Viewing Month: August 1974

Tabell’s Market Letter – August 02, 1974

Tabell’s Market Letter – August 02, 1974

Tabell's Market Letter - August 02, 1974
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y – – -L — – – — – – – -. . — TABELL'S MARKET LETTER – — – – !!eIaf. .Y'&y, .7akll 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF 71'1U;! 4,l1lrmry !//ott fi.C. MEMBER NEW YORI( STOCK EXCHANGE INC MEMBER AMERICAN STOCK EXCHANGE AUgust 2, 1974 -,,,,….I – -Tust seve-n sliortwe-eks'ago; -on TuIie-14 I we wrotT-a -ilter which mcludf'th-e'tole' lov.- -Tt-tab-ulated the performance of two groups of stocks, the so-called Vestal Virgins or growth favontes, and the Sex- less Spinsters, largely basic-industry, historically-cyclical companies. The table, which has been up- dated to show today's prices, shows the approximate price of the stocks in each group at five points in recent market history, the January 1973 high, October 1973 high, December 1973 low, April-May low, and Thursday' 5 close. The percentage change between points is also shown together with the average for each group and the Dow-Jones Industrial Average. Jan Oct Dec Apr-May …li.!Jlh High Change Low Change Low Change 8/1/74 Change DJlA 1067.20 997.59 – 6.5 783.56 -21.4 788.80 0.6 751.10 – 4.7 Avon Products 132 98 -25.7 58 -40.8 40 -31.0 29 -27.5 Purroughs 115 121 5.2 92 -23.9 96 4.3 90 – 6.3 Coca-Cola 145 145 – 115 -20.6 98 -14.7 84 -14.2 Disney 115 82 -28.6 41 -50.0 41 – 37 – 9.7 Eastman Kodak 145 135 – 6.9 108 -22.9 100 – 3'.8 86 -14,0 IBM 360 280 -22.2 235 -16.0 210 -10.6 202 – 3.8 Int'l Flavors/Fragrances 48 47 – 2.0 34 -27.6 32 – 5.8 30 – 6.3 Johnson & Johnson 132 125 – 5.3 100 -20.0 105 5.0 94 -10.4 McDonald's Corp 78 74 – 5.1 44 -40.5 50 13.6 38 -24.0 Polaroid 130 125 – 3.8 65 -52.0 53 -18.4 27 -49.0 Procter & Gamble 120 106 -11.6 89 -16.0 85 – 4.5 93 9,4 Sears, Roebuck & Co. 124 100 -19.3 78 -22.0 80 2.5 64 -20.0 Xerox 156 150 – 3.8 115 -23.3 106 – 7.8 94 -11.3 – . -Average — – – –9-9 – 21l–S– — – 5.5- '-14.4 Alcan Alumimum Ltd 26 40 53.8 36 -10.0 27 -25.0 29 7.4 Allied Chemical 28 48 71.4 43 -10.4 39 – 9.3 36 – 7.6 Alcoa 40 54 35.0 44 -18.5 43 – 2.2 46 6.9 Bethlehem Steel 30 36 20.0 27 -25.0 29 7.4 30 3.4 Int'l Paper 42 57 35.7 43 -24.5 42 – 2.4 46 9.5 Kennecott Copper 26 38 46 . I 31 -18 .4 31 – 35 12 . 9 Monsanto 55 74 34.5 43 -41.8 60 39.5 60 – Phelps Dodge 44 50 13.6 39 -22.0 35 -10.2 37 5.7 U. S. Steel 34 37 8.8 30 -18.9 40 33.3 45 12.5 Westvaco 28 40 42.8 27 -32.5 27 – 27- Weyerhaeuser 28 41 46.4 34 -17.0 40 17.6 34 -15.0 Average 37.1 -21.7 4.4 3.2 We pointed out In Tune that we thought the figures were Intereshng. In the first nine months of 1973, the Dow posted a 6.5 decline, while the cyclical Issues advanced 37, vs. a 9.9 average