInion or tiny other motter herein contolned 1, or IS to be deemed to be, dIrectly or IndIrectly, on oHer or the sol1c.totlon of tin offer to buy or sell any security referred to or mentIoned The maHer IS prcsented merely for the convellenCI!I of the subSCrlber While we believe the Curbs ofbour hnfo;rb- tlon to be relIable, we In no way repreent or guorantee the occuracy thereof nor of the statements mude hereln Any tlctlon to be token by the su se(l er,' toul k e btlMld on his own posItions or trode i'n vreesStpIgeacttIo10n and ony information Janney Montgomery eaJntle mentIoned In th,s or any Scott, future Inc, os a Issue, ond corporatIon, and Its offIcers or such pOSItion may be dIfferent employees, mtly from any vIews now now ohrovhee,reoarJtmerayexptrI eersetod. e, .In tt. or ony other Issue Janney Montgomery Scott, Inc, wh,ch .s regltered Wllh the SEC as on Investment odviror, may give adVICe to Its Investment tI VISOry on ot el customers independently of tiny statements mode In liS or In any other Issue Further informatIon on ony scomfy menlloned hereIn .s aVailable on request

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Tabell’s Market Letter – March 17, 1972

Tabell’s Market Letter – March 17, 1972

Tabell's Market Letter - March 17, 1972
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TABELLIIS MARKET LETTER J 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE March 17, 1972 Money, inflation and the stock market constitute a triad of subjects which should be of interest to most investors. We plan, therefore, to devote two letters to these subjects, our concept of their interre- ..lation andthe suggestfo!\s ofthat-interrelatinn -ior-1972-1973 .—- – – – '- Readers of this letter will be aware that it possesses a certain bias toward the monetarist view of economic analysis. It will perhaps be worthwhile to examine some of the assumptions of this view. It is, first of all, based on a truism — the familiar equation, MV PT. This, translated into English, says simply that the money supply (M) times the velocity of money (V) equals total transactions (T) plus the prices (P) at which those transactions take place. Since PT is nothing more than a synonym for Gross National Product and velocity is defined as GNP divided by the money supply, the equation, of course, is true on its face. It has little practical value, however, unless a relationship between money supply and GNP can be established. The key monetarist assumption, of course, is that velocity tends to be relative- ly stable over the short run. If this assumption is true, then changes in M will have a direct and predict- able effect on the economy. The second key monetarist assumption is that the physical capacity of the economy to increase output year by year is limited and relatively fixed. Any attempt, therefore, to increase the money stock by more than that amount will simply be translated into price increase. The following table attempts to show whether the theory has worked in practice over the past 25 years. It shows the annual percentage change In six variables money supply, actual GNP, velocity, real GNP, the stock market (S&P 500) and prices (measured by subtracting real GNP change from actual GNP changEi. PERCENTAGE CHANGE IN Year Money Supply Actual GNP Velocity Real GNP SIXP 500 Prices 1947 3.67 10.94 7.01 -0.86 0.00 11.80 1948 – 1.41 11.37 -q,g49 – 0–27 ,— –04;'l 12.97 4.45 –0'i'l6- – – 1-01-2 – 0.65 ,)0–2-6 6.92 –0.