Viewing Month: December 1979

Tabell’s Market Letter – December 07, 1979

Tabell’s Market Letter – December 07, 1979

Tabell's Market Letter - December 07, 1979
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–J TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISiON OF MEMBER New VORK STOCK eXCHANGE, INC MEMBER AMERICAN STOCK EXCHANGE December 7, 1979 — — '1' —–;..- — …. …–..- … The investment art-has hlways incorporated a number of separate disciplines, and one aspect thereof that has gained increasing attention as such a discipline has been called market timing.- It is probably not accidental that the investment community's interest in this subject began to emerge around 1974, shortly after most portfolio managers had been ravaged by the 1973-74 bear market, an experience which, hindsight revealed, could have been avoided by the simple process of fleeing from equities at some point in 1973. Market timing, as a distinct aspect of the investment art, has also been sanctified by the growing body of quantitative work lumped together under the heading of modern portfolio theory. It is possible, using the sophisticated, performance-tracking teChniques developed as tools of this theory, to separate portfolio returns into those attributable to success in forecasting the stock market and those attributable to astute selection of indi- vidual portfolio components. There is nothing new about this, of course. An old bit of stock-market folk wisdom likens the behavior of stocks to boats in a river with a strong current. Each boat individually will benave in a manner differing from the others, but they will all be similarly affected by the action of the current, just as all stocks, whatever their behavior in relation to each other, will be affected by swings in the general market. Stock selection is thus an effort to choose the most powerful boat, whereas market timing is a judicious attempt to haul all one's boats out of the water when the cur- rent gots too strong. Like all disciplines, market timing has developed its own set of protocols. One of theseis the f'sct..,that a fo suggest -that securities – – – are ,amply priced and that risk-return ratios might be more attractive in other areas is an effort likely to gain little notice. If one announces, however, that the Dow-Jones Industrial Average is likely to get to, say. 400, one is almost guaranteed a wide hearing. Thus, the past few years have been rife with apocalyptic visions of what is going to happen to the stock market. There has also been a hearty minority of seers willing to forecast dramatically higher prices for the Dow. All this has taken place in a market which, over the past three years or so, has done, in terms of averages. precisely nothing. When a particular area of investment management approaches the status of a fad, it often becomes practically worthless. This has been just about the case with efforts to time the market since 1976. Let us consider the history. The recovery from the 1974 lows to 1976, while selective, was con- ventional. However, from September, 1976 to spring 1978, we had what amounted to a bear market in terms of the averages, coinciding with a rather strong upswing in secondary stocks. The market started up again on a broad basis in March, 1978, only to be interruptedy an intermediateterm correction which erased almost all the gains over a period of a few weeks in the fall. 1979 saw an almost exact repetition of the process. a long laborious upswing, followed by the Saturdaynight-massacre correction, which erased most of the gains. In this sort of environment, it seems to us, efforts at market timing have been somewhat less than productive. It was, we suppose, possible to call the 1976-1978 downswing, except that, in doing so, one missed the myriad of upside opportunities available in secondary stocks. It would have been theoretically desirable to avoid the corrections that occurred in the fall of 1978 and the fall of 1979. However. the sharp reversals which characterized the first, and the second one so far, made this sort of effort difficult at best from a practical standpoint. The period from 1974 to date, in other words, has been one in which it has been basically profitable to ignore efforts at market timing and concentrate on the selection of undervalued issues, especially those less well known. It has, ironically, been a period in which most professional investment effort has been directed in precisely the opposite direction. Dow-Jones Industrials (12 00 PM) S & P Composite (1200 PM) Cumulative Index (12/6/79) 839.59 108.42 769.29 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTsla No statement or of opinion or ony other moiler herein contolned 15, or IS 0 be deemed 10 be, directly or indirectly, on offer or the soircltalton of to buy or sell dny tecurlty referred to or mentIOned The mattcr IS presented merely for the ad' thhe Into be reliable we In no woy represent or guarantee the occuracy Ihereof nor af the statements ml.l e ereln ny a hll Ion el0 e a en be I I tak on hiS own 'investigation and information Janney Montgomery ciposltloM or trades 1/\ respect to ony secuntles menlloned In thl5 Of any Scolt, future Inc, as a Issue, and corporation, and ,ts officers or such POSit. on moYdbe different efrmo-pnloyeneys, may now thl! or on other Issue Janney Montgomery Scot!, Inc, whICh IS registered With Ihe SEC as on mvetment a v,sor, may give 0 vIC 0 rsed other C'lJstomtHS of eny ';'etements mede In thiS or I!\ eny other Inue Further information on any secullty mentioned herein IS available on request

