.———- – ——- I TABELL'S I MARKET LETTER I I 1 —-'1 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE May 3, 1974 After collapsIng a week ago for a very good reason, the Consolidated Edison dividend cut, the market proceeded, on Wednesday and early Thursday, to turn around and retrace a good deal of the ground lost for no apparent reason whatsoever. Indeed, it did so in response to more of the same sort of news that pundlls have been assuring us for the past few months is responsible for the market's malaise. As of this writing, the 10 3/4 prime rate has become more widespread, and an 11 rate already exists in certain quarters. All this, we are assured, is bearish for stock prices although it is seldom made clear why this should be so. Theoretically, one might suppose a high prime rate would produce a high call-loan rate, which would discourage borrowing to finance stock purchases. Yet in fact, stock exchange margin debt has recently reversed its sharp slide of 1973 and begun to edge up somewhat. Most of the recent comment on short-term interest rates has, in our view, been centered around the wrong area, i.e. the level of those rates, and it is indeed true that that level is at its highest point in over fifty years, a fact which, no doubt, lends the rate some news value. A more useful figure for analytical purposes, however, is not the level of short term rates—which, although at a record, is not all that different from where it was in the Spring of 1970 or the Fall of 1973—but its relationship to longer-term money rates, in other words, the shape of the yield curve. The recent situation has been ,- fundame ntatl y d ifferent-from'tha t'of ;-sayc;-luly19-70'-'\ t-thatpoi nt,short- te rmorates7were-r4 si ngdra – –,-1 matically, but only for a short period and by a modest amount did they ever rise above the rate offered by high-grade corporate bonds. By contrast, in the Fall of 1973 when prime commerCial-paper yields, a widely used gauge of short rates,averaged 10.23, seasoned AAA long bonds afforded only a 7.88 return. Roughly the same sort of relationship prevails today. Now there has been some recent disagreement as to Just where the prime rate, and the multitudinous other short-term rates which are tied to it, will ultimately wind up. The president of a large Philadelphia ba nk recently opined that a 12 prime was in the offing, while a major New York City bank suggested that 6 by sometime this summer was a possibility. At the moment, Philadelphia, although tied with New York in ice hockey. appears to be leading it in interest rate prediction. Regardless, however, of the differing opinions of human forecasters, the collective forecast of the marketplace is quite clear. The phenomenon we have at the moment is known as an inverted yield curve, and it has never, in the past, persisted for very long. Normally, the resolution is a return of short-term rates to their normal position below the yield of high grade bonds. In its willingness to lend money over the longer term at rates decidedly inferior to those readily available from short instruments, the market is quite clearly saying that it does not expect short rates in the double-digit range to be a permanent feature of the finanCIal scene. –IInto We the think, lA any case, that, whatever happens present pricestrucfureforcommoostocks– to As the we prime rate, 'suggested this factor has now lA'last week's'letter, beuennlllbui-lt–' Consolidated EdIson came along, the market had been responding well to bad news. Having absorbed Consolidated Edison, it has evidently reverted, for the time being at least, to that pattern of response. Ignoring bad news has long been one of the signals that a market decline is at or past a terminal phase. It will be interesting to see if such turns out to be the case in the present Instance. Dow-Jones Industrials (1200 p.m.) S & P Compo (1200 p.m.) 91.62 Cumulative Index (5/2/74) 564.00 AWTed 847.23 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or e)(preSSlon of opinion or any other matter herein contained IS, or IS 10 be deemed to be, directly or indirectly, on offer or Ihe sollCltoTlon of an offer to buy or sell any seCUrity referred to or mentioned The mailer IS presented merely for Ihe convel'ence of the subSCriber. While -lie believe the sources of our mformo han to be rellable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action to be taken by the subscriber should be based on hiS own Investigation ond mformallon Janney Montgomery Scoll, Inc. 0 a corporation, and Its officers or employees, may now have, or may later toke, poSitions or trades In respect to any secUrities mentioned In Ihls or any future ISUe, and such pOSition may be different from any views now or hereafter el'pressed In thiS or any other Issue Janney Montgomery Scali, Inc, which IS registered With the SEC as an Investment adVisor, may gIVe adVice to Its Investment advlwry and othel customers Independently of any statements made rn thiS or In any other Issue Further mformatlon on any security mentioned herem IS available on request

