Viewing Month: April 1973

Tabell’s Market Letter – April 06, 1973

Tabell’s Market Letter – April 06, 1973

Tabell's Market Letter - April 06, 1973
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGe .- – April 6th. 1973 – – – – ;; – – — -.– – Only an incurable optimist could fmd anything good to say about the short-term action of the equity market. True enough, a week ago the market managed to stage Its strongest minor rally since the dechne began in January. That four-day advance, which carried the Dow up some 31 pOints from a closing low of 922.71 to a peak of 959.14, dIsplayed measurably better breadth and volume than either of the two rally attempts which had proceeded it, the weak one In early March and the steep but abortive three-day rise to over 1000 mid-February. DespIte this evidence of better demand, however, the ultimate fate of the most recent rise was the same as that of the prevIOus two. It rose precisely to the top of the downtrend channel which has characterized all of 1973 trading thus far and promptly faded. By Wednesday, the S & P 500 had moved into 1973 low territory and on Thursday the Dow-Jones Industrial Average followed, posting a new low for the downswing on an hourly bas is. While all this was going on. internal measures of market strength were turning in sub- par performances Declining stocks and downside volume predominated through all of last week. and there was little evidence of the demand previously evidenced at the 920 level. as the Dow sank to that level for a second tIme. At week's end the Dow was again flirting with its historical low pOints of July and October. In view of the aPl'arent lack of demand. the odds — .. — -…-;'–T—-''''' —- —………..,,—-.——-;—— L ,. -. r – ….. – in favor of those lows holding would seem slim indeed. As if the story being told by the averages was not bad enough, there is a conSiderable body of evidence which suggests that the decline since January has indeed been worse than simple inspection of major market indices would suggest. The drop from the early January highs was, as of Thursday, 12.2 in terms of the Dow-jones Industrials and 9.7 In terms of the S & P 500. By contrast. our cumulative unweighted index of all New York Exchange stocks has fallen from a high of 976.52 in january to a recent low of 789.80 — a decline of 19.1. This measurement of the drop since january comes extremely close to being of major bear market proportions. Paradoxically, the only glimmer of light on the horizon is the fact that the dechne has been as vicious as it, in fact, has. There are, after all, two ways of vieWIng market pnce, firs t In terms of trend and secondly in terms of level. As noted above the current picture as regards to market trend could hardly be worse. As far as level is concerned, there is at least some suggestion that vast numbers of stocks were, at last week's lows, at prices that might be termed objectively cheap or even indeed rediculous. Let us consider this in terms of our unweighted index. At Thursday's close, that index was lower than it had been at anytime since 1964 with the single exception of the period May-October 1970. It was, in other words, lower than it had been at the 1966 low, when the Dow bottomed out at 735, and it was withIn 15 of its s'ummer-1970 low when the Dow reached 63i. None of this IS to say that the market cannot go lower. It is simply a statement of analytical fact which it WIll be helpful to recall in the emotional climate whIch lower prices, if they occur, WIll produce. We find ourselves, under the circumstances, more inclined to feel comfortable about the market than any surface indicators of short-term technical actIOn would suggest that we should be. Markets whIch are plunging to histonc lows are always uncomfortable ones. They prove, however, in retrospect, to have been markets in which abundant bargains were available. Dow-jones Ind. (1200 p.m.) 930.52 S & P Compo (1200 p.m.) 109.13 AWTkd No slolemcn! or expression of oOlnlOn or ony other matler herem tonlcllned '5, or IS 10 be deemed 10 be, directly or indirectly, on offer or Ihe 5011(101001'1 of on offer to buy or sell any secvnly referred 10 or mentioned lAe motter IS pre5ented merely for the convelIenC5 of the subscriber While He believe the sources of our Informalion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be token by the subSCriber should be based on hiS own Invesllgol1on and information Janney Montgomery ScoII, Inc, as a corporation, and Its officers or employees, may now have, or may later tole, POSitions or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter erpressed In thiS or any other lSue Janney Montgomery Scoll, Inc, which IS reg,stered w,th the SEC as on Investment adVisor, moy give adVice to Its ,nvestment adVISOry and other rustomers Independently of any satements mode In thiS or In any other Issue Further mformatlon on any security menhoned herein IS available on request

