Viewing Month: October 1974

Tabell’s Market Letter – October 04, 1974

Tabell’s Market Letter – October 04, 1974

Tabell's Market Letter - October 04, 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 I – October 4, 1974 All right, let's put it this way. Let's say you are thinking of buying a candy store. You have – on-e'pickedout;'a s amatter -of'fact-It ch-asthe-'f,-gst'lo-ian6niiit-(jwfi;-ana;–a s!1eaY'''a-s- you- can– – –,-II figure out, has for quite some time been doing close to half of the candy business in the entire area. The store, showcases and other equipment which you would be buying cost about 16,000 originallY,although they have been depreciated on the books to around 9, 000. The previous owner has done a good job of maintaining the property. As a matter of fact, over the past ten years he sunk a little better than 10,000 into the business. The store has something over 3, 000 in the bank and that bank account would come along with the business. Another 3, 000 is owed to it by some of the best families in town who maintain charge accounts with the store. Also coming along with the business is about 5,200 worth of eminently saleable inventory of candy and like goods sitting in the back storeroom. About 1, 000 of this year's expenses have been prepaid. You would be asked to assume some liabilities. The store has accounts payable to candy suppliers and other near-term liabilities of about 6,200 ,and there is a small mortgage of 756. You look at the past ten years operating record for the store, and it is pretty interesting. Last year, in fact, was its best year ever, and it sold more than 36, 000 worth of candy. That is more than twice the amount of candy that it sold ten years ago. Its operating income also set a record of 4,500 before taxes, and over the past decade.its record has been fairly consistent It has never prodd an operatingTe ofless than'3;'060 in a-ny -ye-r ,furtng- th-;-past ten, except for one year when the employees went on strike. In addition to operating income there was, last year, 900 of additional cash flow from depreciation. Operating income is, of course, figured after paying the manager a salary comparable to what he would earn elsewhere. 1- This year figures to be somewhat of a problem. The people in your town have gotten dietconscious and aren't likely to buy as much candy as they used to. Sales will probably be off some 20, and earnings before taxes may drop under the 3, 000 level for the first time in ten years except for that one strike year. You think this problem is largely temporary, though, and you expect an adequate earnings recovery in 1975. O. K. Now look at the above figures again. What would you be willing to pay for this business — 16,000 in property at original cost, 6,200 of working capital, negligible debt, earnings which in good years exceed 3,500 before taxes, cash flow which, last year, was well over 5,000. Would 10,000 be a fair price It would certainly seem so. Now, take all of the above figures and multiply them by one million. Change the business from candy to automobiles. What we have just given is an essentially accurate description of General Motors,and it can, indeed, be bought for one million times 10,000, the value of its -287,617,041 shares at 351/4 being approximately 10.14 billion. There is a simple point to this exercise. Benjamin Graham has repeatedly suggested, and has again reiterated in a recent article, that, In a large area of the present stock market, we could return to a very old-fashioned but nonetheless useful criterion for equity investment –namely the value of the company as a private enterprise to a private owner, irrespective of market quotations for the shares. We chose General Motors above, not to recommend it specifi- cally, but Simply because it is the largest company in American industry. It is simply used to make the point that it is just one of hundreds of listed companies whose securities are available at prices which appear patently absurd if the underlying companies are viewed as on-going concerns. Dow-Jones Industrials (1200 p.m.) S & P Compo (1200 p. m.) 577.99 61. 56 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Cumulative Index (9/3/74) 355.80 AWT/jb No totement or expression of Opinion or cny other matter herein contomed IS, or IS to be deemed to be, directly or indirectly, on offer or the SOIICI'otlon of on offer 10 buy or sell any security referred to or menTIoned The motter IS presented merely for the converlence of the subSCriber Whde He believe the sources of our informa- tion to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statemena mude herein Any action to be taken by the subSCriber should be based on hiS own investigation and information Janney Montgomery Scott, Inc, as a corporation, and lIs officers or employees, may now hove, or moy later take, 1Il.'- 1IIl'L- poSitions or tradc, In respect to any securities mentIOned In thiS or any future ISsue, and such position may be different from any views now or hereafter expressed In this or any other Issue Janney Montgomery call, Inc, which IS registered With the SEC as on IOvestment adVisor, may give adVice to Its Investment adVISOry and ather ruom''d'P'd','YOfOY''om','mod','h,,o,,oyo'h''''Fh'',fo'mooOOy,,ru..,ym,,,o'dh''''ovo'ob',o''q'-J

