TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE March 18, 1977 . '. ,C ,The recent short-term action of the stock market remains constructive as the Dow-Jones In- dustrial Averages ad';aced25'10 polntSoVe'r five sfraighftradi aaYstii.rooghWednesday-onlilsweek;- The averages broke out of a minor base on our 2-point and 5-point unit charts, respectively. indicating a short-term upside objective of 974-980. As the averages approach these levels, conventional wisdom would indicate the heavy overhead supply at 980-1020 would necessitate a pause or possible test of the previous lows. It appears we are in the process of broadening a potential base which would be sufficient enough to ultimately penetrate the supply previously mentioned. This type of sideways action leading to a more important base formation is viewed constructively; however. a major ingredient in this process of formation will be time. The New York Stock Exchange earlier this week released their monthly figures of NYSE firms carrying customers' stock margin accounts. Margin debt increased again 10 February and for the 17th month in the last 18 has not declined. Margin customers of the NYSE member firms added 210 million to their indebtedness, bringing a total margin debt to a record 8,480 million at month end. This is the third month in a row customers' margin debt posted an all-time high in the series that dates to January, 1965. The former record of 7,900 million was set in December, 1972. The number of margin accounts for the same period between December, 1972, and February, 1977, has increased from 750,000 to 840,000. Although margin debt is at an all-time high, it is interest- ing to note that the number of margin accounts is still, after almost ten years, well below the level set in September, 1968, when margin accounts numbered 945,000, In the following exhibit, we compare margin debt to margin accounts and show this as a ratio. We have taken the highs and lows of margin debt and compared them to the corresponding major highs and lows of the DJIA. EXHIBIT I . .. . Margin Debt(mll) . Accounts (thou) Ratio June, 1968 ,- High 6690' 940 14.05 Date Dow-Jones n/29/68 .. 985.08 —eo- July,1970 Low 3780 770 20.37 5/26/70 631.16 December,1972 High 7900 750 9.49 1/11/73 1051.70 December,1974 Low 3910 625 15.98 12/6/74 577.60 February, 1976 High 8480 825 9.72 9/29/76 1041. 79 From 1965 to date the range of this ratio is 20.37 high on July, 1970 and 9.35 Iowan Octo- ber, 1972. The ratio tends to be high at market bottoms (July, 1970 and December, 1974) and low at market tops. The relative high ratio in June, 1968, a market high, can obviously be attributable to the large amount of speculation in the market. Also, the ratio peaks before a market high and after a market low. If these observations are correct, the recent or a subsequent j1igh in customer margin debt would indicate the DJIA could be higher at a later date. EXHIBIT II Margin Debt Total Market Value Percentage Date Dow-Jones June, 1968 High 6690 641037 1.043 11/29/68 985.08 July. 1970 Low 3780 531077 .712 5/26/70 631.16 December, 1972 HIgh 7900 872000 .906 1/11/73 1051. 70 December,1974 Low 3910 511054 .765 12/6/74 577.60 February, 1976 High 8270 802504 1. 031 9/29/76 1041. 79 Another way we are able to analyze the customer stock margin debt is to compare it to the total market value of equities listed on the NYSE. From 1965 to date the range of the percentage of margin debt to total NYSE market value has been 1.10 high on September, 1966. and .597 low on January, 1971. Jhe observations see.'! e the sae. J'he hlg!!er !h.e.pentage of !!!.argin debt to mark'..t valtle, the higher the averages and, conversely, the lower the percentage, the lower the averages. Although the above exhibits would allow for stock prices to go higher, one set of figures re- leased by the NYSE would argue this point. Customers carrying margin accounts under 40 equities now stand at 1. 5 billion or 18 of total margin debt. In simplest terms. this means the quality of credit has deteriorated during the month of February with 18 of the debt in accounts in the lowest equity class against 15 in the same class in January. It should be remembered in August of 1974, this ratio reached a high of 23, a series record,and was thought to be a major contributor to the decline in late 1974. Dow-Jones Industrials (1200 p.m.) 962.85 S & P Composite (1200 p.m.) 102.03 Cumulative Index (3/17/77) 661.76 RJS/jb ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL No stolemen! or expression of optnlon or any other motter herein contolned Il, or 15 to be deemed to be, directly or Indorectly, on offer or the SollCllotlon of on offer to buy or sell Clny secunly referred to or mentioned The maHer IS presented merely for the (onverlenn of the subscriber While Ne believe the sources of our Information to be rehoble, 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 Investlgollon and Information Janney Montgomery Scott, Inc, as a corporation, and Its officers or employees, may now have, or may later take, positions or trades In respect to ony securities mentioned In thiS or any future Issue, and such POSition moy be different from any Views now or hereafter expressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as an Investment adVisor, may give adVICe to Its Investment adVisory and other customers Independently of any statements mode rn thl or In any other Issue Further information on any security mentioned herern IS available on request

— TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE March 25, 1977 Last week's intraday high of 971. 58 on the DOW-Jones Industrial Average approached the 9749ao-short.rirft;'objective-s mentlorimfii1thrStet–er'laSt'week . Sinc; th'Jfe DJIA h-a-g' ciecline;'d– 32.33 pOints in six consecutive trading days and as we have discussed, appears to be testing the previous lows in the Average. We continue to feel we are in a time-consuming process of broaden- ing a potential base which would be sufficient enough to ultimately penetrate the heavy overhead supply present at 980-1020. However, the ability to break decisively the November, 1976 low of 924.04 would destroy this sideways action of the market. Since December 5, 1968, when give-up checks were terminated, through May I, 1975, when negotiated rates went into effect, the brokerage industry has been faced with the prospect of reduced commissions and reduced volume. Since 1968, these various factors have had an influence on total volume, but to date only in degree. Last week the New York Stock Exchange released their Monthly Review and we discussed the series Margin Debt. Another series mentioned in that re- lease was the number of shares listed on the NYSE. This figure, like margin debt, has reached an all-time high. In itself, this figure is constructive and not surprising due to the many stock splits and new issues admitted to the NYSE. However, looking at the figures compared to the average daily volume per month on the NYSE, we find some mteresting comparisons. Date DJIA Chg. It Days It Shares Avg. Daily Shares/ this Swing Listed Volume Volume 12/ 3/68 985.21 13196 14860 .888 5/26/70 631. 16 -35.94 367 15551 12296 1. 265 1/11/73 1051.70 66.63 12/ -6/74…–5-77-,,60., –45-;e08 665 19323 18750 1.031 –48f.-……,..