Tabell’s Market Letter – May 02, 1975

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 06540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE – May 2, 1975 -…– We have noted in this space in the past that the stock market has, of . …… — – ………. ……. 0 — -.–'-la'te,be.ens.l..-emo-nst-r-at-ingvOLo.- la-, – …… tility-more sirtiilaYto that -of the-r9Td'stiian tne 1940-1970 period. It is, perhaps, worthwhile to document some of the tentative evidence in favor of this conclusion. One mea sure of volatility in a given year is the number of days showing large percentage changes, either up or down, during that year. The following table shows the number of trading days in each year since 1926 that the percentage change of the Dow fell …within various ranges between under 1 and over 5. YE AII -u 1-21 2-31 341 4-51 sr . -..YEU -1I 121 -!I 341 4-51 5h 121 133 55 e I I III 1'151 255 2e 0 0 I'J IU1 1&4 4 c I 0 0 1'152 210 II 01 III '12e 2\4 &8 A 4 III I U5 235 I'! I III III III 1'12'1 154 84 25 II 5 12 1'154 235 15 2 I!I 0 I'J 1'130 14 'II i!& 20 8 4 155 ill4 3(11 1 III III I 1f/31 102 'II 56 il5 13 \3 15 ill 32 III III I'J '1'II! 'I &0 4& 34 i!'! 35 1'157 ill2 32 1 III I 1'133 120 71! n 27 !1 15 235 1& I 01 134 1'12 H 21 2 2 2 1'15'1 il1 3! I III 0 III 1'135 233 5'1 'I 0 0 I'IU 212 3'1 I 0 III 0 1'131 244 44 12 I III 1'111 228 22 III 0 II 01 ' .1937 181 73 20 1 & 7 1'1&2 188 50 l! I 1 1'138 1&I A2 3'1 12 5 2 1'163 237 \I 20I \'13'1 21'1 55 1'1 II I 1'1&4 208 '3 0 0 0 III 1940 cO 37 1 1'101 257 9 3 –.,…,.,, '19irz-' i! 5 7'0 0—il 143 218 !0 c 3 2 0 I 4 i 1'1&5 3'1 00J.'I&2(11 0 0 1&7 232 II 0 I'IH 21118 13 44 19 1& 0 0 (lO – 20' (11' .. – 'II II 0 i! 0 0 1\ 1944 2'11 7 0 0 0 19&9 218 32 II 11 0 145 257 28 I 0 0 0 1'17(11 1'12 51 8 2 III I 1'146 213 48 13 4 i! I 1'171 2\7 34 1 I e '1947 235 42 5 I 0 1'I7 25 2& 0 0 0 ' ,1'148 241 29 5 2 01 0 1973 15'1 7'1 10 4 II ,I'ln 2&1 21 II II 0 0 IHO 134 75 4 8 2 1'1'''' 242 31 & I I III 191 os 2'1 8 I 0 'The statistics are interesting. For the years 1926 through 1928, a highly placid market climate pre- vailed in which well in excess of 200 trading days saw percentage changes of less than 1, and there were very few wide swings. This abruptly changed in the 1930's. In the bulk of these years, the number of days on which the percentage swing was under 1 was just a bit more than half of the total trading days, and the number of days in which the percentage change ran between one and two per cent generally reached 70 or better. Likewise, especially during the 1929-32 bear market, there were a number of days on which percentage swings were considerably wider. Then, starting in 1940, as can be seen, the pattern of the 1920's returned and remained pretty consis- tent through the period. The only years in which a noticeable increase in volatility took place were the bear market years of 1962 and 1970. In 1973, as near as we can tell, the pattern abruptly reversed itself. Both 1973 and 1974 saw fewer days with a percentage change of less than 1 than any year since 1933. Likewise, the number of days on which price change ran 1 or greater exceeded any-year since the-lafterpart6fTlfe-1930(S – A partial explanation of this lies in the fact that 1973-74 constituted a continuing bear market, and volatility, as the table clearly shows, tends to increase in such a climate. What is interesting, however, is that the pattern is continuing so far into 1975, one of the sharpest up-years in market history to date. If one were to annualize the 1975 figures, for example, there would only be 137 trading days with less than 1 change, 88 where the change was 1-2 and 27, where the change exceeded 2. Thus, the vola- tility pattern established in 1973 apparently continues. If this sort of thing is, indeed, the wave of the foreseeable future, it is quite obvious that some of the investment strategies a ppropriate to the last 30 years may be inappropriate in the 1970's. Dow-Jones Industrials (1200 p. m.) 840.82 S & P Compo (1200 p.m.) 88.94 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL Cumulative Index (5/1/75) 483.34 AWT/jb –N-,-,-'o-',-m-,,-'-'–'–'–'''-0'-0-'-''-'0-0-0-'-oo-y-,-th-,-,-m-o'–,–h,-,,-,,-'-o–o,-,,-d–,–o-,-,,-,-,-b-,-d.-,-m-,d–'-,-b-,-d-,,-,,-'-,-,,-od,-,,ct'y,-oo-';ff'-''-;'h'-'O',,o,,,;o'-;o-o;;ff'' to buy or sell ony security referred 10 or mentioned The motter IS presented merely for the convenlena. of the subscriber. While we bell!!ve Ihe SOUfces of our Informa- tion 10 be relmble we In no way represent or guorantee Ihe accuracy thereof nor of the statements mude herein Any octlon 10 be token by Ihe subscriber should be bosed on hiS own' ,nveshgollon and mformOhOl Janney Montgomery SCali, Inc, as () corporOhon, and lIs officers or employee may now hove, or may loler loke, POSitions or trodes In fCSP!!ct 10 any secUrities mentioned on Ihls or cny future Issue, and such POSlllon moy be dlfferen from ony views now or hereofter e'pressed in thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered wiln Ihe SEC os on ,nvestment odvlsor, may g,ve adVice to Its investment adVisory ond olhel customers mdependently of any tatement mode m thiS or .n any other Issue Further Information on any secullty mentioned here.n IS available on request