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Tabell’s Market Letter – October 11, 1974

Tabell’s Market Letter – October 11, 1974

Tabell's Market Letter - October 11, 1974
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.- – – – – – – ——, TABELL'S MARKET LETTER I L – – – —- 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION 01 MEM8ER NEW VORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE October 11, 1974 The stock market finally got around th,s week to turning in a reasonably exciting performance!c-.;,al- ,..I …- h0ii9fllii many ways -,t caiihardtybe' sald t,ilaVebeensur'Pii'Sfi1g.In-aii'y2ase;'theDawopenecttl1e week with a 23-point rise and, after a mild retracement on Tuesday, scored its best advance in SlX- teen months on Wednesday w,th a 28-pomt rally. This nse was further extended through midday Thurs- day, when profit-tabng set in, but Thursday's close, nonetheless, still showed a 17-point improve- ment on the day. All in all, from last Friday's intraday low of 573.22 to the Thursday mtraday high of 664.03, the total advance was some ninety pOints, or a nse of 15.8 in a four-day period. – We said above that the performance was hardly surpnsing. This is true in a sense that it obviously was going to take place at some time and some place, the only questlOn being when and where. The spectacle of a deeply oversold stock market probing for a bottom is in no way new and has been re- peated in essentially the same fashion for as long as markets have eXlsted. In this sense, at least, the week's action, for all the fireworks, was famlliar to the paint of being dreary. Whether the low of a week ago will ultimately turn out in the light of history to have been the low of the 1973-74 bear market is a question we do not think can be answered with certamty at the moment, although the probabilities of th,s bemg the case are perhaps better than they have been at any time so far. Thursday's advance, during which 26 million shares changed hands, met the volume standards which have characterized major turning paints in the past. Breadth, on the other hand, was disappOint- ing. Neither the 1301 advances of Monday, the 1220 advances of Wednesday or Thursday's 1338nsing issues met the standards of prior major turning pOints. Such a standard at the moment would call for a slightly over 1400 advanCing issues, a performance we have not, as yet, been able to achieve. Also disappointing was the renewed appearance, on Wednesday and Thursday, of the sort of strong selling 'I'p';re-sWs!u1raeCsiswpheirchhahpas ve turned well-to-)( back previous eep lD mlnaaY rally fliis ' attempts stage tstf ieaafr-lhioetrttohm,sS,yheiasrt.o ri c a U f , ' li a v e – a s suiile1i-dif– ferent forms and different shapes. For example, May 29, 1962, for many stocks, constituted the effective bottom of the 1962 bear market as the Dow touched an intraday low of 552. After a two-day rally, it fell again to an intraday bottom around 525 in June before reversing sharply. It then returned to the May low four months later in October, at the t,me of the Cuban missile crisis. In 1966, two successive lows' were made, the first m August and the second in October, and m this mstance the second low was moderately lower than the first. In 1970, of course, the May 26 low was never really tested, and, as it built its base for the 1970-73 advance, the market edged slowly higher. Such was also the case