–2-l737..,…. -1'5007 . – -1-;448,–' – 9/21/76 1014.79 75.69 452 24080 19741 1.220 2/28/77 936.42 -7.72 III 24612 20971 1.174 A 25 percent yield filter was run against the DJIA and the above exhibit shows the highs and lows from December, 1968, to date. The number of shares listed and the average daily volume for each respective month is also shown. From December, 1968, to February, 1977, the number of shares listed increased from 13,196 million to 24,612 million or 86.51 percent increase. More surprising was the fact that average daily volume for the same period mcreased from 14,860 million to 20,971 million or an increase of 41.12. In other words, volume is increasing but at a slower rate than the increas ing number of shares listed. A major factor affecting the volume figures is the large block activity on the NYSE. Since 1968, the institutionalization of the stock market can be shown by the block share (10,000 or more) volume as a percentage of total monthly volume. In December of 1968, this figure was 12.50 percent. In the short period of less than eight years, the figure has increased to 22.22 percent in September of 1976. Although the current figure is below this all-time high level, there is evidence that this percentage will continue to remain high for at least the immediate future. Date DJIA Chg. It Days Monthly Block Trans Ratio this Swing Volume (thou) 12/ 3/68 985.21 267480 33425 12.50 5/26/70 631. 16 -35.94 1/11/73 1051. 70 66.63c 367 66.5 258220 393750 32647 12.64 -81090- 20.59,., 1.2/ 6/74 577.60 -45.08 481 315150 44829 14.22 9/21/76 1014.79 75.69 452 414550 92101 22.22 2/28/77 936.42 – 7.72 III 398440 77397 19.43 Total volume has been down but relative block activity has been greater. A subtle reason I !I for the ability of this ratio to remain at its relatively high level might be the new institutional in- vestor's acceptance of indexing, investments weighted in line with one of the popular stock aver- ages. It is interesting to speculate on the potential negative effects indexing could have on total volume after participating institutions have completed their conversion to indexing. Dow-Jones Industrials (1200 p.m.) 933.59 S & P Composite (1200 p.m.) Cumulative Index (3/24/77) 99.56 622.64 RJS/jb ROBERT J. SIMPKINS, JR. DELAFIELD, HARVEY, TABELL No statement or expression of opinion or any other moiler herein contained 1, or 15 to be deemed to be, directly or rndmcty, on offer or the sollcltolLon of on offer 10 buy or sell ony security referred 10 or mentioned The mailer IS presented merely for the conver'1en of the subscriber While 'l'Je believe the sources of our mformatlon 10 be reliable, we In no way represent or guarantee the accuracy thereol nor of the statements mude herem Any action to be toen by the subscrtber should be bosed on hiS own mveshgctlon and Information Janney Montgomery Scoll, Inc, os 0 corporotron, ond Its officers or employees, moy now have, or may later loke, positions or trades In respect to any securities menttoned m thiS or any future Issue, and such POSition may be different from ony views now or herellfter erpressed In thiS or any other Issue Janney Montgomery Scott, Inc, which IS registered With the SEC as on Investment odvlsor, moy give adVice to Its mvestment adVisory and othel customers Independently of any statements mode ,n thiS or In any other Issue Further Information 0'1 C'ly security men honed herem IS available on request

—– TABELL'S MARKET LETTER i I J – 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK eXCHANGE, INC MEMBEA AMERICAN STOCK EXCHANGE March 31, 1977 Those who seek out news events as an explanation for the behavior of the stock market have been haying a hard thne oLit Ja,tely. Paradoxically,. th.eculprJt.in ,the .present instance has notbeen.a short- … … age of ;ew -';;;nts .Indeed, tl;r;–hav bee'; plerrty of those.- We-ha'; had, amog '(;ther-thing-th' declining dollar, the coal strike, Mideast hostilities, etc. The problem has been, rather, the market's response to these events or, more precisely, its lack of response. The market, as those of us who make a living following 1t are painfully aware, has done, in the past few weeks, practically nothing. There has, in other words, been a total lack of response on the market's part to events which, in other times and at other places, might have jarred it into violent movement. In this sort of atmosphere, the upward move of some eight pOints, which took place in the Dow on Tuesday and Wednesday, was perhaps of more than passing interest. We were assured by various pundits that this strength was due to the Department of Commerce's release on that day of the Consumer Price Index for February, which stood at 188.3 of its 1967 average, a rise of 0.6 from the January figure before seasonal adjustments. This rise was reputed to have been of a lesser magnitude than the financial commumty was expecting, thus triggering the minor rally m the stock market. The conventional chain of reasoning, which suggests that moderation in inflation is bullish for stock prices, is complex and a bit tenuous. It posits that renewed inflation wlll cause a response on the part of monetary authorities in the form of tighter money or slowed-down monetary growth. This, in tum, 1S supposed to produce higher interest rates which are then supposed to affect stock prices in a negative direction. Presumably, an abatement of inflationary pressures makes the Fed less inclined to act in this pernicious fashion and is, therefore, stimulative of equity prices. Never mind that all the links in the foregoing chain can be criticized both theoretically and empirically. It has, over the past year or so, prov1ded a reasonably good explanation of the market's short-term behavior. If it is, indeed, fear of inflationary pressures which is currently depressing the market, it may be that we have a feature built into the current price structure which is more apparent than real. In — contrast towhat seems tObe awJ'-dely-p-revaifingTmPresslOn;lf is,-rteasi;an arguable prem!' e' that' – -, a) the economy's recent progress in combatting inflation has not been all that bad and b) that the prospects for the immediate future, at least, may be somewhat better than the conventional wisdom envis ions. Let us exa mine first of all the recent record. One plausable view of the Consumer Price Index is as an annualized six-month rate of change. Using a change rate suggests the pace at which prices are actually growing, and a six-month penod tends to smooth out shorter term fluctuations. On this basis, the most recent record has been rather good. The rate of change for the six-month period ended June, 1977 was an annualized 9.0. This figure declined sharply throughout the latter half of last year, reaching an annual rate of 4.4 in Decem- ber. For the past two months, it has increased, but not seriously, and the February figure represents a 5.4 annual rate of change. This is not terribly out of line with the level which prevailed throughout all of 1976 and, mdeed, is a considerably lower rate of increase than tended to prevail in the post- recession period. Indeed, at no time since the early part of the 1960's have we seen long periods of a better performance on the part of growth m consumer prices. If recent action is not that unsatisfactory, what are the prospects for the future We have, in the past, confessed our own bias in the direction of the belief that money-supply growth is the most important determinant of price change. As an outgrowth of this thinking, we have stated our belief in the efficacy of a neutral monetary policy, one in which short-term changes in the money supply are held within as narrow a range as poss1ble. Strangely enough, for six years now, there has been some evidence at least that this sort of policy 1S being followed. The month-to-month change m the six-month average of the broadly defined money supply (M2) has been fluctuatmg for the most part in a narrow band on either side of 0.8 per month, the only exception being a protracted period of slower growth during .- the 1974 receSSion. -Now it is arguable that this'rate is perhaps'too high and; indeed-;Ts SuggestiVeof price increases at approximately a 5 annual rate. Strangely enough, it 1S just this sort of behavior, for the most part, that we have been having. The point is that there have recently been none of the wide swings in monetary change which characterized the early 1970's, and which may have been responsible for inflation in the double-digit range. Indeed, the steady rate of monetary growth could, given time, continue to moderate the rate of inflation as it was apparently doing throughout the latter half of last year. Under these cond1tions, antiCipated mflationary pressures, which may be bullt mto current stock-market levels, might very well be illusory. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (3/30/78) 756.54 89.08 681.424 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWT/jt No stalement Of epreSlon of opinion or any other matler herem contained IS, or IS to be deemed to be, directly or indirectly, on off!!r or the sollcltotlon of on offer to buy or sell any security referred to or mentioned The molter IS presented merely for the converlence of the subscriber Whde oNe believe the sources of our Information 10 be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action 10 be token by the subSCriber should be based on hiS own Inve511g01l0n and information Jonney Montgomery Scott, Inc, os a corporation, and lIs officers or employees, may now have or moy later toke, poslhons or trade In respect to any seCUrities menlloned In thiS or ony future Issue, and such pOSition may be d,fferent from any views now or hereafter expressed In Ihls or any other Issue Janney Montgomery Scott, Inc, wh,ch IS registered With the SEC as on lflvestment adVisor, may gille adllice to lIs Investment adVISOry and othel customers .ndependently of ony statements mode In thiS or In any other Issue Further Informoilon on any security mentioned herem IS avollable on request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW VOAK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE April 1, 1977 , 'o,Qulteoftenthe,best'te,chnill!le forth!lllsingJ'lttol1allya!out the stock market 1S to back off from it and become less concerned with its diy-to-day-vagru-ie;- Wht lecis-u's to 'th-;;-;;-omment– at this time is the fact that two weeks ago we found ourselves far removed from the market's short- term action, having spent the previous few days on the side of a Vermont mountain. There, the only ups and downs with which we found ourself concerned centered around the mechanical device which took us up said mountain and the quality of the snow which brought us back down. The ups and downs of the stock market were, by and large, out of our mind. It was probably just as well. Had we been here staring at the tape a fortnight ago, we might have felt compelled to comment on the fact that the Dow-Jones Industrial Average had just risen sharply above the trading range in which it had been contained through February and early March. We might have commented further on the fact that an apparent successful test of the lows around the mid- 920's had taken place and that the market had rallied nicely from that test. Rereading of the financial press indeed suggests that many commentators at the time were compelled to this sort of euphoria. It was a euphoria that was shortly shattered as the market, having made its new peak, spent ten of the next eleven trading sessions sinking like a stone, in the process reaching new 1977 lows for the popular averages, penetrating, in the process, the bottoms of last November. We have thus con- cluded a two-week penod in which the analyst who restricted himself to Simple-minded chart reading, found it necessary to shift from mild optimism to the depths of despair. This sort of schizophrenia is somewhat less than conducive to rational portfolio management. The first question that needs to be asked centers on whether it m1ght not be advisable to ignore the recent weakness, much as it was obviously advisable to ignore the strength of two weeks b-efore. The second–is, assuming that-the-weakness;'s.,,,-indeed,-tel-ling ,us-something ,whatisiLin- dicating as far as portfolio planning is concerned. The answer to both questions reqUlres a preface reiterating our comments of the past half-year concerning the various widely-followed market averages. There is no doubt that, if one looks at the major indices, the outlook is somewhat less than favorable. A decisive follow-through to last week's decline would leave the market w1th little in terms of projected support this side of the base from which it took off some 15 months ago. That base, tn terms of the Dow-Jones Industrials, is tn the low 800's, and comparable downSide targets can be read for other widely-followed indlCes such as the SSP 500. Yet, as we have been trying to suggest since last summer, these indices have, of late, been telhng us precious little about the true state of the market. Our Cumulative Index, for example, which we believe to be adequate proxy for the action of all New York Stock Exchange issues, now stands around 646. It is difficult at the moment to pro- ject a downside target of much worse than 620, a level which can hardly be considered disastrous While the DJIA and the SSP 500 have just completed the classic signs of a bear market tnCeptlOn — they moved below their respective 200-day moving averages in mid-February and returned preclsely to touch those averages on the recent rally before turning down again — the Cumulative Index finds itself in a preclsely opposite position. It remains sharply above its own 200-day moving average, and that average is still ris mg at an appreciable rate. The same is true, for what it is worth, of the Amex Market Value Index. What we are saying, in other words, lS that we are more mclined than we mlght other-wise be t,,beskeptical-of the pa'ttern ofthe widelyfollowedindicators.' 'That a further follow– — through to the decline would suggest fairly senouS market weakness is, we are afraid, an inescap- able conclusion. A basic concern, however, should be on the effect of that weakness on a well- structured portfolio. Based on the action of the bulk of listed issues, we are unable to envision that effect as being more than temporary. The dual point that we are trying to make 1S that the action of the averages may be mis- leadingly beansh and that, even assuming that it is not, that many issues are hkely to outperform the averages on the downs1de even as they have been outperforming them on the upside for the past nine months. We thtnk it is safe to continue to base portfolio strategy on tndividual stock patterns as they develop rather than on the current ominous actlOn of the popular indicators. Dow-Jones Industrials (1200 p.m.) 924.29 S & P CompOSite (1200 p.m.) 98.87 ANTHONYW. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (3/31/77) AWT/lb 624.31 No statement or expressIon of opInion or any other matter here,n contained IS, or IS 10 be deemed to be, dIrectly or indirectly, an offer or the sohcltahon of on oHer to buy or sell any security referred to or mentioned The matler IS presented merely for The converltmcos of the subSCriber While we believe the sources of OUr InformaIlon to be reliable, we In no woy represent or guarontee the occurocy thereof nor of the stotements mude herein Any octlOn fa be toen by the subscriber should be ool&d on 'liS own /nVCtlgotlon and Infarmatlon Janney Montgomery Scott, Inc, os a corporation, and Irs officers or employees, moy now have, or may later taj.-e, poSitions or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such posJtlon may be different from any views now or hereafter exprcssed In thu or any other IsSue Jonney Montgomery Scoll, !nc, which IS regls'ered With the SEC 05 on Inveslment odvlsor. may gIVe odvlce to Its investmenT odvlsory and other CI.IstamCf Independently of ony statements mode In ThiS or In ony OTher Issue Further mfarmaloon on any security menhoned herein Is ovolloble on request