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Tabell’s Market Letter – December 14, 1979

Tabell’s Market Letter – December 14, 1979

Tabell's Market Letter - December 14, 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 STOCK eXCHANGE December 14, 1979 ;.;.there'exist somethmg-w— -more tliim 1,700 back issues thereof. We freely confess that there have been times when, lackin inspiration, we have borrowed, in whole or in part, from one of those back issues. Having arrived at that time of the year when it is customary for us, in preparation for an annual forecast, to review the year just past, we are tempted simply to present last year's review with the figures updated. The similarity between market action in 1978 and 1979 is, indeed, truly remarkable. Both years showed pronounced strength through the end of the summer. Both experienced sharp declines in the fall, and, based on the record to date, both those declines bottomed out toward the end of the year. In both years, moreover, broader measures of price performance, especially those weighted heavily in favor of secondary stocks, outperformed the more familiar market indices. It is thus worthwhile at this time to review, not just 1979, but the two-year-period 1978-79. If the measurement used in such a review is the Dow-Jones Industrial Average, the result is, to say the least, desultory. On December 30, 1977, the Dow closed at 831.17. As of this writing, it stands at 838.31. Over two years the average price change for 30 premier U .8. industrial companies has been almost exactly zero. This would be bad enough, were it not for the fact that over the same two-year-period the Consumer Price Index has in9reased by approximately 22 percent. Applying this index to the Dow produces a decrease of 17.8 percent in real-dollar terms. Even when the generous and improving dividends on the DJIA are taken into account, the net annual return for the index -3 A percent..in-r-eaL.dollar-s. As we noted above, however, broader indices have, indeed, outperformed the Dow. Our Cumu- lative Index, a measurement of the price change of all NY8E-listed issues, which closed 1977 at 673.36 is now just about 100 points higher, having increased some 15 percent over the two-year- period. This gain is, admittedly, less than the rise in the CPI, but nonetheless, the rate of return for the Cumulative Index, with dividends included has, over the past year, been positive, approximately 2 percent in real-dollar terms. What, it may be asked, is so exciting about 2 percent. We are reminded of the gambler who continued to play the obviously-crooked roulette wheel because it was the only game in town. In an era of rampant inflation, there have been precious few games other than the stock market for the investor. Take, for example, long-term bonds, exemplified by U.8. Treasury 8's of 19962001 which two years ago were 99t but which stand now around 81. The inflation adjusted rate of return on this safest-of-all investments has been a negative 5.22 percent. Investment in shortterm instruments, when adjusted for inflation, has produced a lesser but similarly negative rate of return. , Our President has reminded us that life is unfair and, although it would be nice to be able to preserve real capital without risk, such has not been nor is it likely, in the future, to be the case. Equity markets over the past two years have, at least, offered the possibility of preserving real capital and income. Other vehicles have, of course, been available, and yes, we know about Krugerrands, Louis XIV furniture, etc., etc. Hindsight shows a positive return for such vehi- cles.- We have some -d—o..u..b…ts over theiruseful-ness, -in a practical sense, -f-or th-e -futu-re. The proverbial bottom line, as we see it, is approximately as follows. The two-year performance of the stock market has, admittedly, not been one calculated to induce euphoria. It has, however, been possible, through hard work and a willingness to search for security values beyond conven- tional, well-known issues, to use the stock market as a vehicle for preserving purchasing power in the face of rampant inflation. Equities, moreover, have been one of the few such vehicles available and, therefore, a positive attitude toward common stocks through 1978-79 has, in retrospect, not been ill-advised. The central question posed for the forecast, which we intend to issue next week, is whether this will continue to be the case for the year ahead. Dow-Jones Industrials (11 00 AM) 8 & P Composite (11 00 AM) Cumulative Index (12/13/79) 838.31 108.11 775.15 ANTHONY W. TABELL DELAFIELD, HARVEY TABELL AWT sla No statement or e)(prelon of opinion or ony other molter herein contomed IS, or IS to be deemed 10 be, directly or ond'f('ctly, on offer or the sol,cltollon of on offer 10 buy or sell (my security referred to or mentioned The molter IS presented merely for the conveJ'llenCE; of the subscriber While we believe the SOluces of our informa- tion to be reliable we In no way represent or guarantee the accuracy thereof nyr of the statements mude herein Any action to be tok!!n by the subscriber should be based on hiS own'lnvestlgotlon and Informollon Janney Montgomery Scott, Inc, os a corpcrotlon, ond Its officers or employees, moy now hove, or may later lake, POSitiOns or trodes In respect 10 ony securities menlloned In Ihls or any future Issue, and such position may be different from any views r,ow or hereafter expressed In Ihls or ony olher Issue Janney MonTgomery tott, Inc, which IS registered Wllh the SEC as on rnvestment adVisor, may give adVice to ItS rnvestment adVisory and othel customers independenTly of ony statements mode In thiS or In any other Issue Further rnformotlon on any security mentioned herein IS available on request

