Viewing Month: April 1979

Tabell’s Market Letter – April 06, 1979

Tabell’s Market Letter – April 06, 1979

Tabell's Market Letter - April 06, 1979
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TABELL'S MARKET LETTER – ……….. . .011 909 STATE ROAD, PRINCETON. NEW JERSEY 08540 DIVISION OF MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE !B-st analYsis of April 6, 1979 WALL STREET JOURNAL contained, a atlle! penetrating bit of economic iri .the . It – that those payments, recently at least, had kept pace with the concomitant record-high rate of inflation. The dividend-inflation relationship is not, in our view, quite as optimistic as the JOURNAL ariticle might have suggested. (The article referred to total dividend payments while the study below uses dividends on the SiP 500.) Nonetheless, a hard look at the dividend history of the last thirty years does, indeed, suggest a rationale for common stocks as an investment at a time when historically high interest rates generally exceed the yields available on equities. The chart below traces the history of the dividend on the SiP 500-Stock Index since 1947 ex- pressed in constant 1967 dollars. The deflator used is the Consumer Price Index. 00 3.80 5&0 500. 3.60 3.0-1.0 3.20 3.00 2.80 2.60 '' To get the bad news out of the way first, the chart quite clearly shows that dividends failed, generally, to keep up with inflation during, roughly, the period of the mid-1960's to the mid-1970's. Inflation-adjusted dividends for the SiP 500 reached a high of 2.95 in the third quarter of 1966 and have not since exceeded that figure, having remained recently around the 2.50 level. However, as the JOURNAL article points out, performance of late haa been more impressive. In the first quarter of 1976, real dividends were at 2.20 in 1967 dollars and have moved ahead some 13 to date. The most important fact shown by the chart above, however, is the fact that over the past 32 years dividends, even after inflation-adjustment, have generally been rising. The calculated trend channel shown on the chart has been increasing at the rate of 1. 92 annually and, aa the chart shows, real dividend growth adhered very closely to its trendline figure from the early 1950's to the mid-1970's. The rise of the past couple of years, especially in view of current historically low payout ratios, sug- gests that dividends might return to their rate of trendline growth. Now, dividend growth after inflation adjustment of close to 2 is, to us, a fairly impressive figure. If one calculates the value 01'the discounted caah flow of dividends rising at this rate versus the pre- sent price of the SiP 500 it suggests a return — in real purchasing power, remember — of 4.44. This is a return which is certainly not matched by 10 short-term money in an era of double-digit in- flation and, indeed, difficult to equal in most readily-marketable investments. It is an ironic fact, at a time when common stock prices have been depressed by inflation fears, that common stock income may well be one of the better available protections against that inflation. Dow-Jones Industrials (1200 p.m.) 877.25 ANTHONY W. TABELL S&P Composite (1200 p.m.) 103.27 DELAFIELD, BARVEY, TABELL Cumulative Index (4/6/79) 754.22 AWTrak No statement or exprenlon of opinion or any other molter herein contolned Is, or IS 10 be deemed to be, directly Of mdlrectly, on offer or the sollcltotlon of an offer to buy or sell any security referred to or mentioned Tne matter IS presented merely for tne convenience of tne subscriber While we beheve the sources of our Informo tlon to be reliable, we In no way represent or guarantee the accuracy tnereof nor of Ihe stolements mode nerem Any action to be token by the subscriber should be based on nls own Invesllgohon and Informallon Janney Montgomery SCali, Inc, as a corporation, and Its officers or employees, may now have, or may later lake, positions or trades 1n respect 10 any seCUrities mentIoned m thiS or any future Issue, and such POSition may be ddferent from ony vIews now or hereafter expressed 1n thl or ony olher Issue. Janney Montgomery Scott, tnc , which IS regIstered With the SEC as on Investment adVisor, may give adVice to lIs Investment odv15.ory and othel customers Independently of any statements mode 1n Ih,s or In any other Issue Further information on any securlty menlloned herein IS aVailable on request

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Tabell’s Market Letter – April 12, 1979

