Viewing Month: January 1986

Tabell’s Market Letter – January 03, 1986

Tabell’s Market Letter – January 03, 1986

Tabell's Market Letter - January 03, 1986
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 January 3. 1986 It is hardly news that 1985 was a good market year. with the S P 500 up 26.33. We thought 'it-of'possible'interest'to study'thellerformanceof–each of the individual-components of that index. The following table summarizes the study. using the 85 industry groups which com- prise the 500. For each group. the un weighted average percentage change of the components is shown. together with the total number of stocks in each group. the number of stocks advanc- ing and the number advancing by more than the 26.33 gain of the average itself. A total of 423 of the 500 stocks were up on the year. and 232 showed a better gain than the index. This latter figure. significantly less than half. suggests that much of the S III P's gain came from larger stocks. a thesis confirmed by the fact that only 38 of the 85 groups out- performed the S P. The figure also suggests that group identification was probably as important a factor as individual stock selection during 1985. For the 35 leading groups. everyone of the components was up on the year. and this statement is true of a total of 45 groups. For no fewer than 12 of the groups in question. every one of the components outperformed the S p. and for all of the lesding groups a substantial majority did so. Not surprisingly. the table clearly shows that the year's leaders were those stocks we have characterized as diSinflation-hedge issues. 37 of the 85 groups fall into this category. and 27 of those groups outperformed the average. 214 of the 220 component stocks were up and 141 showed superior performance. By contrast 16 of the 18 basic-industry groups underperformed the S p. with 64 of the 91 component stocks underperforming and 25 down on the year. 0' 0'Industry Broup HuIbor Total lIP StadsSIP I n d u s t ,. 6 r au' CIianH IIuIbor Total lIP StodI.SsIP — EHm!TAIHltElfT 8'1.25 4 4 4 LIFE IIISIIIWU 24.71 442 – aJIIf'UTER SRIIICES 67.82 3 3 3 NISCJ.lAIIOOS 23.SO 25 23 11 —-1-IID,A——U;tg1–1–t-r-nL' A—-lg—i— – – – f PlUUTIOH COHTROL RETAIL SPECiAlTY HOSI'ITAl Slm.IES TEXTILE APPARL ItFRS. ElECTROHIC IIAJOR COS. FOODS III1THIHE IHSWIIfCE DRUGS SAVINGS lLOAN aIII'AIIlES SOAPS COSNETICS TROCKERS ClllTAINER METAl 1 &lASS PIlII'ERTY-tASlIAlITY INSURANCE RETAIL STORES I(PARTMEIIT CHEMiCAlS TEXTILE PROooeTS BE\lERA6ES IIRElIERS BAHKSlHElI YORI( CITY MlISHING RESTAURAIITS PmERSODHRAIHlLJO(SANS FOOD DlAIN CON6LOHERATES F1If1111tIAL MIscru.AHE1RJS GENERAl IIERDfAIIDISE DlAIHS BEVERAGES DISTIllERS HOTElIltOTEL MlISHING !HEVSPAPERS) TELEPHOIIE !HElI) CIfPER TIRES 1 RUBBER AIR FREI6HT PAPER TRAHSP.