in 1957-58. Thus, wh'le history shows it is dangerous at this early stage to try to predict the course of the averages, it is hlghly possible that, in the case of a good many individual stocks, important bot- toms may already have been reached. The action of the market from here on out wlll be interesting and probably, in addltion, highly infor- mative. What most of the major indices have now done is to return to trading ranges which have a good deal of potent,al significance. The Dow-Jones Industrials, for example, traded m a range roughly be- tween 650 and 680 during the latter two weeks in August and early September. While this month of tradmg is not particularly slgnificant from a time point of view, it assumes a high degree of technical importance, due to the volume and pnce actiVlty that took place. The recent rally, of course, has brought the average back into this range, and the most constructive action it could possibly show would be to remain within the confmes of the 650-680 area and ultlmately penetrate ,t on the upside. Were this sort of action to ensue, something that could deservedly be called a bull market could appropriate- ly be foreca st. . The Transportation and-Utility mdices have patterns which are the s-arriein prln'ciple;- aHhough some- what different in specifics, These two indices did not make new lows on the recent downswing (The Transportation index did do so, but only fractlOnally) and are now moving toward the trading areas of late July and early August. They still have some d,stance to go to reach these areas, 150-160 on the Transportation index versus the present level of 145 and 68-72 on the Utilities versus a current level of 67. However, as is the case with the Industrials, could these levels be attained and held, the action would have to be considered constructive. It is best, at times Ilke the present, to remember the Blbllcal injunction that we see only through a glass darkly. As patterns like the present one slowly unfold, the specifics become clearer and a more rational forecast becomes poss,ble. Last week's action, however, must be regarded as a possible initial link in the constructive chain of events. Dow-Jones Industmlls (1200 p.m.) 646.59 S & P Compo (1200 p.m.) 69.80 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (10/10/74) 387.27 AWTjc No statement or exprenlon of opinion or any olher malter herein contOlned IS, or IS 10 be deemed to be, directly or mdnec1ly, on offer or the OIICllotlon of on oHer to buy or sell any secunty referred to or menlloned The mOiler IS presented merely for The convellenc of Ihe subSCriber While -Ne believe the sources of our Informotlon 10 be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mode herein Any adlon to be To!.en by the subSCriber should be bosed on hiS own investigation and Informallon Janney Montgomery Scott, Inc, as a corporation, and 11 officers or employees, may now have, or may later lak;.-, positions or trades In respect to any SeCUrities menllaned In thiS or any fuTure Issue, and such position may be different from any Views now or hereafter eJOpressed In ThiS or any other Issue Janney Montgomery Scott, Inc, which IS regisTered With the SEC as on Investment adVisor, may give adVice to ItS Investment adVisory and othel customers Independently of any uotements mode In thiS or In any other luue Further information on any security mentioned herein IS available on reque