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Tabell’s Market Letter – April 13, 1973

Tabell’s Market Letter – April 13, 1973

Tabell's Market Letter - April 13, 1973
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCk eXCHANGE April 13, 1973 We have been attempting in recent letters to show that the averages, over the past three years, have — -pElrformed- a-great dEla1-better thanth-eavera-gestock- An- examination-of-the-individua1-ts sues in the Dow– Jones Industrials shows an even more unusual situation. The average, since the May 1970 lows, has actually outperformed most of the stocks contained in it. Over the period May 26, 1970- January 11, 1973 the Dow rose from 631. 16 to 1051. 70 for a total rise of 420.54 points. The first column of the table below shows how many of the 420.54 pOints were contributed by mh company. The second column expresses the point-rise contributed by the stock as a percent of the total rise, and the third column accumulates those percent figures. Finally, the last three columns show the price of each stock on the two dates together with the percent change. Before discussing the implications of the table it is necessary to point out some of the statistical properties of the Dow. The method of computation causes higher-priced stocks to have a greater weight than lower-priced ones. Thus a 10 rise in duPont would cause a 10 .4-point rise in the Dow while 'a 10 rise in Anaconda would cause only a 1. 3-point rise. This property accounts for the interesting fact that General Foods, which was lower at the end of the period than at the beginning, actaully contributed two points to the rise in the averages. The table raises some interesting points. The average was up 66 over the period, but only ten ofthe thirty components managed to post a percentage rise better than this figure. The lesser weight given low- priced stocks is made apparent by the table. Allied Chemical, for example, has performed better than duPont but it contributed less than eight points to the rise in the averages while duPont contributed 48. Most graphically, however, the table demonstrates the narrowness of the advance. One-third of the entire rise in the Dow was due to the action of three stocks, one-half of it due to the action of five, almost two- thirds to seven issues and three-fourths to ten. Quite clearly the phenomenon of relatively narrow leader- —!;shipexists-,–within;!heaIJC!geitself. Points Rise . – 4' ,,- — -of – – Cum-'- — Price Stock Eastman Kodak QQDtrUll.ltsg 51. 