dechne for the growth stocks. The cyclica1s matched the performance of the Dow on the downside In the decline from the October hIgh to the December low, whereas the growth issues declined cons1derably more sharply. Likewise, on the move to the Apnl-May lows, the growth issues dropped another 51/2 while the cyclical issues advanced. It is in the last column that the major difference eX1sts between the table above and the earlier version of it published last June. When we published that letter, the Dow was at 844.81, some 90 points higher than it is today. At that point the growth stocks had, for the first time, been able to show superior per- formance over a short period. They were up almost twice as much from April-May lows as were the – – cyclical issues and.had'conslderably-bettered the-ris-e of the Dow-We'concluded the June 14-1ette'r-by saying, We think 1t is premature to conclude that the superior growth stock performance Wh1h charac- terized 1971 and 1972 and then disappeared abruptly in 1973, is about to burst out again in ltS old refulgence. Such has certainly not been the case, as the last column above shows. Of the 13 growth stocks, 12 are below their April-May lows and the average 14.4 decline IS considerably worse than the Dow declIne of 4.7. By contrast, only two of the cyclicals are down, and this group, on average, remains 3.2 above its prior low. We think, In sum, that the conclusions drawn in our June 14 letter are still valid. Dow-Jones Industrials (12'00 p.m.) 750.39 ANTHONY W. TABELL S & P Compo (I200 p.m.) 78.57 DELAFIELD, HARVEY TABELL Cumulative Index (8/1/74) 447.43 AWT/jb No statement or expressIon of OP!nIOn or ony other moiler herem contCl!ned IS, or u to be deemed to be, directly or mdHectly, on offer or the sol!c!tatlon 01 on offer to buy or sell ony setunty referred to or menltoned The motler !s presenlcd merely for the convef'!enCE of the subscrIber Wh!le oNe bel!eve the sources of our mformot!on to be rel!Oble, we In no way represent or guorantee the occurocy thereof nor of the stotemenl mode herc!n Any oct!on to be token by the subKnber should be bosed on h!s own Investlgotlon and mformohon Janney Montgomery Scotl, Inc, os 0 corporot,on, ond !ts offIcers or employees. moy now hove, or may loler toke, pOSItIons or trodes In respcct to ony seturot!es mentIoned In th!s or any future Issue, ond such posItIon may be different from ony vIews now or hereafter expressed In thIs or ony other Issue Janney Montgomery Scott, Inc, whIch IS regIstered WIth the SEC os on Investment adVIsor, moy glVc odvlce to !ts Investment odvlsory and other customers mdependently of any statements mode In thiS or !n any other Issue Further mformotlon on any securIty mentIoned herem !S ovalloble on request