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Tabell’s Market Letter – December 21, 1979

Tabell’s Market Letter – December 21, 1979

Tabell's Market Letter - December 21, 1979
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEM8ER New VORK STOCK EXCHANGE INC MEMBER AMERICAN STOCK EXCHANGE December 21, 1979 .— .. our,,cu1tQmary wenoted-t1ieTact -mar.o . ket had-, during 1978 and 1979, provided a vehicle by which real purchasing power could have been preserved in the face of rampant inflation and other disruptions. We stated that the crucial question for a forecast centered around whether this would continue to be the case during 1980. We believe that it will be. To a great extent, our reasons for this feeling are based on negative rather than positive elements. Let us consider for a moment precisely what equity markets have had to contend with over the past couple of years. There has existed, first of all, the unprecedented inflation referred to above. Exacerbated by this inflation, interest rates climbed to record levels throughout almost all of 1978 and 1979, only to have the noose tightened yet another notch by the shift in Federal Reserve policy this fall. Monopolistic OPEC pricing practices have escalated the rise in energy costs to almost crisis proportions, and, while all of the above was going on, we have been treated to, if not an actual recession, a two-year-long series of advertisements of a recession impending. Finally, on top of all of the above fundamental disruptions, there emerged this fall a madman in the Middle East rattling the sabers of possible war. Throughout all of this, the stock market has, at least, not gone down. The reasons it has not gone down are, we think, clear if one takes a long enough historical view. The fact is that, by the middle 1970's, stock prices had reached levels generally attained only at quarter-century intervals, levels which, in the past, we now know, have discounted im- pending disaster. Under these circumstances, it was at least believable that the market could, as it did, survive a string of events which, in other times and places, would have been sufficient to send it into the worst sort of tailspin. a!;.ysmally.J9.w – the 19'74'' 76 rebound,- and a consequent difficulty in recognizing the fact, as we pointed out last August, that a new stock market cycle, in all probability, began in March of 1978. Our belief in this cycle identification leads, we think, to further grounds for optimism. It is extremely diffi- cult to square the suggestion of a market top in 1979 with a cyclical bottom in March, 1978. In order to do so, one would have to posit a cycle either shorter than all other such cycles in this century or with a shorter advancing phase than all but three. It would be necessary to visualize a cycle which produced the second smallest rising phase on record and a third consecutive cycle that failed to achieve a new high, a phenomenon that has not occurred in the 20th century. This leads to the likelihood, in our view of the currently available evidence, that the previous highs for the major averages, the 1978 high of 907.74 on the Dow, and the 1979 high of 111.27 for the S & P 500, are likely to be exceeded some time in 1980. It is the timing of that occurrance and, consequently, the shape that the 1980 market pattern is likely to take that appears to be the most uncertain element in the picture. As this is written, we continue to hold a fairly optimistic view as far as the short-term outlook is concerned. We expect, in other words, a conventional year-end rally, one which will carry forward to somewhat higher prices in the early part of the upcoming year. The real question is whether, in view of tpe technical damage done during October, it might then be necessary further to test the 800 level and build a base for a broader advance in the second half of 1980. Such an eventuality would be consistent with the election-year tendency discussed here a couple of months ago. Could the market extend the year-end rally to and through the 900 level, and in the process, correct the potential breadth divergence caused by this fall's decline, the resulting pattern could be favor- able indeed. The suggestion then would be that .the current cycle would turn out to be fairly conventional in extent, extending in time throughout most of the year ahead and leading ultimately to considerably higher prices. The strength of the year-end rally, a subject which we will discuss next week, will be an important clue in determining which of the above two eventualities ensues. We noted above that the market has spent two years ignoring highly negative fundamental factors. Should those fundamental factors prove, during 1980, to be less serious than analysts now foresee, the technical potential exists for a very good year indeed. Dow-Jones Industrials (12 00 PM) S 81 P Composite (1200 PM) Cumulative Index (12/20/79) 841. 81 108.03 779.23 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL AWTsla A VERY MERRY CHRISTMAS TO ALL .' No statement or expressIon of opmlon or any other motter herein con tamed IS, or IS to be deemed to be, directly or Indirectly, on offer or the soilcltohon of on offer to buy or sell any securoty referred to or mentioned The molter Is presented merely for the of Ihe subSCriber Wh.le 'i'le believe Ihe sources of our Informo- t.on to be rel.oble, we In no way represent or guarantee the accuracy thereof nor of the sotements mude here.n Any act.on to be by the subscr.ber should be bosed on h.s own Invest'gotlon and ,nformat.tln Janney Montgomery Scolt, Inc, as a corporat.on, and .ts offICers or employees, mav now have, or may later lake, pOSitions Of trades In respect to any securities ment.oned ,n th,s 0' any future Issue, ond such POSItion moy be from ony vIews now or hereafter exprcned In thIS or any other lSsue Janney MOntgomery Scott, Inc, whIch IS regIstered WIth the SEC as on Investment adVisor, may give adVICe to Its .nvestmenl adVIsory and other customers Independently of any statements mode 1M thiS or In any other Issue. Further informatIon on ony security Mentioned herein IS ovollable on request