,I TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE . May 10, 1974 – .-Thre -a-re a–number o-fr sons1or-looti;g–f;rd to–Maychye a'mong'tliem '-thefwering of the — dogwoods in Princeton, New Jersey. To us numbers freaks, however, May's arrival takes on an additional significance. For It brings the issue of Fortune magazine containing ItS statistICal tabulation on the 500 largest U. S. industrial corporations. There is almost no limit to the permutations and combinations of lIgures one can derive from a perusal of this data. One of our own favorite mampulations, with the phenom- enon of earnings growth havmg attamed an almost rellgIOus SIgnifIcance m the financial community, is to cull out the ten companies with the largest 10-year growth In earnings per share. The list almost invari- ably is composed mostly of surprises rather than the familiar billion-dollar growth companies, and this year is no exception. Herewith, then, the ten companies WIth the largest 1963-73 per share earnings growth as computed by Fortune. Return to Rank Return to Rank Investors 1973 in 500 Investors 1963-73 In 500 ITE Imperial -48.42 403 14.86 61 Fleetwood Enterpris es -83.65 483 White Consolidated -51. 00 415 19.14 33 Loews Corp. -53.60 423 24.90 14 Champion Home Builders -76.64 480 New York TImes -26.44 248 Wheelabrator-Frye Clark Oil Tesoro Petroleum Sk-y-l-i-ne-H-omes -39.18 335 -27.01 314 24.36 49 -6-.5.-28-.—461- 5.38 223 27.20 9 22.22 20 20-52–. -..-26 – – As we suggested above, however, the names are not exactly those that the average investor mIght guess were he to attempt to pick the compames with the greatest earmngs growth for the past decade. It must be noted, also, in all fairness, that Fortune's method of computing earmngs growth may be over-simplistic, in that a straIght 1963-73 comparison can be distorted if the 1963 base year happened to be a particularly poor one for the company involved. which IS I in fact, true in some cases above. The most fascinating statistic, however, IS the way the market treated these ten companies m 1973. The second column of the table above shows the return to mvestors for 1973 as computed by Fortune, m- eluding capItal gain or loss, plus dividend mcome, together with its rank in the 500 on this baSIS. Nme of the ten common stocks show a loss, and In each case that loss IS substantial. A 100,000 portfolio equally mvested in the ten compames at the end of 1972 would, at the end of 1973, have shrunk to 55,314 . Over the longer term, however, the lIgures would tend to suggest that the market does recognize true growth. For the seven companies where data was available, six, In fact, showed above average percentage returns over the 10-year period. The average annual percentage return and its rank m the 500 for this perIod is shown in the rIght hand two columns. 10,000 mvested m each of the companies at the end of 1963 would have grown by 1973 to 457,000. We thmk the table demonstrates rather vividly what, to us, are some of the least appealing tendencies in Wall Street's valuation of stocks, the tendency to pay a great deal of attentIOn to short-term, even quarter-to-quarter, earnings changes and the tendency to place premIum multiples on at least some com- panies with above-average past earnings growth. Thus I the presence of three mobile-home companies on the list and the fact that these three represent the three worst performers IS not surprIsing. The mobIle home industy In gen-eralhas shown one of the more astounding grow-th rates in the U. S. economy-over —– the past decade. The market duly noted its appreciation of this fact in 1972 when it valued Skylme at 47 times earnings, Fleetwood at 41 times and Champion at 55 lImes. In 1973, earnmgs growth for all three companies flattened out, and it was VIvidly demonstrated that what the market gives It can take away, the taking away being documented In the stocks' performance. A more rational approach to valuation rmght have prevented the stocks from attainmg the