-55,-'—''''' 1950 4.50 11.03 6.26 9.63 21.78 1.41 1951 5.59 15.31 9.20 7.91 16.46 7.40 1952 3.83 5.21 1.33 3.05 11.78 2.16 1953 1.10 5.53 4.38 4.48 -6.62 1.05 1954 2.72 0.05 – 2.59 – 1.41 45.02 1.46 1955 2.19 9.10 6.76 7.62 26.40 1.48 1956 1.26 5.33 4.02 1.85 2.62 3.48 1957 – 0.73 5.30 6.07 1.43 -14.31 3.86 1958 3.83 1.34 -2.40 -1.15 38.06 2.49 1959 0.57 8.14 7.53 6.39 8.48 1.74 1960 – 0.35 4.16 4.52 2.48 – 2.97 1.68 1961 2.83 3.24 0.40 1.95 23.13 1.29 1962 1.38 7.73 6.27 6.56 -11.81 1.17 1963 3.80 5.39 1.53 4.00 18.89 1.39 1964 4.90 7 .10 2.09 5.46 12.97 1.63 1965 4.98 8.30 3.16 6.32 9.06 1.99 1966 1.90 9.49 7.45 6.52 -13.09 2.97 1967 6.76 5.81 -0.88 2.60 20.09 3.22 1968 7.91 8.91 0.93 4.65 7.66 4.26 1969 1970 3.34 5.14 7.51 4.84 4.04 -0.28 2.56 -0.65 -11.36 4.95 -0.10– ,5.49- ' 1971 6.19 7.46 1.20 2.69 11.67 4.77 Average 3.02 6.72 3.63 3.54 8.94 3.18 Cursory examination of the figures bears out, we think, the essential monetarist assumptions. Velocity, while it has more than doubled in 25 years, has had relatively constant yeal'-to-year changes averaging 3.63. Moreover, the monetarist would argue that the advantages of slow steady growth in money supply are manifest as one looks, say, at the period from 1961 thru 1965. This produced, In 196z..l.966, a period of successive above-average changes in real GNP and a period of below-average Inflation with price In- creases of only a bit over 1 per year. By contrast, the past 5 years constitute a monetarist horror story, with four years of supra-normal growth punctuated by the sharp reversal of 1969. The result has been, in the monetarist view, a 1969-1971 period in which real change in GNP has been below average, and the inflation component of that change has been the largest for any period since just after World War 2. The Implications of all this for the economy and, more directly, for the stock market will be discussed in next week's letter. ANTHONY W. TABELL Dow-fones Ind. (1200 p.m) 941.75 DELAFIELD HARVEY TABELL SIXP (1200 P m I 107 81 ', AWTIDUltotement or expreslOn of opinion or any other matter herein contained IS, or IS to be deemed to be, dIrectly or Indirectly, an offer or the soliCitation of an offer to buy or sell any secuflty referred to or mentioned The matter IS presented merely for the conveIence of the subscrober. While we believe the sources of our Informa- lion 10 be reliable, we In no way represenl or guarontee Ihe accuracy Ihereof nor of Ihe statements mude herein Any action to be taken by the subscriber should be based an hIS own Invetlgatlon and information Janney Montgomery Scali, Inc, as a corporollon, and lIS offIcers or employees, may now have, or may later take, POSItions or trodes in respect to ony surrflCS mcntloned In Ih.s or any luture )nut', and svdl posihon may be different from any views now or hereafter expressed In Ihls or any other Issue Janney Montgomery Scali, tnc , whIch IS reglslered With the SEC as on Investment adVisor, may give advloCe to lIS Investment advISOry and othel customers Independently of any statemrnts mode In thiS or In any other Issue Further information on any security menlloned herein IS available on request