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Tabell’s Market Letter – December 28, 1979

Tabell’s Market Letter – December 28, 1979

Tabell's Market Letter - December 28, 1979 page 1
Tabell's Market Letter - December 28, 1979 page 2
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TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 DIVISION OF MEMBER NEW VORl( STOCK eXCHANGe, INC MEMBER AMERICAN STOCK eXCHANGE – December 28, 1979 w,e. hav;e hestock-m al'-ket to-,- – , , stage ayear;'end.' riilly-;-and' it has beEm the custom of this'ietter 'to point' out' some- of the conclu- sions that can be derived from a study of this phenomenon. We have suggested that an exhaus- tive study. since the Dow-Jones Industrial Average first was computed in 1897, indicated that such a rally, however miniscule, invariably had taken place. Until recently, the year-end rally as measured by the Dow-Jones Industrial Average had always carried into January. However, two recent periods, 1976-77 and 1977-78, have provided exceptions, failing for the first time in the history of the DJIA to continue into January. The 1977 bear market began from a high of 1004.65 on the last day of December, 1976. In 1978 the bear market continued, penetrating the December, 1977 low on the first day of the year, plunging almost 100 points before bottoming in February. Inspection of the 1978-79 year-end rally seems to indicate a return to normalcy, and a num- ber of interesting facts about the market action of the year end may be noted. 1. The year-end rally often has been of great magnitude with advances as great as 28 having been recorded. It also, on occasion, has continued with only minor interrup- tions for as long as six months into the new year. In 1961, 1964, 1967, 1971, 1975, and 1976, the rally continued into February or March. However, on other occasions, it has been of only a few day's duration, reaching a top extremely early. Thus, in 1960, 1970, and 1973, the rally reached a peak by the first week in January, and, as noted above, the 1976 and 1977 year-end rallies failed entirely to carry into January. 2. There has been a persistent tendency for the rally to begin early in years when the market has been up, and late in years when the market has been down. In recent years, 1963, 1967, and 1975 are examQles, the rally – uecemoer -Ih years', 1962', 966, 1969, and 1977, the rally began late in the year. The start date this year, essentially an up year, began the early part of the month on December 3. 3. The important thing to watch in connection with the market action in the early months of the new year is the low for the previous December. This low has been broken in 47 years out of the past 79. However, in 28 of these 47 cases, it was broken in Janu- ary and February. For example, in 1970, 1973, 1977, and 1978, the December low was broken by early January. Since 1937, it has never been broken later than mid-March, with the exception of 1965 and 1974. Thus, if the market is able to hold above its December low for the first 2-1/2 months of the year, chances become good that this low will not be broken. 1978-79 was no exception as the December low was not broken. the entire year. 4. In years when the December low has been broken, the subsequent trend has been downward two-thirds of the time. 1962, 1966, 1969, 1973, 1974, and 1977 are typical cases. 1965 and 1978 were exceptions. 