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Tabell’s Market Letter – August 09, 1974

Tabell’s Market Letter – August 09, 1974

Tabell's Market Letter - August 09, 1974
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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 August 9, 1974 It seems to us impOSSible, from any rational pOint of view, to view the events which culminated la st.nightand. today. with anyfeeling other tha n-sadnesS We' find-ourselves Tn addition -;- in 'agree– ment with those commentators who have expressed admiration for the viability of the Constitutional structure. Beyond that, we do not think it is the province of this letter to comment on those events except insofar as they relate to securities markets. The response to the first rumors of resignation, it will be recalled, was a shrap three-day, 45-point rally ending on Wednesday with some correc- tion on Thursday and Friday morning. Although PreSidential resignation is an experience unique in 200 years of American history, the stock market's action was, m initial appearance at least, simply another repetition of a phenome- non that has ample historical precedent. That phenomenon centers on the fact that, shortly after any sudden and unexpected change in administration (or change in direction of administration) the rrKlrket tends to respond initially with an extremely sharp, short-term rally. That short-term rally, moreover, often constitutes the takeoff point for a sustained advance later on. Let us consider the precedents. On Sunday night, March 31, 1968, President Johnson announced he would not seek reelection and would actively pursue peace in Vietnam. The Dow moved ahead 20 points on the following Monday, setting an all-time volume record in the process and continued the advance throughout the early part of the month of April ,advancing over 50 points in two weeks. On November 22, 1963, President Kennedy was assassinated in Dallas. The ini- tial response was a panic decline of 20 points, with trading halted early. However, after a three- day closing, the market opened the following week wIth a 32-point advance, closing 11 pOints higher than it had been the day prior to the assassination. The rally continued into early Decem- – -ber-for-a-tota 1-auvanCErofmore'thln''l'SOpo1nts. On Aprirr2-,-19457'Prn-siuent-Rb'oS'even-dfed at—'- Warm Springs, Georgia, wIth the presidency passing to V,ce President Harry S. Truman. On the following Monday, the market advanced sharply on expanded volume, and continued the advance without any substantial interruption for the next two weeks. Going back even farther, the after- math of the death of President Harding, on August 4. 1923, was an initial decline followed by a sharp' rally throughout the remainder of August,which produced a 7 1/2 advance. Now, the rea son for this sort of behavior IS not the fact that the market exhibits a macabre ex- citement at the unexpected removal of a President, by whatever means. There exists, rather, m our view. a strong psychological tendency to rally round a new President. We thus, at the time, called the 1963 action the Johnson Confidence Eoom. If a rally from current levels ensues, the appelation, Ford Confidence Boom will probably not be a misnomer, just as it is, likewise, arguable that, in the earlier ca ses, the market wa s expressing mitial confidence in new Presidents Coolidge and Truman. The conditions preceding the changes in administration above and their longer-term aftermaths are also interesting. At the time both of Roosevelt's death and the Johnson announcement, the market had been advancing for a number of years. Both of the ensuing rallies, the one in 1968 lasting for nine months, and the one in 1945-46 for 14 months, proved to be the final advances of their respective bull markets. In neither case, did the market correct substantially following the initIal rally. In 1923, by contrast, the market had been drifting lower for most of the year. The initial rally in August was retraced entirely m September and October, but prices went on . . – – – –… – – – – – -.– – – –;;-. — – . — – —- from the October low to advance almost uninterruptedly into 1929. The 1963 experience, in many ways, constitutes a unique case. At that point the market had been advancing for over a year but was beginning to show distinct signs of weakness, mcluding sharply deteriorating breadth conditions. The boom of confidence m President Johnson was of sufficient strength to turn that technical condition around entirely in the first few months of 1964 and to lead to an advance which went on for over two years. If any sustained rally does develop from the current levels. then, it will undoubtedly be viewed by many as being ephemeral. Historical precedent, however, hardly suggests that this is likely to be the case. Dow-Jones Industrials (1200 p.m.) 777.77 S & P Compo (1200 p.m.) 80.90 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Cumulative Index (8/8/74) 462.05 AWT/jb No stalemenl or expression of opinion or any other moIler herem contolned IS, or IS to be deemed to be, directly or mdlrectly, on offer or Ihe sollcltotlon of on offer to buy or sell any securrty referred 10 or menlloned The molter IS presented merely for Ihe conVCl'lenCE of the subscriber While -HC believe the sources of our information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any cc1lon to be token by the subscriber should be bosed on hiS own InvestlgohOn ond Information Janney Montgomery Scot Inc, os 0 corporation, ond Its officers or employees, may now have, or may Icter toke, positions or trades In respect 10 any seculltlcs mentioned In thiS or ony future Issue, and such position may be different from any views now or hercofter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS reglslc-cd With the SEC as on Investment adVisor, may give adVice to liS investment adVISOry and other customers Independently of any statements mode In thiS Of In any other Issue Further information on any secu-Ily mentIOned herein IS ovolloble on request

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Tabell’s Market Letter – August 16, 1974