35 Total Rise 12.2 lative 12.2 5/26/70 575/8 1/11/73 1473/4 Change 156 Dupont 48.00 11.4 23.6 1001/4 1841/2 84 Proctor and Gamble General Electric 42.45 41. 79 10.1 9.9 33.7 43.6 401/4 301/4 (A) 1143/4 73 5/8 185 143 Sears Roebuck Standard Oil California 39.88 25.43 9.5 53.1 513/8 1213/8 136 6.0 59.1 393/4 843/8 112 Exxon Westinghouse Electric 22.65 19.86 5.4 64.5 513/8 4.7 69.2 27 (A) 911/8 461/4 77 63 Chrysler General Motors Union Carbide United Aircraft Texaco American Brands Swift Allied Chemical International Harvester International Pa per American Telephone Alcoa Goodyear Bethlehem Steel General Foods Woolworth Owens Illinois U.S. Steel Johns Manville International Nickel Anaconda American Can 13.82 13.39 11. 89 9.62 8.83 8.76 8.26 7.91 7.83 7.69 6.55 5.48 5.27 4.13 2.24 2.14 1. 78 1. 71 1.64 1.35 .36 -1. 50 3.3 3.2 2.8 2.3 2.1 2.1 2.0 1.9 1.9 1.8 1.6 1.3 1.3 1. 0 0.5 0.5 0.4 0.4 0.4 0.2 0.1 (0.3) 72.5 75.7 78.5 80.8 82.9 85.0 87.0 88.9 90.8 92.6 94.2 95.6- – 96.8 97.8 98.3 78.8 99.2 99.6 100.0 100.2 100.3 100.0 19 5/8 59 1;2 29 1/2 27 241/8 295/8 223/4 16 1/4 283/8 333/4 431/8 50 211/2 22 1/4 333/8 (A) 26 1/2 383/4 303/4 263/4 333/4 223/8 35 43 7/8 83 50 3/8 437/8 395/8 45 371/4 30 1/8 417/8 361/8 545/8 59 5/8 303/4 29 1/2 291/2 301/4 417/8 333/4 295/8 361/8 23 323/8 124 39 71 63 64 52 64 85 48 7 26 19 43 32 – 12 14 8 10 11 ., 3 8 Dow-Jones Industrials (1200 p.m.)956. 73 S&P Comp.(1200 p.m.) 111.83 AWTrk ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL No statement or expression of opinion or any OTher molter herein (onTomed IS, or IS to be deemed to be, directly or mdlrectly, on offer or the sollCltoTlon of 07 offer 10 buy or sell any secunty referred 10 or mentioned The moiler IS presented merely for the converlenCE of the subscrIber While He belleve the sourcbs of our hn'ldmb' han to be reliable, we m no way represent or guarantee the accuracy thereof nor of the statements mude herem Any actIon to be token by the su sen ber s. au e bosed on h.s own poslllons or trodes Invesllgotlon In respect to and mformatlon Janney Montgomery any seCUrities menhoned In thl5 or any Seoll, future Inc, as a lssue, cnd corporatIon, and Its offICers or such pos,t,on may be dIfferent employees, may from cny v,ews now now ohravhee,reoorJtmerayeJlopr,eersetodkhe,n, thl or any other lssue Janney Montgomery s.cotl, tnc , whICh l5 regIstered w,th the SEC as on Investment adVisor, may gIve adVICe to ,ts ,nvjstment a VIOryon 01 er customers Independently of cny statements mode ,,\ th.s or In ony other Issue Further Informa'lon on any securtty mentioned herein IS avcI able on request '