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Tabell’s Market Letter – March 24, 1972

Tabell’s Market Letter – March 24, 1972

Tabell's Market Letter - March 24, 1972
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I I TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIYISION OF MEMBER NEW YOAK STOCK EXCHANGE, INC. MEMBER AMERICAN STOCK EXCHANGE March 24, 1972 We presented, last week, a synopsis of the monetarist economic view together with a capsule history of the economy over the past 25 years tending to support certain assumptions of that view. We would like-; this-week,- to'ekplorefurther the effects-of-changes'in'the money supply-an-inflation and, further, on the stock market. The table published last week showed that the average annual change in the stock market over the past 25 years has been just under 9. Column 1 of the table below shows the percentage change in the S&P 500 for the eight years of greatest increase in the money supply and column 2 shows the percentage change for the eight years of least increas e in the money supply. It should be evident that increases in the money stock tend, immediately at least, to be good for the stock market. Six of the eight years in column 1 produced above-average stock market increases and the average of the eight years was one-third greater than the average for all 25 years. Even more striking is the effect of monetary stringency on the market. The average performance for the eight years of least increase in the money stock was a 1. 88 decline and these eight years include five of the seven down years that have occurred over the 25-year period. Column 3 takes the eight years of greatest money supply increase and shows, for each year, the amount of price increase, measured by subtracting the in- crease in real GNP from the increase in actual GNP. The average of 3.77 Is significantly above the 25-year average of 3.18. The fact that increases in the money stock tend to a) benefit the stock market and, b) cause inflation may lead to the aS,sumption that inflation is beneficial for stock prices. Clearly, however, over the short run, Inflation Is not helpful to common stocks. Column 4 shows the change in stock prices for the eight years of greatest inflation. The average gain Is a miniscule 1. 2 vs. an average market increase of 8.949'0. By contrast the eight years of least inflation shown in column 5 produced – -anaverage -6f–p-ercentClge gain 'for-th-esto-ck-markeYa-lm-osttwlcea-s'great-a-s -th-e-overaU-average; – – – I Years of Change Years of Greatest In Least Change Years of Increase Years In Greatest In of Change Years in of Change in Rise In Stock Rise in Stock Rise in Prices Greatest Stock Least Stock MoneySup. Prices MoneySup. Prices MoneySup. Inflation Prices Inflation Prices 1968 1967 7.66 20.09 1948 1957 – 0.65 -14.31 1968 1967 4.26 3.22 1947 0 1949 10.26 1951 16.46 1953 – 6.62 1971 1951 11.67 1960 16.46 1949 – 2.97 1971 10.26 1951 4.77 7.40 1948 – 0.65 1962 -11.81 1970 0.10 1961 23.13 1970 1965 1964 0.10 9.06 12.97 1959 1953 1956 8.48 – 6.62 2.62 1970 1965 1964 5.49 1.99 1.63 1969 -11.36 1963 1971 11.67 1950 1968 7.66 1954 18.89 21.78 45.02 1950 21.78 1962 -11.81 1950 1.41 1957 -14.31 1955 26.40 Average 12.47 – 1.88 3.77 1.20 15.88 With all of the above as prologue, we can take a glimpse into the future. First of aU, as suggest- ed last week, five years of an above-average increase in the money stock have produced a high rate of inflation causing the implementation of wage-price controls. (The monetarist view that, had money policy been more intelligent, the controls would not have been needed in the first place is impliCit.) In order to ascertain its implications, recent monetary policy must be examined more closely. The total money supply increase in 1971 was a high 6.2. This increase was achieved by U.6 annual rate of growth in the first seven months and a miniscule 15rate in the last five months,'all of which may have had something to do with the poor performance of the stock market throughout most of the second half. For 1972 a policy of stimulus is apparently being followed with the annual rate of change approaching 9 for the first 2 months of the year. We find ourselves, in other words, on the horns of a dilemma. Continued growth of the money supply will obviously benefit the stock mar- ket over the short run, and indeed that growth may account for the nearly flawless technical con- dition of the market at the present time. The dangers of continued growth, however, suggest the possible renewal of inflationary pressures. A certain skepticism regarding the efficacy of Phase 2 in combating these pressures must also be expressed. Such pressures might well lead, later in the year or in 1973, to a more stringent monetary policy. And, as the figures above quite clearly show, neither inflation or tight money tend to be particularly beneficial for the stock market. Dow-Jones Industrial (1100 a.m.) 945.36 ANTHONYW. TABELL S&P (1100 a.m.) 107.81 DElAFIELD, HARVEY, TABELL AWT'mn No statement or expreSSIOn of opinion or any other matler herein conlaliled IS, or IS to be deemed 10 be, d.rec1lv or Indirectly, an offer or the sollcllohon of an offer to'buy or sell any seCUrity referred 10 or menhoned The mailer IS presented merely for Ihe convCrlence of Ihe subscriber While oNe believe the sources of our mfarmolion to be reliable, we m no woy represent or guarantee Ihe accuracy thereof nor of the statements mode herein. Any adlon to be token by the subscnber should be based on hiS own Investigation and InformallOn Janney Montgomery Scott, Inc, as a corporation, and ,ts officers or employees, may now have, or may loler take, posItIons or trades In respect to any secuflllC5 menlloned In Ih.s Of any future 'nwc, and s,weh posilion may be d,fferenl from ony views 'lOW or hereafter epressed In thll or any other ISSU Janney Montgomery Scott, Inc, whICh IS registered With the SEC as on ,vestment adVisor, may give odvue 10 lis Investmenl adVISOry and othel cvstomer independenlly of any statements mode In thIS or In any olher Issue Further Information on any set1Jrlty mentioned herem IS ovollable on request

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