TABELL'S MARKET LETTER — 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGe. INC MEMBER AMERICAN STOCK EXCHANGE April 7, 1977 We have noted in this space in the past that it 1S often as important for stock market – .'– . a'n'aC'IYs lsto 'a'slCtnerlghtquElstiotlS as7togetthe right'answersoIn this veln7it'Seemsto'us -'- perfectly valid to ask, at the present time, Why is the stock market not gOing up It is a question, it seems to us, that is seldom being asked these days. That the mar- ket is not, in fact, going up would appear to be an established fact. The Dow attamed a high of 1014.79 in September and 1004.65 on the last day of 1976. Neither high has been exceeded since. Recent prices have taken the averages to levels lower than they have attained in some fifteen months. Technical analysis, as we suggested last week, indicates, despite some con- fusing elements in the picture, still lower prices — for the popular indices, at least. Yet very little time seems to be spent asking why this should, in fact, be so, and it appears all too easy to come up with explanations. Rises in wholesale prices, President Carter's energy program and a spate of other factors have all been cited as reasons for the market's be- havior. Nobody, in summary, seems particularly surprised by the action of the stock market. The move to lower prices is, indeed, being treated as almost normal. Occasionally, a voice will be heard suggesting that, on an historical basis and by ob- jective standards, common stocks are selling at levels which must be considered, to say the least, unusual. In fifty years of recorded, price history, there have been very few years when the Dow sold lower than it is selling at the moment, either in relation to earnings or in relation to book value of its underlying assets. Although the analogy does not hold up over the longer term, there are very few times in the past decade or so when the Dow has been available at a more generous dividend yield than that offered today. It is clearly an inescapable fact, it seems to us if one looks solely at the record, that the investment odds clearly favor the aggressive purchas';- of eq-;'ities a1 currEmCpricet!l1, tllerna'eket conflnueino mOve dOwnwaraand–' — to no one's apparent surprise. At this paint, it is necessary to drag out the old Wall Street adage about the unwisdom of fighting the tape. We cannot ignore the fact that the record shows quite clearly that today's buyers and sellers of equities are singularly indifferent to the demonstrable bargain levels of common stocks. It becomes a worthwhile exercise, then, to think a bit about the reasons for this indifference. It has been recognized for a long time now that the stock market is subject to extremes and that these extremes result from the fact that it is a product of the interaction of human beings with human emotions, among these human emotions the rather unattractive ones of greed and fear, greed which drives prices to unreasonably high levels and fear which drives them to equally unreasonably low ones. This concept was certainly valid in a market dominated by m- dividual investors whose fear of losing their capital provided the sort of panic-selling which fueled earlier bear markets. Yet, in today's market, dominated by the institutional mvestor, the atmosphere pervading the move to lower prices appears to be not fear but ennui. The,pre- vailing mood seems to be a rather profound disillusionment with common stocks based on what is now almost a decade of disappointment at the results achieved by common stocks as an in- vestment medium and by investment management as a means of producing superior returns. There is, moreover, a convenient cop-out centering around the fact that common stocks generally are yielding under 5 while AAA corporate bonds yield in excess of 8. Who, the conventional wisdom runs, wants to subject himself to the normal risks of the stock market when one can simply optout and; atihesame tiiiie,-eam amorE';generous-return' -.. – – '- Recognizing that 8 is greater than 5 is, however, an exercise in elementary arith- metic, not in investment management. The historical record shows quite clearly that periods of lassitude such as the current one have existed, often all too long, in the past. Yet history al- so quite clearly teaches us that they have never been permanent. At Some pomt in time, we can say with some certainty, the vision of common stocks as a vehicle for above-average, long- term return will once more manifest itself, even as it has in the past. At that point, it seems safe to say, the market will be a good deal more responsive to the historically low level of stock prices than it seems to be at the moment. Dow-Jones Industrials (300 p.m.) 916.64 ANTHONY W. TABELL S & P Composite (300 p.m.) 98.15 DELAFIELD, HARVEY, TABELL Cumulative Index (4/6/77) 641.42 AWT/jb No statement or eKpreS510n of oplrllon or any other mo'ler herem contolned 1, or ' 10 be deemed to be, directly or mdlreclly, an offer or the soliCitation of on offer to buy or sell any security referred 10 or mentioned The malter ,s presented merely for the conVef'lenct. of the subscriber While e believe the sources of our Information to be reliable, we In no way repreent or guorantee the occuracy thereof nor of the statements mude herein Any OC'llon to be talen by the subscriber should be based on hl own Investigation ond Informotlon Janney Montgomery Scott, Inc. os 0 corporation, and Its offICers or employees, may now hOlle, or may later toke, positions or trades 111 respect to any securities mentioned In thiS or any future .ssue, and such pOltlon mav be different from any views now or hereafter expressed III th1 or any other ISSue Janney Montgomery Scott, Inc, ….. hlch IS registered With thc SEC as an IIlllestment odvlsor, may give adVice to '5 Investment adVisory and othel customers mdependently of any statement mode In thiS or In any other luue Further Information on o.,y security mentioned herein IS available on request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY OB540 DIVISION OF MEMBER NEW YOAK TOCK EXCHANGE, INC MEMSER AMEAICAN STOCK EXCHANGE April 15, 1977 The stock market continues its somewhat schizophrenic behavior. We commentedinthis ,space twoweeks.ago'aboutthe markets .strange..action foHow- ing the rally which took the Dow to the mid-970's at the end of March. The aftermath of this rally, at a time when it might have been logical to expect continued strength, was a sickening plunge in late March and early April to new IS-month lows. In the process a large number of widely-followed indicators (although not all of,them) moved out of year-long trading ranges on the downside. Con- ventionally, this might have foreshadowed accelerated weakness. Instead, the market chose, this week, to move up — sharply, on reasonably good breadth and with increasing volume. It is, perhaps, as good a time as any to bring up the subject of breakouts from trad- ing ranges. The word is a familiar one in technical jargon, and readers will be familiar with its use in this letter. The concept of a trading-range breakout is a perfectly valid one from an ana- lytical point of view. It can be justified on the rather simple premise that,if an object is gOing to move from point A to point B, it must pass various pOints in between along the way. Thus, if a stock is going to move, for example, from 50 to lOa, it must, at some pOint, pass, say, 60. The burden of technical work is to determine whether 60 in this case is more or less significant than 56 3/4 or 69 7/8. It is, in our experience, possible to determine such significance only imper- fectly. This does not, of course, suggest that the attempt should not be made. The simple-minded follower of breakouts, however, has had a hard time of it lately. On September 22, the Dow reached a new high for 1976 at 1026.26, in the process breaking out of a trading range which had contained it since February. That high lasted for precisely two days, following which the average'sank to a new low at 917.89 on November 10. That low was immediatelY'foHowedby-a-move-to aJanuary-3rd-intra'day-peak of-l-007 .