Tabell’s Market Letter – March 10, 1972

-. . — . . -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