Tabell’s Market Letter – April 12, 1979

Tabell's Market Letter - April 12, 1979
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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 STOCI( eXCHANGE April 12. 1979 '- profoundl!lk .0C!teresLin.common stocks ,-'; ,as ,exemplifi,ed,by 0 best-selling books on the coming disaster' and record' levels of-institutional cash the stock market. with its usual perversity. continues to edge higher. Until interrupted by disappointment with IBM's earning results on Wednesday. most indicators had spent the prior two to three weeks posting a successive series of modest new highs. and there is little doubt, in our view. that we are. for the time being at least. in an uptrend of intermediate-term proportions. The two basic questions which require answering at this stage center around how far the uptrend is likely to continue and what will be its significance in the longer-term pattern. HindSight suggests that the present advance had its antecedents in the last two months of 1978. The Dow had reached a peak of 907.74 in early September and from that high declined. sharply and somewhat unexpectedly. to new lows at the end of October. It is now quite apparent that November and December, 1978. constituted a base formation the upside penetration of which took place in the traditional year-end rally which began in last December and continued rather steadily to reach a high of 859.75 in late January. At that stage, some uncertainty set in. as the market turned down to attain a February 27th closing low of 807 on the Dow. At that level. however. most downside objectives had been reached, and it became apparent that the February decline was nothing more than a conventional test of a previous base following an equally conventional up-side breakout. By mid-March, the January peak had been exceeded, and the upswing which began last fall remains in force. If the interpretation outlined above is indeed the correct one, we must return to the November-December base formation in order to ,measure the possible upside potential of the ' current' move. The-most 'narrow andpes'srnlisfic 'ol'ijectiveCirtllat'1lase-suggests rioWng'more – ' than a target in the vicinity of the September high — something in the 880- 900 range versus the September peak of 907.74. More optimistic readings of the base formation, including February's action as part of the accumulation area, would suggest that the September high will be exceeded with upside targets approximately in the vicinity of 940. These targets might be reached as summer stren,gth, a pattern with some seasonal reliability, once more exerts itself. While it would be mildly encouraging to see the September high penetrated. we do not. at the moment, think that it is crucial. The recent trading with the most overriding significance is, in our view, the original top area from which the 1976-1978 decline began. That trading centers around the 960-1010 area and constitutes only the most recent example of the barrier around the 1000 level that has turned back upward movements in the Dow repeatedly over the last ten years. We freely confess that, -at the moment, we can find no convincing technical reason suggesting that the present upswing will penetrate that barrier without 'further maturation of the pattern. This might take the form of a moderately-severe decline from whatever high is reached 011 'the current move, a decline which might indeed carryall the way back to a test of the most recent lows. It might, alternatively, take the form of a consolidation which might occupy much of the second half of 1979 followed by a renewed attempt to penetrate the supply early next year. One form we do not think it is likely to take is the form long-awaited by the super-pessimists, that of a move through the lows of February, 1978. A pattern suggesting such action might develop but it most emphatically has not done so at the moment. Based on the available statistics, large numbers of investors. attracted by record-high interest rates have chosen to wait out the current period of uncertainty with large holdings of non-equity investments. We are in complete agreement as far as the uncertainty of the current environment is concerned, but we are just as happy, considering the current uptrend and the uncertain severity of any subsequent decline, to do our waiting with fairly ag-gressive equity commitments. Dow-Jones Industrials (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (4/11/79) AWTrak 871.12 102.22 751. 63 ANTHONY W. TAB ELL DELAFIELD. HARVEY. TAB ELL No statement or expresslon of opinIOn or any other matter herein contolned IS, or IS to be deemed to be, directly Of indirectly, on offer or the soliCitation of on offer to buy or sell any security referred to or mentioned The moiler IS presented merely for the converlence of the subscrIber WhIle -He belIeve the sources of our Informa- t,on to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude hore, Any acllon to be laken by the subSCriber should be based on hIS own investIgation and information Janney Montgomery SCali, Inc, as a corporohon, and Its offICers or employees, moy now have, or moy laler lake, pOSItIOns or Hodes In respect to any mentIoned In Ihls or any future Issue, and such POSitIon may be dIfferent from any views now or hereafter expressed m thIS or any other Issue. Janney Montgomery Scotl, Inc, whIch IS reglstorcd Wllh the SEC as on Investment adVIsor, may gIve adVICe 10 lIs Investment adVIsory and othel customers mdependently of any statements mode In thiS or In any other luue Further ,nformat,on on any secunty mentIoned hereIn IS available on request