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Tabell’s Market Letter – April 19, 1973

Tabell’s Market Letter – April 19, 1973

Tabell's Market Letter - April 19, 1973
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE April 19, 1973 We recently concluded a series of four of these letters in which we discussed some of the ramifications of the theory of growth stock investment. We should like, in this issue, to draw a few tentative conclusions based on that examination and to offer a few of our own thoughts on investment philosophy for the 1970's. There is, of course, nothing new under the sun. The following quotation is an appropriate summary of what we have, in our series, indicated was taking place overthe pastfew years. Selectivity took ana new character by reason of the overshadowing emphasis placed on expected future growth as the prime criterion of an attractive investment. There was nothing wrong with these … ideas, except that it was almost im- possible not to carry them too far. With encouragement from the past and a rosy prospect in the future, the buyers of 'growth stocks' were certain to lose their sense of proportion and to pay excessive prices. The above is not Anthony Tabell writing in 1973 about 1971-72. It is Benjamin Graham writing in 1951 about 1928-29. As readers may have gathered from our previous letters, we find ourselves, on this issue at least, comfortably in Dr. Graham'S camp. But, if mindless projection of growth rates is not the simple key to investment success, what is an alternative philosophy We offer herewith three principles 1) Two and two make four. 2) There are no one-decision stocks. 3) Investor confidence varies more than earnings. Let us examine some of the implications of these three suggestions. It was Bernard Baruch who first suggested that in periods of market optimism it was necessary to repeat to oneself that two and two were four. We are, in other words, willing to accept the intuitive conclusion that, when large numbers of buyers are agreed that a given method of investment is a sure road to suc- cess, that method cannot prove viable over the long term. The enforcement of this principle is the function of the marketpla'Oe, and it is our belief that the market will be no less (OffIclent in thi s task in the future than it has been in the past. It should be made clear that what is being said here lmplies no cntlCism whatever of the fundamental merits of recognized growth issues, suggests that they should not sell at some premium over other issues or affirms that they cannot under any circumstances be attractive purchase candidates. What we are suggesting, along with Graham, is that the concept that such issues represent appropriate investment vehicles for conservative accounts, regardless of the price being paid, is, to put it mildly, ludicrous. Secondly, we think the suggestion that tnere exists a class of one-decision stocks, where all that is necessary is to buy and hold, constitutes a abdicatic of the investment manager's responsibility. Were the investment manager perfect, his initial selections for purchase would, of course, be only those stocks which were going to provide the maximum long-term rate of return, and these could be held effec- tively indefinitely. Investment managers, however, are far from perfect. Each initial purchase memorial- izes the manager continually to decide whether to hold or not to hold, depending upon whether the original expectations are being fulfilled and to what extent the market price discounts these expectations. Finally, as we have pointed out, the biggest factor in price change, over relatively long periods of time, tends to be caused not by earnings but by investor confidence in those earnings — this confidence being most readily express ed by the statistic of the price/earnings ratio for individual stocks. This fact has two implications. The first provides the reason for our conviction, which will surprise no one, that technical analysis is an indispensible factor in the investment decision-making process. It is equally important in evaluating common stocks to have some idea of what the market is likely to pay for future earning power as it is to forecast what that earning power is gomg to be. Technical work, we think, is a most useful guide in making such a projection. The second implication of investor confidence variability is that price level, in relation to earnings and in turn to comparable valuation of other stocks,must be a prime criteria in investment selection. It is axiomatic that a stock having a low multiple, thus suggesting low investor confidence, ha s more potential on the upside should investor confidence increase and less risk on the downside should it continue to deteriorate. Willingness to ignore the price being paid, even in companies of the most pristine quality, involves,in our view, another abdication of the investment manager's responsibility by reason of the assumption of unneccessary risk. It may be suggested, of course, that recent markets have hardly tended to prove the soundness of these tenets vis-a-vis the Simple-minded growth approach and, indeed, may even have suggested the opposite conclusion. We continue to believe, however, that the principles above represent viable gUlde- posts to a successful investment philosophy. Dow-Jones Industrials 963.35 ANTHONY W. TABELL S&P Compo 112.17 DELAFIELD, HARVEY, TABELL AWTrk No statement or expression of opInion or ony otner motter herein contolned IS, or IS 10 be deemed 10 be, directly or indirectly, on offer or the sollcltotlon of on offer to buy or sell ony secunty referred 10 or mentioned The ma!!er IS presented merely for the converlenCl; of the subscriber While we believe Ihe sources of our Information to be reliable, we In no way represent or guarantee the aurocy thereof nor of the statements mude herein Any action to be Token by the subscriber 'hould be based on hiS awn inVestigation and infOrmation Jonrey Montgomery Scolt, Inc, as a corporation, and Its officers or employee may now have, or may later toke, positions or trades In respect to ony ,ecufltle, mentioned In thiS or any future Issue, and such position may be dIfferent from any Ylews now or hereafter e'pressed In thl or any other sue Janney Montgomery Scott, Inc, which IS registered With the SEC 0 on onyeslmenl adYlsor, may glYe odYlce to Its Inyestment odYIKHy and othel customers Independently of ony statements mode In thiS or In af'ly other Issue Further If'lformotion on any security menllof'led herein IS aVailable on request ——.,

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Tabell’s Market Letter – April 27, 1973