-8-1 -Th-e aftermathof tnat — new high, interrupted by the late March rally, was a new low at 909.74, a couple of weeks ago. This downSide breakout led in tum to this week's rise. The whole picture becomes even more confused when we start looking at averages other than the Dow. In the case of a large number of indices, the early January peak, for exam- ple, was well above the One made in September. As noted above, some, but not all, of the other market indicators followed the Dow Into new low territory early this month. The situation has approached the point wherewhatever one's personal predilection, bullish, bearish or neutral, he has little difficulty digging up some average which will support his view. . In such an environment, as we have been trying to suggest since the first of the year, it seems folly to pay too much attention to the averages or to become too terribly concerned about breakouts by a few pOints in one direction Or another. The market has, for almost a year now, been subject to all manner of cross-currents with patterns developing in widely divergent directions for individual stocks. This whole picture has been further complicated by the fact that stocks not in the popular indices (or little represented in those indices) have acted demonstrably better than the more widely-followed,larger companies. By and large, however, the bulk of in- diVidual stock patterns, especially when viewed on a long-range basis, appear relatively attrac- tive. That there has been some deterioration in the overall picture in the past six months is a fact which cannot be denied. The problem for the technician is in gauging the seriousness 'of that deterioratio-n. Wh'en-'compared, for example;' with the sort of'masslvettecnnlCal weakness – that manifested itself in the late 1960's or in 1972-73, the technical damage appears miniscule. The current investor acceptance of a declining market as a normal phenomenon, something we re- ferred to last week, argues further against excessive pessimism. On the other hand, we would not want to become bemused by this week's rally. By itself it has, we think, only minor significance. Eventually, along with all the other false starts which have characterized the past six months, it will become part of a pattern which will lend it- self to analysis. While we await that eventuality, there are, in our view, a large number of attractive havens in equity markets for investment funds. Dow-Jones Industrials (1200 p.m.) 949.46 ANTHONY W. TABELL S & P Composite (1200 p.m.) 101.15 DELAFIELD, HARVEY, TABELL Cumulative Index (4/14/77) 659.23 AWT/jb No statement or exprelon of opinion Of any other matter herein on'alned IS, or 15 1o be deemed to be, directly or indirectly, an offer or the soliCItation of on offer 10 buy or sell ony security referred 10 or mentioned The mollet 15 presented merely for The conVCl'lcnce of The ubscnber While -He believe the sources of our Informohan To be relHJble, we 1M no way represent or guarantee the occurocy thereof nor of the sTatements mude herein Any action to be token by the subSCriber should be based on hiS own investigation and Informat.on Janney Montgomery Scali, Inc. as 0 corporollon, and Its offIcers or employees, may now have. or may later toke. pOSitions or trades In respecr to any seeuritlcs mentioned 1M thIS or any future Issue, ond such pOJlllon may be different from ony vIews now or hereafter expreued In Ihls or any other luue Janney Montgomery Scott, tnc , whIch IS regIstered WIth the SEC as on Investment adVIsor, may gIve adVICe to lis Investment adVISOry and olhe. customers Independently of any statements mode In thIS or In any other lSue Further 'nformot,an on any securIty mentIoned herem IS available on request

TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE April 22, 1977 We tried to suggest last week the pointlessness of following the popular averages too close- – ly Intoaay's' 'marketenvironment aiiatOconveylle tiriptesoslont1ia'tflfiiomln'cius'–pattern of 'SomeOf fifeS-eo averages might tend to lead to an unduly pessimistic attitude toward the stock market. We concluded by saying that, regardless of the action of the averages, there are, In Our view, a large number of attractive havens In equity markets for Investment funds. We would like, this week, to become a bit more specific and discuss the technical outlook for a number of general investment areas. An appropriate starting place Is, perhaps, basic-industry issues comprising such industrial groups as steels, papers, chemicals and non-ferrous materials. This letter has commented favorably in the past on the very-long-term technical action of these groups, and, on this basis, their patterns remain unchanged. The stocks assumed market leadership in the latter part of 1972 when they broke decisively out of long accumulation areas. Their leadership continued through 1973 and 1974 when they declined by a relatively modest amount in a severe bear market, and they then led the bull-market advance through February of this year. Since that time, they have been in a minor-decline phase dropping off slightly more than have the averages and, by and large, failing to participate in rally attempts. For the most part, the decline from the peaks of early last year has brought these issues back to strong support levels, and some attempts at secondary base formations have been made. No immediate move is indicated, but downside risk from these levels appears relatively small. Readers will be familiar with our long-held skepticism regarding the institutional growth favorites. These issues moved sharply lower during the 1973-74 bear market and, after rallying, have, in general, been declining for the past two years with the result that many of them are close to lows made back in 1974, when the Dow was under 600. QUite obviously, the unconscionable premiums that were being paid for these issues four years ago have now almost totally eroded, but echJlica). acti6n;-ona group basis, remains aliysmal;arid;in the caseclanumbero-issues atleast, the risk, . even from current levels, appears substantial. There is, as yet, no technical evidence that the long process of disillusionment with these issues has run its course. By contrast, a number of issues in the secondary growth area possess reasonably attractive technical patterns. Many of these stocks, being smaller and more unseasoned, have had their earn- ings growth patterns interrupted at some stage during the past few years, and the percentage correc- tions in the stocks were substantial. However, these corrections appeared to be, by and large, com- pleted by the end of 1974, and many of the stocks have moved sideways while earnings have recovered or the growth pattern has continued. While these issues are, in many instances, in the speculative category, they deserve, given this proviso, investment consideration. Transportation stocks constitute still another category that is worthy of mention. The Dow- Jones Transportation Average confounded Dow theorists by moving to a new high this week while the Industrials have stubbornly failed to follow through over the past six months. Since action of the air- lines has been desultory, this strength has stemmed largely from the above average market performance of the rails. We do not believe this to be a transitory phenomenon. Large numbers of rail issues, especially those associated with the hauling of coal, have broken out of substantial long-term accum- ulation patterns and suggest considerably higher levels. This pattern is confirmed by that of the Dow Transportation Average itself. This index has a long-range upside target of around 350 versus current levels under 240. Financial issues, while in general presenting above-average long-term patterns, show mixed short-term actlon .. Insurance issues.for..exal1ple p retaintheir,good