Tabell’s Market Letter – August 16, 1974

Tabell's Market Letter - August 16, 1974
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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 August 16, 1974 Welk-ed)st.. e-.'-..k.,.i-b-ou-!-th-e-possibi-li-ty'o,L8aFor-d'.'C–;Q- n–i-de.n.,c..E…'l.,.-B.o-o m-. ILoneIs.t-..o…- be,forth – … commg, it was by no means apparent in last week's market, which celebrated President Ford's first week m the White House by plunging to new lows, at least as measured by the Dow-Jones Industnal Average. Actually, the Ford rally, if there was one, took place while Mr. Nixon was still in office and ended apparently, just as PreSIdent Ford was being sworn in. It was on August,S, 6 and 7, prior to the reSignation speech that the Dow advanced a total of 45 points. Starting on Thursday, August 8, the evening President NIxon resigned, and continumg through the Ford accession on Friday, to his speech to Congress on Monday, the market gave up all the ground gained and lost sixty points in six trading sessions through yesterday. Reasons for encouragement in the market's achon are, admittedly, sparse. There was, mdeed, a great deal of technical vigor to the rally, and, interestingly enough, that vigor continued past the rally pea k a week ago. The Thursday decline, for example, saw more advancing stocks than declining stocks despite a 1 1/2 drop in the Dow, only the seventh time this has occurred In the past 47 years. Market breadth continued fairly good on Friday and Monday despite the sharp drops on those two days. On Tuesday and Wednesday, however, the dechne began to develop steam as breadth deteriorated sharply, and other signs of internal technical weakness made themselves manifest. There were, indeed, a few signs that the stories being told by the Dow and by the S & P 500 –were a bit more pessimistic than the true action of the market. Our own Cumulative Index….f.-ool.l.-o-w–e-d .. – the popular aver'ages into newlow -territory'on Wedne'sday but it can be said', at least that ICis– now moving concurrently with the Dow rather than leadmg It as it had been dOIng ever since last spring; Some confidence may also be gleaned from the fact that, as of this writing at least, both the Trans portation and Utility averages have failed to follow the Industna Is mto new low terrItory, with the contracyclical action of the utilities being better technical strength than this index has been able to exhibit for some time. Likewise, the number of daily new lows, which peaked at 197 on Wednesday of this week ,constitutes a low figure, considering the posihon of the market averages. It IS not our purpose here to emulate Pollyanna. The market IS, mdeed, sinking to new lows and there is no strong technical evidence that It w!ll not, m fact, proceed lower yet. Indeed, the lower downside objectives that exist for most averages were outlined in this letter m the early part of July. We cannot avoid the feeling, however, that the really vicIOUS area of decline is being restricted at the moment to the over-exploIted growth issues. We have been regaling our readers ad nauseam for the past two years with the fact that we considered these Issues to be over-priced in relation to the obvious values available in the rest of the market, so we can hardly say that this action is surprising. Even m the growth area, however, a number of stocks are beginmng to approach major long-term downside objectives. Once this takes place, considering the already depressed nature of the bulk of the list, it IS difficult to envision where the market will find further downSide leadershIp. – – – – – – — We have commented in the past on the phrase,turned by another technician which states that the market IS always lowest at the low. A moment's reflection WIll reveal the fact that there IS, indeed, a grain of wisdom m this apparently inane statement, in that hIstory will undoubtedly some day show that one of the Sickening plunges to new lows that have been part of the stock market expenence since 1973 was, mdeed, the last one. It WIll also have represented one of the better buying opportunities of the pa st few years, but, If history is any gUIde, this w!ll not be recognized in many quarters until a great deal after the fact. Dow-Jones Tndustrials '1200 p.m.) 735.22 S & P Compo (1200 p.m.) 76.17 Cumulative Index (8/15/74) 439.76 AWT/jb ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expression of opInion or Clny other motter herein contained IS, or IS to be deemed to be, directly or mdlrectly, on offer or the soliCitation of on offer 10 buy or sell ony seCIJrlty hon to be reliable, we In referred no way to or mentioned The matter 1 presented merely represent or guarantee the accuracy thereof nor for of the the sclao!nevmelelnentsCfmuodf ethheerseuinbSCArinbyer acWtIOhnileto ebebtealieevne the sources of our Informaby the subSCriber should be based on hiS own Investigation and informatIOn Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later take, pasltlons or trade, In respect to any SeCUrltles mentioned In thiS or any future Issue, and such pOSition may be different from any views now or hereafter expressed In thiS or any ather Issue Janney Montgomery Scoll, Inc, whICh IS registered With the SEC as on Investment adVisor, moy gIVe adVICe to Its Investment adVisory and othel customers Independently of any statements made In thiS or In any other lS5ue fUMher Informollon on any security menhoned herein IS available on request

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Tabell’s Market Letter – August 23, 1974