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Tabell’s Market Letter – April 20, 1979

Tabell’s Market Letter – April 20, 1979

Tabell's Market Letter - April 20, 1979
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TABELL'S MARKET LETTER I' ,. 909 STATE ROAD, PRINCETON, NEW .JERSEY 08540 DIVISION OF MEMBER New VORK STOCK EXCHANOE, INC MEMBER AMERICAN STOCK EXCHANQE April 20, 1979 The subject of petroleum has been much in the news of late, most recently highlighted by the jIIlnounce-m.J!I'lt crfPli1!eoirt-decontrorordomestic oirprices. -This being a tecfiiiicaI letter, we will not comment here on the wisdom of the proposed policy, which involves, as far as we are able to understand it, encouraging oil exploration by making it more profitable and then taxing away the resultant profits. Whatever the fundamental situation, however, the price behavior of oil stocks constitutes an appropriate area for technical comment, if for no other reason than the fact that these stocks, perhaps more than any other similar group, form an important element of the overall stock market equation. Many investors, we suspect, do not realize the extent to which the size of the major oil companies causes them to influence the behavior of the capital-weighted Standard 110 Poor's 50o-stock Index. The total market value of the 500 stocks in that index is some 659 billion, and of this, 107 billion, or 16.3, is accounted for by 20 oil stocks. The largest of them, Exxon, constitutes 3t of the index, and no fewer than 7 issues each constitute more than 1 of the index by themselves. These figures, moreover, do not include the related Oil Well Equipment and Offshore Drilling stocks, which, collectively, constitute another 2.8 of the index. As the chart below indicates, this major component of the stock market has, indeed, behaved in an exemplary fashion of late. S&I' SOO – — –'—/ OIL DDt-tESilC The chart shows the action of the S IIoP 500 since January 1976 together with ,the two major oil indices, Domestic and International. Below each index is plotted a relative strength line, showing the action of the group in relation to the S&P. As can clearly be seen, both the domestic and international indicators have moved sharply into new three-year high territory, despite the fact that the 500 remains well below its September high. Both the oil indices exceeded that high some time ago and have recently been able to post new peaks above their best levels of 1976-1977. Needless to say, this has caused sharp uptrends in the relative strength for both areas. Although the stocks may be vulnerable to temporary correction, this superior relative action shows no signs of abating, and technical work suggests that oil stocks should continue to demonstrate above- average performance. Since these issues are a major component, this could be, in our view, an augury of further market firmness. Dow-Jones Industrials (1200 p.m.) S&P Composite (1200 p.m.) Cumulative Index (4/20/79) 852.22 100.94 746.20 ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL AWTld No statement or expreSSion of opIniOn or ony other motter herein contolned IS, or IS 10 be deemed to be, directly or indirectly, on offer or the SoliCIlotlon of on offer to buy or sell any security referred to or mentioned The moiler 1 presented merely for the convenumce of the subSCriber V/hde -He believe the sources of our IOformo tlon to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements mude herein Any action to be laken by the subscnber should be based on his own inVestigation and Informal Ion Janney Montgomery Scott, Inc, as a corporalton, ond Its officers or employees, may now have, or may loler lake, posilions or trodes 10 respect to ony secufltles mentioned In thiS or ony fulure ISSUe, ond such POSition may be different from ony views now or hereafter expressed 10 thiS or any other Issue Janney Montgomery cott, Inc, whICh IS registered With Ihe SEC as on Investment odvisor, moy grve advice to 1/5 Investment odYlsory ond othel customers Independently of ony stotements mode In thiS or tn ony other Issue Further tnfOrmotlNI on ony secuflty mentIOned herein IS available on requesl

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Tabell’s Market Letter – April 27, 1979