long-term.patterns .but — have been showing poor shorter-term relative strength and may remain under some market pressure for the immediate future. Many bank issues, by contrast, subpar performers during the recent rise, have begun to show recent technical improvement. The same is true of consumer finance stocks. The best- acting group technically has been the savings and loan companies which have maintained market leadership almost throughout the entire bull-market rise. Energy issues are recent market leaders having generally moved ahead throughout 1976-77 during which time the popular averages were moving irregularly lower. Some short-term consolidation has recently taken place, but we do not view this as major deterioration, and we would expect above- average action on the part of these issues to resume before too long. Dow-Jones Industrials (1200 p.m.) 930.55 ANTHONY W. TABELL S & P Composite (1200 p. m.) 99.02 DELAFIELD, HARVEY, TABELL Cumulative Index (4/21/77) 657.96 AWT/jb NQ statement or expression of opInion or any other molter herein contolned IS, or IS 10 be deemed to be, directly or indirectly, on offer or thc sollcltotlon of on offer to buy or sell (lny security referred to or mentioned The molter 1 presented merely for the cOl'weru;!ncn of the sl)bcrlber While He believe the sources of our Information to be reliable, we In no way represent or Quarantee Ihe accuracy thereof nor of the statement 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 corporahon, and 115 officers or employees, may now have, or may laler lake, positions or trades In respect to any secuntles ml!!ntloned In thiS or any future lSoe, and such position may be different from any views now or hereafter e)(pressed In Ih,s or any other Issue Jannl!!Y Montgomery SCOlt, Inc, which 1 registered With the SEC as on InVestment adVisor, may give adVice to ,ts Investment odv,sory and othel culomer Independently of any statements made In th' or In ony other Issue FUlther ,nfornat,an on any seClJllty ment,oned herein ' available on request

TABELL'S MARKET LETTER I . J 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF' MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE April 29, 1977 .,,-. ,The.stock .market)ast .weekJepeaJ.d g,paJtrnJbathas.reCjl.ntly.become alL too famil- -toiar. That pattern began to be traced out on Monday as the Do; eacied c-las-e aT'9'l4 -60 , -d;w; — . 12 1/2 pOints to a new IS-month low. The market's reaction to that conventionally bearish new low was one which, as we suggested above, has been of late common — it promptly turned around and went up. Following a desultory session on Tuesday, in which an early rally was erased in late trad- ing and a new intraday bottom was posted, the Dow scored an eight-pOint advance in Wednesday's trading and followed that up with strength throughout most of Thursday. We suggested two weeks ago that the Simple-minded follower of breakouts on the Dow has had a hard time of it since last September. Last week's action did not make it any easier. In efforts to describe the rather strange market environment that has existed since last fall, one finds the word frustrating gaining increasing currency. We, ourselves, are becom- ing somewhat tired of repeating the obvious facts. We suspect, also, that our readers are bored with having uS tell them that the average stock is acting better than the Dow or the S & P 500, that the Transportation Index, in contrast with the two indices mentioned above, is acting extremely well or that the glamour stocks are taking a severe pasting, thus somewhat distorting the overall market picture. All of the above statements are true and, indeed, have been true since the first of the year. The difficulty is that they tell us little, at least in the terms we are used to, about the stock market. There is little doubt that one of the reasons the current market frustrates many inves- tors is that it is very difficult to place a handy label on it. The terms bull market and bear mar- ket are familiar ones and give a sense of place. The current market, unfortunately, cannot, on the basis of currently available data, be labeled with either appellation. .-.,. –,–.- T'he-last-time-we were-able-t-o'state-with'absolute-certainty.that-abull market..extsted was on September 21st of last year. At that point, the Dow had attained a new closing high at 1014.79, a 75 advance from the December, 1974 low. By definition, a bull market existed on that day. Since that time, for 156 trading days, seven long months, the Dow has failed to score a new high. Over those seven months, therefore, the applicability of the bull-market label has been called into ever-more-serious question. There exists a Simplistic school of thought which maintains that, if a bull market is not underway, a bear market must be. This particular either-or approach has never gained much favor in this quarter. We think the historical record demonstrates that the characteristics of a bear market include a fairly substantial percentage decline, coupled with a relatively sharp degree of steepness. Neither condition has existed to date. On a percentage basis, the Dow is off 9.87 from its high of last September through Monday. It is difficult to characterize a decline of this mag- nitude as being much more than intermediate-term in scope. Such declines have, at fairly numerous times in the past, taken place within the context of ongoing upswings, About the last adjective, furthermore, that can be applied to the drop is steep. If one computes the slope of the downtrend from last September to this week, one finds it declining at the rate of only .23 pOints per day On the Dow. To put this in context, the market could go on declining for another year at an equivalent rate and produce a drop of only 57 Dow pOints. Since the index's variability about the central trend is about 80 points, the upper limit of a trend channel extended out a year into the future is, roughly, at the same level as the Dow today. Clearly, conventional bear market standards have not yet been met. – Wedoriot; in6ther'words;-feel'it iSPossilile-at tllls- stage-to-afflX a label to the– present market. Based on its shape to date, it is possible that it may constitute simply a correction within what will someday come to be known as a continuing market upswing. With a bit more of a decline, it could equally well be set into the context of a full-scale correction of the 1974-76 bull market and the prelude to a new major advance. We intend to resist for a bit longer the temptation to pin labels and let events tell their story. Dow-Jones Industrials (1200 p.m.) S & P Composlte (1200 P. m.) Cumulative Index (4/28/77) AWT/jb 927.24 98.27 650.03 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or eprenlon of opinion or any other motter herein contained IS, or IS 10 be deemed to blL', directly or Indirectly, on offer or Ihe 501lcltollon of on offer to buy or ell any setIJf1ly referred 10 or mentioned The moiler 15 presented merely for the converlencc of the lvbscrtber While oNe believe the sovrces of ovr InformotlOn to be relloble, we In no way represent or guarantee Ihe accuracy thereof nor of Ihe statements meade herein Any ochon 10 be token by the subscnber shovld be based on hu own mvestlgotlOn and mformahon Janney Montgomery Scofl, Inc, as 0 corporal/on, and tts offtcen or employees, rnoy now have, or may loler lake, poslhons or Irodes In respect to ony secvrlhes menttoned In thiS or any fulvre ISSVe, and svch pOSition may be different from any Views now or hereafter exprened tn thiS or any other ISSUe Jonney Montgomery ScalI, Inc, whICh IS registered wllh the SEC as on Investment adVisor, may give adVice to lis Investment adVisory and olhel customers Independently of any statements mode In Ihls or In any other Issve Fvrlher information on ony secl,trlly menlloned herein IS available on request –.