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Tabell’s Market Letter – October 18, 1974

Tabell’s Market Letter – October 18, 1974

Tabell's Market Letter - October 18, 1974
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r..— — —–'- – -…….. TABELL'S MARKET LETTER – 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE. INC. MEMBER AMERICAN STOCK EXCHANGE -1-…..'…-.-T-n-e,-s.to-c-k''7m'a-,rk.e.t,.',p,i,c.t.u..re.conti,n,u..e.d..,t-o,–u..m..c.i,l.a-th i s -w eek .wS2ffchto-abne-ra1st8o,n 197,;.4,,,isfiing aild ( as-w il l be dl S – ' – cussed below) unprecedented rapidity. We suggested in last week's letter that the action of the Dow as it approached the 650-680 area would help to provide a clue as to future market action. We indicated that the most bullish possible course of action would be for the average to fluctuate back and forth in that trading range for some period of time and eventually penetrate it on the upside, thus completing the familiar head-and-shoulders type basing action. Last week's trading saw no fewer than four distinct and separate moves across that range. Monday's continuation of last week's rally brought the index to an hourly high above the 680 level, and a decline starting Monday afternoon and continuing Tuesday morning carried to the mid660' s. An intraday rally on Tuesday brought the average up again, before a drop on Tuesday afternoon and Wednesday carried it down to a 642.29 Wednesday close, moderately below the range we had suggested. The strength on Thursday and Friday morning, however, brought the average back into the projected trading range. As we indicated last week, continued ability to hold within this area would suggest that the base formation for an advance may be completed around current levels rather than involving a test and possible penetration of the lows of two weeks ago. / Returning again to our letter of last week, we made an attempt to be somewhat blase about the sharp advance of a week ago suggesting that it was no more than one of many examples of an over- sold stock market probing for a bottom. This, of course, is at least partially true Since, in genera-lTma eket -Gha ra Gter-i s tic sha-verema,in edu ncha ng ed.for.centurie s….,.xet,c los erexa mina tionrev-ea Is that, in some aspects, we were present, during the week of October 7-11, at an event of historical proportions. The percentage advance on the Dow for that week was just under 12.6, and there has been no percentage rally of that magnitude in any given trading week since 1938. Prior to that it is necessary to go back to the 1929-32 period to find weekly advances of greater percentage. There were three on the way down during 1929-32 and eight after the market had turned in 1932-33. Markets in the postwar period had never been able to achieve a weekly advance of better than 6 1/2 until this week. Actually, the total length of the rally was six days, and, over the six-day period ending Monday, the Dow posted a 15.2 advance. Again, this advance has been exceeded over a sixday period on only nine prior occasions Since 1926, eight of them in the 1929-32 period and one in 1938. We have suggested in the past that it is necessary to return to the 1930's to find a benchmark with which to compare the current decline. It is apparently also necessary to return to that area to find a comparison for the market's current volatility. Nor is the action of a week ago the only instance in the recent past of unusually wide market fluctuations. The decline from the January, 1973 high was punctuated by two rallies, one of 16 in August-October, 1973, lasting 46 days, and a 67-day advance of 13 in December, 1973-March, 1974. Rallies of this magnitude within an ongoing bear market are essentially unprecedented by postwar standards. We are not sure what value the above statistics possess for forecasting purposes, but they – raise some rather interesting questions about the nature of the current stock market. Essentially, they constitute another link in a long chain of evidence which suggests that the equity market has become more volatile,both on the upside and the downside,than has been the case at any time with- in the experience of most investors. If this is indeed the case, flexibility in investment manage- ment, including ability to move rapidly as conditions change, will be at a premium. It is interest- ing to speculate as to the extent to which such flexibility indeed exists in a market coming to be dominated by larger and larger investment-decision makers. Dow-Jones Industrials (1200 p.m.) 657.62 ANTHONY W. TABELL S & P Compo 11200 p.m.) 72.13 DELAFIELD, HARVEY, TABELL Cumulative Index (10/17/74) 393.06 AWT/jb No stctemenl or expreSSion of opinion or any other maIler herein Contolned IS, or IS to be deemed to be. directly or Indirectly, On offer or the SOI'Cllotlon of on offer to buy or sell ony security referred 10 or mentioned The mottC!f Is presented merely for the corwerlence of the subscriber While Ne believe the sources of our 1Oforma han to be reliable, we 10 no way represent or guarantee the accuracy thereof nor of the statements mude herem Any (lctlon to be taen by Ihe subSCriber should be based on hiS own 1Ovestlgohon and InformallOn Janney Montgomery Stott, Inc, as a corporation, and lIs officers or employees, may now have, or moy later toke, poSitions or trades In respect to any securlhe mentioned In th' or any future Issue, and such pOSition may be different from ony views now or hereofter expressed In thiS Of any other Issue Jonney Montgomery Scott, Inc, which IS regiStered With the SEC as on Investment odvlsor, may give adVice to Its Investment adVisory and other rus/omers Independently of any stotements mode In Ih,s or In ony other Issue further 1Oformol!on on any security mentioned herein IS ovodoble on request

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Tabell’s Market Letter – October 25, 1974