euphOrIC levels they reached In the lIrst place, and lessened the shock when the problems within the mdustry, (which,for all we know,may be temporary) became apparent. Dow-Jones Industrials (200 p.m.) 862.33 S&PComp. (200p.m.) 92.73 ANTHONY W. TABELL DELAFIELD, HARVEY. TABELL Cumulative Index (5/9/74) 557.65 AWT/jb Note Comments on indIVIdual stocks are based solely on techmcal factors, and further informatIon on all issues IS available on request. No statement 10 buy or sell or expression of opInion or any other any security referred to or mentioned motler herein lhe motter IS contained presented '5, or IS to be metely for the cdoenevmee'JdI1n0CEboef, directly or mdlleclly, the subsCtlber While on we offer or the soliCitation of believe the sources of our on offer Informa- 110n to be reliable, we In no way represent or guatantee the occl,Irocy thereof nor of the statements mode herein Any Oellon to be tolen by the subscriber should be based on hiS own pos,tlons or trades Inveshgollon and Informallon Janney Montgomery In respect to ony seCUrities mentioned 10 thiS or any Scott, future Inc, as a Issue, and csourcphorpaOtilotnl,onanmdoyItsbeoffdicifefersreonrt employees, moy from any views now now have, or may later lake, or hereafter elCpressed In thIS or any other Iue Janney Montgomery Scali, Inc, which IS registered With the SEC 05 on Investment adVisor, may g,ve adVice to lIs IIwestmenl adVisory ond olhel customers mdependently of ony slo/ements made 10 Ih,s or 10 any olher ,Sl,Ie Further Informollon on any secutlty menlloned herein 1 aVailable on request

TABELL'S I, MARKET I LETTER I JI 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCI( eXCHANGe May 24, 1974 – Readers of this letter over the past couple of months will be aware that we had been trying to worLourselves into ,a .more optimisticframe .ofmindabout- the, stock .mal'ket.thanAthad ,beeF1 pos s -….. Ible to assume for some time. The basic reasoning behind this was that, having for some time ad- vocated the maintenance of some amount of cash reserves, we were becoming worried about whether the weakness which would allow those reserves to be committed would ultimately occur. Many of the factors we cited as prospects for possible optimism were so-called background factors, stemming from the fact that all available evidence suggested that there were large amounts of potential equity money sitting on the sidelines and that any favorable development, the most obvious one being a drop in short-term interest rates, could return this money to the stock market with explosive force. The prices which existed when the market held relatively firm throughout April and early May, however, were evidently not attractive enough to entice this sideline money. Starting two weeks ago, a sharp plunge to a new lower price level took place,with the Dow, which dropped for seven straight trading days through Wednesday of this week, having gotten within an ace of Its December low of 788.31. A sharp rally on Friday morning improved the picture somewhat and, once more, for the time being at least, the previous low has held. The Dow, however, is the only average still remaining tenuously above its prior bottom, almost every other major index hav- lng, on the recent decline, moved into new low territory. Along with this drop, a number of disappointing technical developments can be cited. For a while, at least, the market was showing a fairly healthy ability to resist bad news. The prime rate, ostensibly the market's major worry, was actually above where it had been last December when the Dow last bottomed, and yet stocks had been holding considerably above that low. This I –re5lstante to'l5ad news -eviderrtlyfetmIMtedwffntheConEaTIOn debacle; fo'rlnce 't!ITin-;-t/je' — market has resumed its familiar bear-market tendency to seize upon even modestly bad news Items as an excuse for havoc. The well-advertised problems of Franklin National Bank have created a run, not on banks, but on the stocks of practically every major financial institution, not only banks, but insurance and loan companies. The phenomenon of rotational collapse, where, one after the other, new stocks get clobbered by unfavorable comments or earnings news, has returned with a vehemence equal to that of the spring of 1973, as holders of such issues as Combustion Engineer- Ing and Research-Cottrell must now be painfully aware. Perhaps more disturbing is the advent of potential price vulnerability in issues which had, throughout 1973, been leaders on the upside. Notable