Tabell’s Market Letter – April 27, 1973

Tabell's Market Letter - April 27, 1973
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. ; . – .—-,- TABELL-S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AME RICAN STOCK EXCHANGE April 27, 1973 Acouple 6f years ago we 'were-involved'ina minor auto-aCCident with a truck on-a m()untain road -in Montenegro. We found ourselves, knowing not a word of Serbo-Croatian, faced with the problem of discussing what should be done, with a truck driver, who, of course, knew not a word of English, The frustration produced by such moments is, as any traveler is well aware, exquisite. We find ourselves similarly frustrated at the present moment in trying to talk about the stock market—and for precisely the same reason, the lack of a common language which we can share with our readers to describe where the market has been and where it appears likely to go. For instance, we would have liked to have begun this week's letter by saying that the bear market continued—indeed, even accelerated—last week. Yet in terms of a shared frame of reference, the Dow Jones Industrial Average for example, the statement does not hold together. For the Dow, as of Friday at least, had not made a new low for a month and, in a rally which began on Thursday afternoon, completed what was apparently the second successful test of that low, Moreover, at its low of a month ago, the Dow was off by only 12.26 from its January high so that, by this standard, what has passed since January may qualify as a reasonably vicious intermediate-term decline but not, in historical terms, a bear market. Approximately the same pattern holds good for the S & P 500. Yet, as many of us are painfully aware, the situation is a great deal worse. We must refer again to our old friend, the cumulative index. At week's end, this index had reached an intra-day low of 764.03, compared with a January peak of 976.52 for a decline in excess of 21. Its pattern, moreover. was diametrically opposite to that of the popular averages. While these indices, at week's end, simply tested their lows of mid-March and early April, the cumulative index, which posted successivenew lows on both of. thesE'! .occasions, .moyed substantially .below those.bottomsthisweek, thus continuing what has, since January, been a steep a';d -nabated downtrend. What the index showed was the familiar picture of a major market decline in its more advanced and nastier stages. This contrast between the average stock and the popular averages is important, not only in de- scribing the market action of the past four months, but in formulating a forecast. If all we are lookmg for at this stage is an intermediate-term bottom, we will require a great deal less evidence than would be the case if we were trying to pinpOint the bottom of a major bear cycle. The triple bottom in the averages, if it holds, would constitute impressive evidence of the nd of an intermediate down- swing. Few indicators, at the moment, however, appear to have reached the levels we have become accustomed to associate with the bottom of a major bear cycle. Short interest, which, incidentally, declined last month, is still at a relatively low level. Mutual fund cash position, while it rose slightly in March, is substantially below the levels reached at the last two major-cycle lows. Margin debit balances have been declining sharply for the past three months, a phenomenon which one would expect in a major downswing, but this sort of decline has, in the past, persisted a good deal longer than the current one and has achieved a much greater magnitude than we have seen to date. The classic signs of speculative activity, American Stock Exchange volume, for example. are admittedly at levels normally associated with bear market lows, but then they have been at these levels for the past three years. As we have suggested in the past, one of the salient differences between the 1970-73 bull market and previous ones was the total absence of the individual speculator. The following three facts appear relevant to a forecast at the moment 1) The average stock has already undergone a decline of major-bear-market proportions. 2) The high-grade growth and bluechip favorites which dominate the averages have not yet posted such a decline. 3) The signs normally accompanying a major bottom are not yet present. The three facts lead us insistently to a question. Will the institutional favorites comprising the averages ultimately follow their less aristocratic brethren over the precipice There was some suggestion in last week's action that such may become the case as, for the lrst time, these issues joined in the decline. This possibility, of course, constitutes one of the market's major areas of vulnerability. It will, in most cases, require further evidence to complete distributional patterns in most of the classic growth issues. What remains unanswered, of course, is the extent to which a severe correction in this area of the market might spill over into other, already-deeply- depressed segments of the list. Dow-Jones Industrials (1200 p.m.) 925.57 S &P Compo (1200 p. m.) 107.65 AWTJC ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No slotement or expresslon of opInion or any other moIler herein contained IS, or IS 10 be deemed to be, directly or IndHectly, an offer or the solicltollon of an offer fa buy or sell any security referred to or mentioned The morter IS presented merely for the (onVe(llenl of the subscriber While e beheve the sources of our information to be reliable, we In no way represent or guaranTee the accuracy lhereof nor of The sTatements mude herein Any action to be Token by the Sub5crlber shOuld be based on hiS own Invutlgallon and Information Janley Montgomery Scot!, Inc, as a corporation, and Its officers or employees, may now have, or may laTer Toke, positions or trades In respect to any seufllies menTioned In thiS or any future Issue, and such pOSition may be different from ony views now or hereafter e1pressed In thiS or any other Issue Janney Montgomery SCali Inc which IS regiStered With the SEC as on Investment adVisor, may give adVice to Its tnvestment adVisory and other customers Independently of any statements mode 'In th;s or tn any other Issue Further tnformatlon on any security mentioned herein IS available on request

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