Tabell’s Market Letter – April 27, 1979

Tabell's Market Letter - April 27, 1979
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER New VORl( STOel( EXCHANGe, INC AMER\CAN STOCK EXCHANGE April 27, 1979 -. -,! —; …-. -h… —– – — It is an occastional rite of spring in these pages to comment on the FORTUNE magazine compilation of the 500 largest industrial corporations. We are not sure why the listing, which appears each May, fascinates us so. Perhaps, it is because, as we have often confessed, we are numbers freaks, and the 500 collection provides us with no fewer than 20 pages of nice, juicy numbers to work on. On the other hand, possibly, the reason is that, this being a technical market letter, we have very little opportunity to deal with fundamentals, and it is fun to come at them with the sort of naivete, Which our COlleagues, who are more accustomed to this exercise, find difficult to achieve. Not being fundamentalists by profession ourselves. we can view FORTUNE's numbers as sort of a man-from-Mars, seeing them for the first time. As in the past, we found it interesting, this year, to look at the top ten companies in a number of categories which the compilation lists, especially those categories relating di- rectly to common stock performance, rather than size. Let us, for example, consider the leading ten companies in terms of earnings-per-share growth for the ten-year period ended in 1978. They are, for the record, Wheelabrator-Frye, Fairchild Camera, A-T-O Corporation, NVF, National Semiconductor, Teledyne, Peavey, Peabody International, Natomas, and Digital Equipment. It is an interesting list, to be sure. As has universally been the case, when we have made such an examination, the names do not turn out to be the ones that would be likely to appear on the typical list of favored growth stocks, the last one, DEC, being the only possible exception. The reality of growth, it appears, often exists without its image. On the other hand, for the first time since we have looked at these figures, they support a strong case for the rationality of the stock market. Very often, in the past, when -companies, -theirrecent -price pel'IoFmance .. – , has been fairly dismal. In 1974, for example, we isolated the terr fastest-growing companies for the ten-year period ended 1973. (Wheelabrator-Frye, incidentally, is the only one that made the list both then and now.) An investment in those ten issues in 1973 would have declined by some 45 over the year, not precisely the sort of response to growth that one ex- pects. As we pointed out then, however, the reason lay in the fact that, in the early 1970's, companies with high growth rates 'were selling at astronomical multiples, in many cases over 50, and 1973 turned out to be a year in which multiple reevaluation took place. By contrast, 1978 found most stocks reasonably valued, and the price performance of the ten companies listed above was distincly above average. FORTUNE computes the total re- turn, capital appreciation plus dividends, on each of the 500 companies, and the median was 7.16. For comparison, not including dividends, the Dow was down 3.1 on the year and the S&P Composite up 1. 1. Nine of the ten companies listed above bettered the 500 median, and the return on an equal investment in each of the ten companies involved would have been 22.8. Ten-year figures on total- return were available for nine of the ten companies, and seven of these showed returns well in excess of the median figure. What needs to be stressed, we think, is that in our years of looking at the 500, which cover the decade of the 1970's, 1978 was the first case in which the sort of results referred to above were obtained. The point we derived from previous analyses was that not only growth rates, but comparative valuation had to be taken into account if price performance were to be successfully predicted. In a market such as the current one, where more reasonable historic valuations prevail, price performance may turll out to be more responsive to improving funda- mentals. Since these valuations have not changed all that much over the past year, we would suspect that such may be the case in 1979 also, and we will look forward to FORTUNE's issue of May, 1980, to see if this is, in fact, the case. Dow-Jones Industrials (12 00 p. m.) S&P Composite (1200 p.m.) Cumulative Index (4/26/79) AWTld 856.90 101. 66 749.93 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL I No stalement or expression of opmlon or any other motter herein contolned IS, or IS to be deemed to be dlrcCTly or indireCTly, on oHer or thc soliCitation of on offer to buy or sell ony SCCl,mly referred to or mentioned The motler IS presented merely for the corlVellence of Ihc subSCriber Whda we. believe the sources of our Informo tlon to be rehoble, we In no way represent or guarantee the occuracy thereof nor of the statements mude herein Any action fo be token by the subscnber should be based on hiS own investigation and information Janney Montgomery &011, Inc, as 0 corporation, and lIS officers or employees, may now have, or moy later tak.e, posItions or trades In respect to any seCUrities menlloned In thiS or any future Inue, and such position may be different from any views now or hereafter expressed In or any other Issue Jonney Montgomery &ott, Inc, which IS re.glstered With the SEC os on Investment adVisor, may give adVice to Its Investment adVISOry and othel customers rndependenlly of ony stolements mode In thiS or In any other ISSUI! further InformatiOn on any security mentIOned hercln IS ovallable on requl!!'1

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