-IIISC. LEISURE TINE CONTAINER PAPER RAIU!OIIOS 60.81 59.18 58.03 57.45 53.54 51.09 SO.13 47.39 47.26 45.37 44.39 43.46 43.43 42.87 41.05 40.75 40.61 39.61 38.94 38.30 M.33 36.16 lS.65 lS.JO 34.51 32.32 32.13 31.75 30.20 29.66 26.44 28.18 27.14 26.90 25.lS 25.32 25.20 25.00 24093 3 3 3 BAHJ(S!OUTSIDE MEV YORI( CITY) 19.39 5 5 4 NATURAl GAS 18.79 6 6 5 ruCTRICAL EOUIPMENT 18.26 5 5 5 AEROSPAC-DEFEHSE 17.94 3 3 3 AIR 'IRAIfSI'IIIT 16.97 18 18 17 ruCTROHICS-IHSTRUMEllTATIOH 16.00 6 6 6 ELECTRIC COMPANIES 15.38 12 12 10 ItACHIHltY COHSTRUCTION 1 MAT. 14.66 3 3 3 AUTO PARTS-AFTER IWIKET 14.51 4 4 3 HISCEllAHOUS!HIGH TECH) 13.39 7 7 4 OIl INTEGRATED INTERNATIONAL 13.33 4 4 3 FOREST PRODUCTS 12.08 4 4 3 IlACHIIlERY INIlU6TRIAl/SPECIALTY 12.06 5 5 5 ClDICAlS-DIV. 11.38 8 8 7 HARDIIARE 1 TOOlS lo.s9 8 8 5 OIL INTEGRATED DDIIESTIC 10.05 6 6 4 BlDG MATERIALS 9.78 3 3 2 RETAIL STDRESIDRUG) 9.67 6 6 6 AlUNIHlIIt 8.28 6 6 4 AUTO PARTS-Dl!6. EOUIPHEHT 7.33 5 5 3 TOBACCO 6.98 2 2 2 AUTOHOBILE 6.92 4 4 3 SHOES 5.39 8 8 5 GOLD 4.90 7 7 6 IfOSPITAL NAllAGEHENT COMPANIES 3.96 3 3 3 ruCTROHICS !SEMICONDUCTORS/CO 3.22 5 5 2 MACHINE TOOlS 2.57 4 4 2 AUTO TRUCKS 1 PARTS 2.56 4 4 3 STEEl 1.32 5 5 4 MANUfACTURED HOUSING -0.74 8 8 4 OIL WElL EOUIPNEIIT AND SRlJICE -1.66 3 2 2 aJIIf'UTER 1 BUS. EOUIP. -2.86 3 3 I HOltE BUILDING -J.03 3 2 I METALS MISCElLANEOUS -8.05 9 6 4 AGRiCUlTURAL MACHINERY -13.94 2 2 1 COII!IUlUCATlON EOUIPIIIfRS -23.34 5 4 3 OFFSHORE DRILLING -47090 3 2 lOlL CRUDE PRODUCERS -49.80 654 11 9 11 11 44 10 9 54 43 21 19 44 44 75 54 66 66 64 32 97 10 7 44 44 54 33 42 43 43 4I 64 52 32 83 31 7 – 2 14 9 53 3I 4I 63 40 30 5 2 1 2 I I 2 I 0 4 I I 2 I 0 2 5 0 0 0 0 2 I I I 0 1 0 I 0 O 4 0 0 0 0 0 0 AWTrs Dow-Jones Industrials (12 00 p. m.) 1546,67 S III P Composite (12 00 p.m.) 210.42 Cumulative Index (1/2/86) 2715.02 ANTHONY W. TABELL DELAFIELD. HARVEY, TABELL INC, NO statement or cplesslon of Oplr'lKln or.any other mailer herein contained IS, or Is to be deemed 10 be, directly Of mdlfectly. an oller or the 50llcllallon of an ofler to buyar sell any security referred to 01 menhoncd The mattlrls pre;ented merely for the convenience of Ihesubscflber While we believe the sou/cesol our mformatlon to be reliable. we In no way represenl or guaranlee the accuracy thereof no' of the statements made herem Any action to be taken by the subscriber Should be based on hiS own Investigation and mformaHan Oelaheld, Harvey, Tabell Inc, as a corporatIOn and liS 01110815 01 emplovees, may now have or may later tako, positions orlrades In respect 10 any securitieS mentioned In this or any future Issue, and such position may be dlfferentlrom any views now or hOlea/ter epfessed In this or any other Issue Delafield Harvey Tabell Inc which IS registered With the SEC as an II'Ivestment adVisor, may give advice to ItS Inyestment adVISory and other customers Il\dcpendently of any statements made In thiS or In any other Issue Furlher Informa\lon on any security mentioned herein IS available on requesl