examples of this sort of thing are the oil and electrical equipment industries. Weakness has also manifested itself in such industries as copper and aluminum, although here we suspect It is going to turn out to be relatively minor in nature without destroying the favorable long-term patterns which most of these issues still possess. It will, nonetheless, as is almost the case with short-term downtrends, be disquieting while it is taking place. Likewise disappointing has been the failure of many technical indicators which had reached moderately bullish positions in March and April to move into maximum bullish territory. Typical of this class of indicators is the short-interest ratio, which had reached a moderately bullish 1.82 in April (1.95 or better las m the pastbeen a signal for major bottoms), but declined in May to 1.41, a positive but not wildly optimistic reading. Obviously ,then, there are disturbing factors inthe present day.picture. Certainly.ifthe ban- ing system is about to collapse, for example, the equity market is not the place to be while the collapse is taking place. As we have pointed out in the past, however, profitable buying oppor- tunities have historically occurred when the market 'was discounting developments which ultimate- ly failed to take place. In most times and in most places, it has been profitable to bet against the apocalypse. On this theory, we would be willing to commit reserves if the decline were to move through the December lows on the Dow and continue on Into the 700's. Were this to happen, it would, of course, create a typical confusing and disquieting market atmosphere. We believe, however, that purchases made in such an atmosphere would ultimately turn out to be well-bought indeed. Dow-Jones Industrials (1200 p.m.) 811.40 ANTHONYW. TABELL S & P Compo (1200 p.m.) 87.91 DELAFIELD, HARVEY, TABELL Cumulative Index (5/23/74) AWT/jb No statement or expre!on of op,nion or any other motter herein contOlned Is, or IS to be deemed to be, directly Of ind,rectly, on offer or the sol,cltot,on of on offer 10 buy han to or sell cny security be reliable, we In referred no way 1re0porersmenetntoior ngeudaraTnhteemothileerac1cuprraecsyenttheedremoferneolyr for the convel'lenc of the subscrIber While oNe believe the sources of our tnformaof the statements mode heretn Any action to be ta!.;en by the subscriber should be based on hiS own investigation and Informollon Janney Montgomery Scott, Inc, as a corporation, and lIS officers or employees, may now have, or may later lake, pOSitions or trodes In respect to any secuntles mentioned In thl5 or any future Issue, and such POSitIOn may be different from any views now or hereafter epressedhi thiS or any other Issve Janney Montgomery SCOll, Inc, which IS registered With Ihe SEC as an Investment adVisor, may give adVice to Its Investment advISory and aT el customers Independently of any statemenTS mode In thiS or In any other Issue Further Information on any security mentioned herein IS avoiloble 01'1 request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMeRICAN STOCI( EXCHANGE May 31, 1974 The market this week on disappointing volume continued to move lower sparked by Wednesday's 18.93 declineclosing near its-December low-cW7883f Pe'netratioh of tnfs–r51ffappears tobe-a fore' gone conclusion. However, the significance of such a penetration can be somewhat discounted as without exception all major stock market averages have already, in fact, broken their respective December lows. Utilizing pOint and figure analysis, a downside count, toward the area of the 1970 lows, of 730 is indicated. The time has come, we suppose, to ask ourselves just what it is that is worrying the stock market. Quite obviously, there must be some ostensible reasons for the absolutely abysmal technical perform- ance which the market turned in throughout most of 1973 and now in late May has begun to repeat. Let us try to tick off some of the supposed reasons. High Interest Rates. Certainly it is plausible that the record levels of short-term interest rates should have a deleteriOUS effect on stock prices. The effect, it can be argued, comes from a number of directions. First of all, the availability of unbelievably generous returns from practically riskless investments makes these investments attractive alternatives to stock, especially when stocks of late have done little else than go down. High borrowing costs obviously deter those few potential margin buyers left on the scene from utilizing their reserve buying power