Tabell’s Market Letter – October 25, 1974

Tabell's Market Letter - October 25, 1974
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08!540 DIVISION OF MEMBER NEW 'tORI( STOCK EXCHANGE. INC MEMBER AMERICAN STOCK EXCHANGE October 25, 1974 – We outJine'l il1)lstweIJ)'2;,rtJ;s.'.ghthat the behavi,r of ShegJones.Jndustial.Icve.!ag– m the rough 650-680 area would be Important and suggested that the market's continued ability to hold – in that range would be constructive. It did not quite manage to do so in last week's trading,dropping to a closing low of 636.26 on Thursday and an intraday low as low as 624.30. We are nonetheless not all that discouraged by the week's behavior, and close scrutiny of mdividual chart patterns for major listed stocks, in our view, lends a good deal of encouragement to one's market outlook. In nervous and volatile markets (and this one approaches setting records in both categories), it is often unwise to spend a great deal of time trying to pinpoint short-term targets either for the aver- ages or for individual stocks. The basic question facing the investor at this point in time, it seems to us, is whether the wild fluctuations which have characterized September and October, 1974, con- stitute nothing more than a way station on the road to disaster, as the widely-publicized gloom-and- doom proponents would have us believe, or whether they constitute part of a process which will ul- timately lead to a worthwhile revers a 1. Rational examination of the market's action must, in our opinion, mcline the analyst toward the latter view. We suggested in this space last week that the momentum of the six-day advance of October 7-14 was historically almost unprecedented and that it was necessary to go back to the 1930's to find rallies of equal magnitude. It was advances of this degree that characterized the bottoms of 1932 and 1938. As we admitted last week, there were three rallies of similar strength during the mar- ket's sickening slide during the 1929-32 period, and we are perfectly willing to acknowledge that, if one sincerely believes a lJlajor depression is in the offing, he can point to these as evidence that the past couple of month's market action is essentially meaningless. Not being ourselves inclined toward – -that-view-,-we-tendAG,th-in-klthassomewhat-more–s-ignH-ica-nce-. .. It is really, as we suggested above, to the action of individual stocks that one must turn if he wants to gain some insight into the rather amazing things that have been taking place in the market- place of late. Not only was the velocity of the Dow's reversal unprecedented for the postwar period, but the advances of individual stocks were equally amazing. We compiled recently a study measur- ing the percentage advances of major NYSE and ASE issues from their lows for the week ended Wednes- day, October 9, to their highs of the week ended October 16. We eliminated from the study all stocks selling under 15 a share, since lower-priced stocks tend normally to demonstrate a high degree of volatility. It turned out that during the period, a short 6-10 trading days long, a total of 153 issues advanced 30 or more, with 46 advancing more than 40, twenty more than 50, and five better than 60. This sort of thing, it seems to us, is more than simply evidence of market frenzy. It seems to suggest a fairly high degree of latent demand for stocks at current levels, and, in some cases at least, a lack of any sort of meaningful supply. More subjective measurements pOint m the same direction. As one goes over individual chart patterns, he cannot fail to be impressed not only by the sharp reversals that have taken place but also by the number of instances where the downward movement of 1974 to date has been replaced by lateral action. A fairly Significant number of stocks, it seems to us, has fluctuated back and forth sufficiently over the past few months to form potentially meaningful base formations or at least to make a start on such formations. So, for that matter, has the DJIA itself. The Dow closed, 42 days ago, on August 26, 1974, at 688.13,51.87 pOints above its close of last night. If one adds up the total of the hour-to-hour – changes'forthbse'42 di',ys;–howev-er;'onefinds that they total an astroriomical-944.S5poirits7Y 446 points up and 498 pOints down. In 42 days, in other words, the Dow has managed to post total hour- ly fluctuations almost 1 1/2 times as great as the total value of the index. There is, in sum, something going on out there and it IS, Significantly enough, going on at a time when equities, on an historical basis, represent as good value as they have at any time m the past 30 years. Market reversals take'many forms and many shapes,and we think it would be foolhardy to try to predict the exact shape of the ultimate turn out of the current downswing. The point is that the evidence in favor of an aggressive attitude toward the stock market seems to us today a great deal more compelling than it ha s been in some time. Dow-Jones Industrials (1200 p.m.) 636.50 S & P Compo (1200 p.m.) 70.32 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (10/24/74) 391.84 AWT/jb No stotement or expression of opmlon or any olher matter herein contOlned IS, or IS 10 be deemed 10 be, directly or ,ndlrec1Ir,' on offer or the soiecllollon of on offer 10 buy or sell any secunty referred to Or menlloned The mlllier IS presented merely for the converlence of the subScriber Whl e Ne belIeve Ihe sources of our informatIon to be reliable, we In no way represent or guo ron tee the occuracy thereof nor of the stotements mude herein Any aCTion to be taen by the subscriber should be bor.ed on hiS own investigation and InformaHon Janney Montgomery Scotl, Inc, os 0 corporation, ond Its officers or employees, may now have, or moy later toke, p05ltlon or trades In respect to any seCUrities mentioned In thiS or ony future Issue, and such posllJon may be dIfferent from any views now or hereafter expressed In II'us or ony other ISsve Janney Montgomery Scott, Inc, whIch IS regIstered WIth the SEC as on Investment adVisor, may give odvlce to Its Investment adVisory and other customers Independently of ony statements mode In thiS or In any other Issve Further information on any secury mentioned herein IS available on request

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