Tabell’s Market Letter – October 07, 1983

, TABELL'S MARKET LETTER 909 STATE ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 924-9660 October 7, 1983 With these words. we are. at the same time, starting a new venture and continuing an old tradition. If The above repeats the initial sentence of this letter on August 7, 1970. That letter was the first issue of this publication under the imprint of the Delafield, Harvey, Tabell Division of what was then Montgomery, Scott, & Co. Today's issue is the first one to be published by the independent entity of Delafield, Harvey, Tabell Inc., Members of the New York Stock Exchange. We went on, 13 years ago. to note that we were writing fit he continuation of a letter that has been published weekly since 1944. During this period, the letter has appeared under the imprint of three different firms and under the by-line of two authors, the 'current one and his late father, Edmund W. Tabel!, who founded this publication 26 years ago, and who pioneered many of the analytical concepts still referred to herein. Delafield, Harvey. Tabell Inc., of course, becomes the fourth issuar, and the period of continuous weekly publication of the letter has now extended to 39 years. It is our hope that our readership will continue to find some use for the observations herein during the many years we expect to continue this pUblication in the future. In general terms, we think the hallenges which will be confronting us in the era beginning October, 1983 are very different from the ones which faced us 13 years ago. The issue quoted above emerged with the Dow at 722.28, two months. Lafter tha bottom of the 1970hear market had been reached. At that time, we said, We have come through a trying period over the past 18 months. Stock prices have plunged more precipitously than at any time since the 1930's. Meanwhile, the financial press informs us on a daily baSIs of a multitude of problems besetting the economy …. It is hardly our intention to claim that our economic difficulties are not real. …. But, with most stocks having declined anywhere from 30 to 90 froIIJ..!Bi.!'lY'''1cen.!..J1jghs, it is sillYl'reten.i…!hat the market is sailing along totally oblivious to surrounding deterioration. 11 – – – – — – '' …… – – ——- We had, moreover, at that point, not seen the worst. The bear market of 1973-1974 which, in many ways, made 1969-1970 seem like a picnic, was still ahead of us, with its low of 577.60 in the Dow- Jones Industrials. With the benefit of 20120 hindsight it is possible to say that we began our predeces- sor enterprise in an atmosphere of stock-market pessimism that had been unparalleled over the previous 40-odd years. There could not, in short, be a greater contrast to the atmosphere existing today as Delafield, Harvey, Tabell Inc. is launched. Thirteen years ago, we were two months past the low of the worst bear market in the memory of most investors. Last mght, the Dow-Jones Industrial Average achieved the highest close in its history. That high, moreover, represents the peak so far of a bull market which has, by many measurements which we have had the occasion to document over the past year,been the most dynamic one on record since the 1920's. We do not, as our readers are aware, think that bull market is anywhere near its end. Nonethe- less, as we look at the next 24 months or so, we cannot help but reflect that our task in this space will be the diametric opposite of the one to which we set ourselves in 1970. At that point it was necessary to marshal all our feeble powers of persuasion to convince our readership that Armageddon was not at hand and that common stocks represented uncommon bargains. At some point during the next two years, it will almost certainly become necessary to remind those readers that there exist such things as bear markets and that common stocks do not go up forever. Overriding all of this however, there is, we think, a fundamental change in the stock-market environment from that which existed in 1970. Four and one-half years before we wrote that first letter the Dow had reached a high around the 1000 level. It was not to exceed that high by a significant margin for 13 more years. The current bull market, whatever signs of maturity it may now be exhibit- ing or may exhibit in the future, has moved us decisively out of a secular flat trend that lasted from 1966 until early 1983. As we have noted over the past six months, the exact shape of that trend remains unclear, and it will be the task of this letter to comment on the evidence regarding that shape as it de- velops. For many reasons, however, we are confident that it will involve levels for stock prices in general which will make it obvious that the bull market which began a bit over a year ago was nothing more than a curtain raiser. In commenting on the market outlook back in August, 1970, we concluded, Bit is our belief, however, that it will usher in an era propitious for Delafield, Harvey, Tabell and. much more importantly. our clients. The same conclu'sion holds true today and. we think. happily. to an even greater degree. AWT rs ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. Dw-Jones Industrials (12 00 p.m.) 1270.22 S & P Composite (1200 p.m.) 170.59 Cumulative Index (10/7183) 2046.69 … No statement or expressIon 01 opinion or any other mailer herein contained IS, or IS to be deemed to be, directly or Ind!rectly, an offer or the sollcltahon 01 an offer to buyor sell any secunty referred to or menl!oneo The matter IS presented merely for the convenience of the subscfloor While we believe the sources 01 OUf Informal!on 10 be reliable, we In no way represent or guaranlee the accuracy thereof nor of the statements made herem Any action 10 be taken by Ihe subscriber should be based on hIS own Investigation and informatIon Delafield, Harvey, labell Inc, as a corporahon and lIs officers or employees, may flOW have, 01 may laler take, poslhons or trades In respect 10 any secufltles mentioned In thiS or any future issue, and such POSition may be dl1ferenl from any views now or herealler expressed m thIS or any other Issue Delafreld Harvey, labell Inc whIch Is regIStered with the SEC as an Investment adVIsor, may give advice to lIs Invcstment adVISOry and Olhcr customers Independenlly of any statements made In thiS or In anv other Issue Further Information on any securtly menhoned herein IS available on reQuest