j , iil.G CE fl..!l. ' S lRfr! & . RH'A; Gi.J PI1'Ub! 909 STATt RO …. O. PRINCLTON NLW JEUEV OHl.. .,O ntvr .. r. or t.'!Ff';t.P. NLW OKL1UC' 1 C,)ANUt JNL MEMOER AMERICAN STOCK EXCHANGE May 6, 197'-'-l A good deal of recent market discussion has centered around the difference in per- I formance of various market averages. We intend, therefore, as space permits, to discuss some aspects of the more widely-followed indicators. As a start on that process, we rec(mtly compiled the following table which shows the 30 Dow stocks, with their weight In that average, and the 30 heaviest-weighted stocks In the S & P 500. The list for each average shows the stock's weight in the other average and the difference in those two weights. 30 DDwJOtS STOCKS STOCK T IN OJlA .0 UIFf . I 30 AVltST.EIGHTED 1 1 1 .O D.II . ST OC &P 500 STOCKS X T IN S&P a l IT IN D0 JlA O.IF'F' , . ! d i 1., .j 1 OU POT DE NEMOuW 'Ide 1,00 li,li! 1 ! B i PflUCH F. GAMblE 5.71 1.07 4.bll 1 AMRICAN Tf & TtL GEERAL MOTORS CORP ,'Il 3,cl I .71 1 t.XXON CORP EATrA KOnAK CO 4,6t 1.78 3.06 I GeAl MOTORS COR MtNICAN TEL TEL 4, b,23 -1.11 I GENeRAL tLECTQIC CD SEARS kOEUCK CO ' n 1,57 2,80 I EASTMAN KODAK CO UNIO tAIU COP 4,lb a,!)!! 3,58 1 SEA5 IOEI'UCK CO ALUMINUM CO Of AMt N 4,011 0,32 3,J7 I STANDAID all IOIANA ITtNATluNAL PAE 1l.0 0,3 3.0 1 ROYAlOUTCH f'OLEU OWS lLLlOIS INL 3,'11 0,15 3,6 I HXACO l!C EHO CORP !.b!) .5, T1- O,Ob 1 MOBIL LOkI' MINNtSuTA MINING M 3,b2 0,\15 2.b7 1 DOw CHtMICAL CO GlNEkAL ELtCTRIC CD 3,5'1 1,64 1 ,14 I STAuAka OIL CALif UNITtD STATts STEEL 3,2'1 O,bl a,b6 I PROCH & ('AMALE AMH'JCA\ ekAr.,liS Jolt 0, 1!j r.,96 1 au PONT DE NtMOUNS ALLIu CHtMICAL CO 3,10 a,co 2,'10 1 MINNeSOTA MlING MFG AMEIC.N CAt CO c,S'I 0,12 2,71 I GULF all CORP STANOAO vIl CALIF i!.j 1,09 1 , T 1 ATLANTIC ICHFIEO UNITt TECHNOLDulES c.'1'1 0, 1 2.34 1 ORO MOTO CO bElhLtMtM STEEL COk .'1b O,e 2.21 I SCHI.UMfIGtR INTtNATNL ARVE5TE c,'1l 0,1 b 2,21 1 EVf.HHAutSE CO coJONS ANVILlE CORP 2,31 0,11 2.20 1 S'UL OIL GENEkAL FOUnS COMP c.ea O.eb 2,0' 1 AMfR1CAN HOME PROD INCU 2.eO 0,.51 1.8S 1 CATERPILLAR TAC10H ESMAK INC c,ttO 0,09 ., oil I COCA COLA CO TEUr.O INC 1, '13 1,1'1 0,7'1 1 HILLIPS pETROLEU wOllLoOklt F CO 1,11'1 0,12 GOUUYEA TIR & RUbR 1. 0.24 Cl1kY5ltF! ('OHP 1,SoS 0.16 1 .72 I MEkCt( 1\ co l/'C ,c1 1 I GEN TEL ELECTRONIC I.! 1 KRESGE S 5 CO lSTINGHOSE ELECT 1.21 O,e5 I.O.! I JOHNSON JOHhSON b,14 0,00 &,14 b,23 .52 1 ,71 3,11 3,&5 0.0& 3,ci 4,111 01,11 1,84 J,II -1,74 1,18 ,6b -3,08 1,7 ,37 -2.80 1,ii! 0.00 I, c2 1. C!0 O.ClO 1.20 1,1 1,'13 0,14 1,1& 0,00 I, 1& 1,15 0,00 1,15 1. 0'1 .83 -1,14 1,07 5,71 -4.&/1 I, 00 ',12 -!l.12 0.5 3.&2 -2,&1 O,eq 0,00 0,89 0,6'1 0,00 0,6'1 0,65 0.00 O,5 0.e3 0,00 O,B3 0,81 0,00 0,81 O,6/) 0.00 0,60 0.16 0.00 1'1,78 0,17 0,00 0.11 0,7& 0,00 0,76 O,bQ 0,00 O,&q D,b8 0,00 0,18 0,05 0,00 0,65 O,b5 0,00 0,&5 0,&11 0,00 0.&4 TOTAL That there should be differences in the performance of the two indicators is hardly surprising. The table for the Dow stocks shows that they account for only 28 of the weight of the S & P 500 and that 28 of the 30 carry a heavier weight in the Dow than they do in the S & P (largely due to the fact that the Dow contains fewer stocks and weights, effectively, by price). On the other hand, while the 30 most lmportant stocks in the capital-weighted S & P 500 account for 45 of the total weight in that average, 19 of these stocks are not in the Dow, including IBM, the most heavily-weighted company In the S & P. Furthermore, 9 of those 11 are weighted more lightly in the S & P than in the Dow. We will be commenting in future Issues on the construction of these and other Indices and the implications thereof for Investment pollcy. Dow-Jones Industrials (1200 p.m.) 937.58 S & P Composite (l200 p.m.) 99.61 ANTHONYW. TABELL DELAFIELD, HARVEY, TABELL Cumulative Index (5/5/77) 663.86 AWT/lb ,- .1 ;-j —————– ——————————– ! 1. I. 1'1 I ' ,. , ' I f , ,II ,01' I, ., I,t,'. j F, ,1. J,.. , I I ! . d r ,.. ' , I, . , .\, – ' ' I 1 ,I( , I. j y , 11 '. , ''''' ,,' .I I. , ,I, ,,,.I Ii. '''''!il' P'''I,tl wi I,,, II,.. r ,' ,., ,, II,,,1. , \' \VII. ' I, I .., I,,, ,I''', tol, ,,) 1101, f' I. , I. I' I ' , ,. 'I' I/. I ,II, I ' I. I ' , (.1, ' ,,/ I, ' ,\,,1' H,' 1., I I' l.t' I),,, 1,,' ,I, t -,J,,,),j J,,, 1.,1.1,,, ,,,11'01,,,,'1,,1 . t. 1,,,,,,.'.1,, . , . , , , I oI'Oj .,,',' I I , , . ' . ' I . ',.. I ,I, ' f 1,.k ' ''I I I y . ' ,,,,.,,,,,.,,, 1 , tI. i I,,, ,. ', ''',,( .I. I' ,',., ' I. I,ll., ' to .., 1 . ,,1. i ,I, I' ..1 ' ''I'\'.,\ ,,' ''''1'''',.,( ,- c' h,,,,,.v,\ '''Y ., II I .lill I I, I. '1'''.1 ,1111 110. ,II ,,,' ,,,.' ''' III ,,., '''' . ,,,I,,, I. III ,-, . I ,f.. .,(, ,,1 ,I, L. ' – -,. ,,' ' .. , i ! ' ,., ' ' ' . , I ' … ' I ' I , ' .I, ,II.' I i , ,. I ,I ,d i. I I