1970, of course, was a down year in the first half. 5. The magnitude of the rally is an important clue as to the year's market trend. For example, an advance of 10 or more from the December low has been followed by an upward or neutral market in 34 of the 40 years that such an advance has occurred. An advance of less than 10 or more from the December low before an identifiable correction takes place has been followed by a downward market in 26 of the 39 years. In 1963, 1964, and 1971, the year-end rally approximated 10, and in 1972, it was 17. In 1962, 1970, 1973, and 1977, for was less than this figure. 6. The length of time in which the rally continues into the new year also is important. For example, in 22 years, the rally continued into March or later. In 19 of these 22 years, the eventual trend was upward. In 1964, 1972, 1975, and 1976, the year-end rally continued into March and in 1961, 1967, and 1971 into February. ' This year, therefore, the December 3 closing low of 819.62 becomes an important reference point to watch. If the Dow is able to advance from this low by 10, not unlike last year, roughly to the 900 level, or continue a rally into February or March, the historical implications would be bullish. Dow-Jones Industrials (1100 AM) 839.33 S & P Composite (11 00 AM) 107.93 Cumulative Index (12/27/79) 781.18 ROBERT J. SIMPKINS. JR. DELAFIELD, HARVEY, TABELL RJS sla WE WISH YOU ALL A HAPPY AND PROSPEROUS NEW YEAR No stotement or expreS510n of op'nion or any other motte' herein cOntolned IS, or 15 to be deemed to be, directly or .ndlrectly. on offer or the soliCitation of on offer to buy or sell ony security referred 10 or menlloned The matter IS presented merely for the convef'lcnCC of the subscnber \'1hde we believe the sources of our Informolion to be reliable, we In no way represent or guarantee 'he accuracy thereof nor of the statements mude herein Any act,on to be token by the subscriber should be based on hiS own investigation and Information Janney Montgomery Scott, Inc, as a cortlo'otIO'1, and Its off.cers or employees, may now have, or may later toke, pos.tlons or trades In respect to any secUrities mentioned In thiS or any future .ssue, and such POSition may be different from ony views now or hereafter expressed In lhls or ony other Issue Janney Montgomery SCali, Inc, which IS registered With 1he SEC as on ,vestment adVisor, may give adVICe to 115 Investment adVisory and athel customers Independently of any clements mode In thiS or In oy other Issue Further information on any security mentIOned herein IS ovooloble on request …. 18qq Iq00 Iq01 1'I0i! 1'103 1904 1'106 1'107 1'108 1'109 1'110 1'111 \'112 1913 1'114 1'115 1916 1'117 1'118 1919 1920 1921 1922 1923 1'124 1925 1926 1927 1'128 1'129 1'130 1931 1932 1933 1934 1935 1936 t937 1938 1'139 1941 1942 1943 1944 1945 1946 1'147 1948 1'14'1 1950 1'151 1'152 1'153 1954 1955 1'156 1957 1958 1'15'1 1'160 1'1&1 ..,.,—- '—. 19&4 1'1&5 19&& 1'1&7 1'168 1'1&9 1970 1'171 1'172 1973 1914 ,975 197& 1'177 1978 ..- …………VE.A..R-E.N.D.DO.W. PERCENTAGE 66,08 67,50 2,15 63,20 61,'15 ! ,U 46,'10 -24,2'1 6'1,50 4e,I9 '13,05 '14,40 1,45 59,35 -37,13 85,60 44,23 '18,00 14,4'1 80,'15 -17,40 80,85 -0,12 88,10 A,'I7 77,10 -12,4'1 55,00 -28,66 97,00 , 76,3& '18,50 – 1,55 82,45 17.45 105,80 28,32 72,20 -31,,6 7'1,80 97,10 21.68 94.10 115,45 22,6'1 154,55 157,20 1,71 202,40 28,75 300,00 48,22 248,48 .17,17 Ib4,58 -33.'7 77 ,90 -52,67 5'1,93 99,90 66,69 104.04 4,,4 144,13 38,53 17'1,90 24,A2 120,A5 15 4 ,76 -32,82 131,13- – -2,92 .15,38 119,40 7,61 135,89 152,32 12,09 192,91 26,&5 177,20 -A,t4 181,1& 2,23 177,30 -2,13 200,13 12,88 235,41 17,63 26'1,23 2'11,90 8,42 280,90 -3,77 404,3'1 43,'16 488,40 20,77 4'19,47 435,6'1 .12,77 583,65 67'1,3& &15,8'1 1&,40 q,!4 731,14 18,71 &52,10 -10,81 874,13 '1&9,2& 185,&'1 905,11 943,75 ' 14,57 10,88 4,27 -15,19 8'10,20 1,020,02 850,8& &16,24 852,41 1,00 4 ,&5 831,17 805,01 &,11 14,58 .e1,57 38,32 11,8& -17,27 -3,15 -,-

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