and lastly, it can be argued that, therefore, high borrowing costs pia ce a squeeze on profit margins and thus caus e lower earnings and lower stock prices in a great many industries, this argument being most persuasive in explaining the recent sharp drop in utility stocks. Illiguidity. This is also a real threat on a number of levels. The liquidity of the banking system is in general at new record lows, and loan demand, while having moved irregularly lower, remain at —. extremely. high .Iev.els . Obylpllsly.,..JIlost..ma.j orbankswouldbeunable Jo..meeLtneir.commitments,with–. ' out the huge amounts of money attracted by cetificates f d.;'poSit 'which they h';e bee; selling at – record interest rates. Corporations, meanwhile, with the equity market effectively shut off to them by the present depressed level of prices have had to turn more and more to high interest rate short-term financing. The potential for collapse in such a structure is obvious. The Middle East. The presence of armed conflict has a general tendency to make the stock market nervous, and it is certainly doubtful that the various Arab-Israeli outbreaks exercised a positive effect on the market,. It is notable, however, that the market failed to rally in Wednesday's trading even after President Nixon's announcement of the Israeli-Syrian disengagement agreement. Watergate. There are a number of analysts who argue that the uncertainties over the President's impeachment or resignation have caused a market climate which will make it impossible for stocks to move ahead until the issue is finally, one way or the other, resolved. The phenomenon of the Johnson confidence boom following President Kennedy's assassination in 1963 is cited by these analysts with the suggestion that the installation of President Ford by some means or another this summer might pro- duce similar results. The Securities Industry. The recent wave of brokerage house mergers and the reports of declining profitability have again raised doubts about the long-term future of the securities industry, The impli- cations here are important also. While the existence of particular firms may not be important, a viable industry is a necessity if the American economy is going to be able to maintain its ability to raise capital. Serious doubts are being raised at the moment as to whether such viability, in fact, exists. Now, as technicians, we think the significant fact about all of the above is that none of it will be – any news whatsoever to-anyone who has been'even vaguelY following the finanCial' press. All of the – . – above factors, it seems to us, consist not so much of explanations of why the market ought to head lower, but why it is where it is at the moment. Furthermore, again with out particular technical bias, we doubt that the amelioration of anyone of the above tactors is suddenly going to turn the market. We suspect, in other words, that, over the short-term, purely on technical factors, the market is headed into lower ground. At some point, a bottom will be produced, and it will not be because of any of the factors cited above. It will be simply because the last investor who can be panicked into dump- ing stock at lower prices has finally done so, and it will be precisely at that pOint, as has been the case throughout recorded history, that a turn in the tide will take place. Dow-Jones Industrials (1200 p.m.) 802.33 ANTHONYW. TAB ELL S & P. Camp. (1200 p.m.) 87.32 DELAFIELD, HARVEY, TABELL Cumulative Index (5/30/74) 512.20 AWT/jb No statement or eKpreS510n of opinion or any olher maHer herein contolned IS, or 15 10 be deemed to be, directly or Indirectly, on offer or the soliCitation of on offer to buy or sell ony secunty referred to or mentioned The matter .s presented merely for the convellen of the subscrober Whole we beheve the sources of our ,nformatlon 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 SlIbscnber should be based on hiS own Investigation ond ,nformallon Janney Montgomery Scott, Inc, as a corporation, and Its offICers or employees, may now have, or may later lake, POSItIOn or trades In reSpect to any seCUrities mentioned m thlt or ony future Issue, and such POSIT,On may be different from any views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, whICh ,s registered With the SEC as on Investment adVisor, may give advl(e to ,ts mvestment adVisory and othe, (Vtomers ,ndependently of ony stotements made In thiS or In any other Inue Furlher onformatlon on any security mentioned here'n IS avollable on request