, . — — – – j TABELL'S ! MARKET LETTER 1 JI 909 STATE ROAD, PRINCETON, NEW JERSEY 081540 DIVISION OF MEMBER NEW VORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK eXCHANGE May 13, 1977 We began last week a discourse 9n the composition of some of the more widely-followed – market.verIges withthe npte ,that wein!el1d9.1o,;c.optinue. hisdiscuss ion,in future-1etters. Our.;;.. …- 1–work with averages at this time is motivated by a bit more than the Simple desire to fill up space in a rather dull stock market. As readers will be aware, there has been growing interest of late in a technique called indexing. This latest of panaceas to gain a following among professional money managers involves the construction of a portfolio so as to duplicate, as precisely as possible, the performance of a given market average — in most cases, the S & P 500. We will have some thoughts on this subject before we are done. Before discussing the concept, however, it is worthwhile to have some idea of the criteria used to index a portfolio. Hence, some further discussion of the two most popular indicators, the Dow-Jones 30 Industrials and the S & P SOD-Stock Index. The anomalies in the Dow have been pointed out by many writers. They start out with the fact that the average sells for over 900 despite the fact that no one of the 30 components sells for anywhere near that price. This stems from the method used to adjust for splits, additions and deletions since the average was first put together in its present form in 1928. The computation of the average simply consists of adding up the closing prices of the 30 indiVidual issues and dividing by a constant divisor. When a split or other adjustment takes place, it is that divisor which is changed, not the process of cumulating the prices of one share of each stock. After almost 50 years of adjustment, the divisor is now 1.474, thus producing the current high level of the average. Strangely enough, it is not the divisor itself but the technique of using the price of just one share of each stock which causes the distortion in the index. The method causes high-priced stocks to be weighted more heavily than low-priced ones. Thus, Dupont accounts for 9 of the Dow Simply by virtue of its currently having the highest price while Chrysler is the least lmportant component by reasOnof b-elnc;i tlierowest'-pficed'iSStfE;7'WeteDuP6Iit to spliCterlforone-; it wOulalmmediatel'Y' change from the most important factor in the index to the least important one by a considerable margin. Most portfolios, obviously, are constructed around equal market value holdings of all component stocks, certainly not on the basis of an equal number of shares. Yet, it is precisely this basis on which the Dow is put together. The need for a broader and more scientific index led to the origination, over 20 years ago, of the S & P 500. Paradoxically, the S & P, despite its 500 components, is not a broad index at all. The reason for this, again, lies in the details of computation. The method essentially is to take the price of each of the components and multiply it by the total number of shares outstanding. The resultant total market value is then diVided by a base — originally calculated to make the index equal to 10 in a 1941-43 base period. The result is, to paraphrase George Orwell, that some stocks wind up being a great deal more equal than others,and the larger companies bear a disproportionate weight in the index. The table below illustrates the phenomenon. With this capital-weighting, IBM and American Telephone between then account for the same weight in the index as the 283 lowest-ranked companies. 1st 2 stocks 1st 4 stocks 1st 11 stocks 1st 22 stocks —1st 37 stocks Weight in 500 Weight in 500 13 Lowest 100 stocks 1.4 20 Lowest 200 stocks 5.8 30 Lowest 300 stocks 14.8 40 Lowest 400 stocks 30.0 -. – -50—-' -Lowest.,450 stocks-'-'-43-6 — –.- The above remarks sound more critical of the two market indicators than they are, in fact, meant to be. They are meant only to point out the fact that both indicators have limitations for statistical purposes, and it is best to be aware of these limitations before proceeding further, let alone measuring portfolio performance on the action of these averages. The fact is, quite simply, that there is no such thing as a perfect market average nor will there ever be. The appropriateness of a given average is solely dependent on the use to which it is being put. Whether a given index is an adequate measure of portfolio performance will depend, moreover, on the characteristics of the portfolio for which it is used as a benchmark. This is a point to which we intend to return in future discussion. Dow- Jones Industrials (12 00 p. m.) S&P CompOSite (1200 p.m.) Cumulative Index (5/11/77) AWT/jb 927.49 98.88 662.66 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL No statement or expreSlon of opinion or ony other matter herein conlolned IS, or IS 10 be deemed to be, directly or IndHectly, on offer or the Ol,cltollon of on offer 10 buy or sell ony securrty referred 10 or mentioned The motler 15 presented merely for The convel'tence of The subscriber While -He believe Ihe sources of our information 10 be reliable, we In no way represent or guarantee Ihe accuracy thereof nor of the statemenTS mude herein Any action to be laken by the subSCriber should be based on hiS own Investigation and 'nformatIon Janney Montgomery SCali. Inc, as a corporation, and ,ts offICers or employees, may now have, or may laler tke, palllon! or Irades In respect to any secUrities mentioned In thiS or any future Issue, and such POSition may be d,fferenl from any views now or hereafter expressed In Ihls Of any other Issue Janney Montgomery Scali, Inc, which IS regluered With the SEC 05 an Investment adVisor, may give adVice 10 liS Investment adVISOry and athel customers ,ndependently of any STatemenls made In thIS or In any other ISsue Further Information on any security mentioned herein IS available on request