Tabell’s Market Letter – August 23, 1974

Tabell's Market Letter - August 23, 1974
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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 August 23, 1974 Ayear and a half ago, we published a series of four letters exammmg some of the impilcations of the ThenpopUTai theorY-ofgrowttl stock InvestmeOn ApiIU19-73 we P7IBfislles-umriiaryra-na1;onclu' sian based on those four letters. That summary is reprinted herewith,verbatim and in its entirety. There lS, of course, nothing new under the sun. The following quotation is an appropnate summary of what we have, in our series, lndicated was taklng place over the past few years. Selectivity took on a new character by reason of the overshadowing emphasis placed on expected future growth as the pnme criterion of an attractive investment. There was nothing wrong with these .. 1deas, except that it was almost impossible not to carry them too far. With encouragement from the past and a rosy prospect in the future, the buyers of 'growth stocks I were certain to lose their sense of proporllon and to pay excessive prices. The above is not Anthony Tabell writing in 1973 about 1971-72. It is Benjamin Graham writmg 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. Eut, 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 earn- ings. Let us examine some of the implications of these three suggestions. It was Eernard 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, ln other words, willing to accept the intuitive conclusion that, when large numbers of buyers are agreed that a given method of investment lS a sure road to success, that method cannot prove viable over the long term. The enforcement of this principle 1S the function of the marketplace, and it is our belief that the market will be no less effic1ent in this task m the future than -it-hasbeenin'1hepast; — – – -',..,, – – – It should be made clear that what is being sa1d here implies no critiC1sm whatever of the fundamental merits of recognized growth issues, suggests that they should not sell at some premlUm over other 1ssues or affirms that they cannot under any circumstances be attractive purchase candidates. What we are suggesting, along with Graham, 1S that the concept that such 1ssues represent appropriate mvestment vehicles for conservative accounts, regardless of the pnce being paid, lS, to put it mildly, ludicrous. Secondly, we think the suggestion that there exists a class of one-decision stocks, where all that is necessary is to buy and hold, constitutes an abdication of the investment manager's responsibility. Were the mvestment 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 b1ggest factor in price change, over relat1vely long periods of time, tends to be caus ed not by earnings but by investor confidence in thos e earnings — this confidence being most readily expressed by the statlstic of the price/earnings ratio for individual stocks. Th,S fact has two implications. The first provides the reason for our convichon, which will surpnse no one, that technical analysis is an indispensible factor in the mvestment decision-making process. It 1S equally important m 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 eamlng power is going 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 vEduation of other stocks;-must beapri1ne criteria inlnveslment selectionIt'ls-' axiomatic that a stock having a low multlple, thus suggesting low investor confidence, has 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 prishne qualIty I involves, in our view, another abdication of the investment manager's responsibility by reason of the assumption of unnecessary 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 concluslon. We continue to believe, however, that the principles above represent viable guide- posts to a successful investment philosophy. Dow-Jones Industrials (1200 p.m.) 706.82 S & P Compo '1200 p.m.) 73.24 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (8/22/74) 419.19 AWT/jb ..- No statement or expressIon af aplnion or any other matter herem contained IS, or , to be deemed to be, dtredly or Indirectly, on offer or the solIcitatIon of an offer to bvy or sell any securtty referred to or mentIoned The matter IS presented merely for the converolenc6' of the subscrtber Whde -Ne belIeve the sources of our mfarma- tlon 10 be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herem Any action 10 be token by Ihe subSCriber should be based on hIS own Inves\lgatlan and Information Janney Montgomery Scali, Inc, 0 a corporation, ond Its offICers or employees, may now have, or may later toke, poslttons or trades m respect to any seclJrltles mentIoned In thIS or any flJtlJre ISSlJe, and SlJch POSitIon may be different from any views now or hereafter expressed In thIS or any other Issve Janney Montgomery Sc01l, Inc, which IS registered WIth the SEC 0 on mvestment adVIsor, may give adVICe to Its Investment adVisory and othel customers mdependently of any statements mode m thIS or In any other ISSlJe FlJrther tnformatlan on any 5eClJrtty menhoned herem IS avadable on reqlJesl

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