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Tabell’s Market Letter – January 10, 1986

Tabell’s Market Letter – January 10, 1986

Tabell's Market Letter - January 10, 1986
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 January 10. 1986 After posting a new high of 1565.71 in the Dow Jones Industrial Average earlier this week. – , the \!did.smeth!!lg..i. has not !,one in-over!-hree- years,…- -correct -its.!lLi, 87single- trading. session over 2-1/2. As spectacular as this 40 point correction was, it. of course, -is not ,unprecedented. In the post-war experience from January 1949 to date. there have been 31 similar corrections of at least the same magnitude. Taken by itself, this correction does not change our constructive view of the stock market. However. as the bull market continues to mature. these events should not be discounted. For some years now. we have studied the familiar seasonal tendency of the stock market to stage a year-end rally. and it has been the custom of this letter to point out some of the conclusions that can be derived from a study of this phenomenon. Our original study. going back to when the Dow Jones Industrial Average first was computed in 1897. indicated that such a rally. however miniscule. invariably had taken place. Two recent periods. 1976-77 and 1977-78. provided exceptions. with the DJIA. in each case. reaching its year-end rally high prior to the first day of January. However. 1985-86 will not be an exception as the DJIA has already reached a new high on January 7th at 1565.71. The following facts about the year-end rally may be noted. 1. The year-end rally often has been of great magnitude. occasionally continuing through the entire subsequent year without a 5 correction being recorded. It frequently continued with only minor interruptions for as long as six months into the next year. In 1961. 1963. 1964. 1967. 1971. 1975. 1976 and. most recently. 1985. the rally continued into February. March or beyond. However, on other occasions, it has been of only a few day's duration, reaching a top extremely early as was the case in 1983-84 when the rally peaked on January 6 which turned out to be the high for the year. In 1960. 1970. 1973. 1974. 1981. and 1982. the rally reached a peak by the —Jrst-wekcinJanuary.——-;———-… — 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 upward years, 1967. 1975. 1979. and 1980 are examples. the rally commenced from early December. In recent downward years. 1962. 1966. 1969. 1977. and 1981. the rally began late in the year. 1985. an up year. saw an early start on December 2. 3. The important thing to watch in connection with the market action in the early months of the new year is the aforementioned figure. the December low. This low has been broken in 51 years out of the past 85. However. in 30 of these 51 cases. it was broken in January and February. For example. in 1970. 1973. 1977. 1978. 1981. and 1982. the December low was broken in early January. Since 1937. it has never been broken later than mid-March with three excep- tions. 1965. 1974. and 1981. when it was finally penetrated in August. In 1985. of course. the December low was never broken. 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 penetrated. 4. In years when the December low has been broken. the subsequent trend has been down- wards two-thirds of the time. 1962. 1966. 1969. 1973. 1974. 1977. and to some degree. 1984. are typical cases. 1965. 1978. 1980 and. most recently. 1982 were exceptions. 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 37 of the 43 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 30 of the 42 years. In 1963. 1964. 1971. and 1980. the year-end rally approximated 10. and in 1972. it was 17. In 1962. 1970. 1973. and 1977. for example. it was less than thiS figure. 6. The length of time in which the rally continues into the new year is important. For ex- ample. in 25 years. the rally continued into March or later. In 21 of these 25 years; the'eventual trend was upward. In 1964. 1972. 1975. and 1976. the year-end rally continued into March and in 1961. 1967. 1971. and 1980. into February. This year. therefore. the December low. reached December 2 at 1457.91. will become an important reference point to watch. If the Dow is able to advance from this low by 10. roughly to the 1600 level. or continue a rally into February or March. the long-term historical implications would continue to be bullish. RJSke Dow Jones Industrials (12 00 p. m.) 1519.03 S & P Composite (12 00 p. m.) 207.20 Cumulative Index (1/9/86) 2666.12 ROBERT J. SIMPKINS. JR. DELAFIELD. HARVEY. TABELL INC. No statement or eJl;preSSlon 01 opmloo or any other maIler herem contained IS, or IS to be deemed to be, directly or mdlrectly, an oHer or the soliCitation of an oHer to buyor sell any security referred toor mentioned The mailer IS presented merely lor the convemenceo! the subSCriber While we beheve the sources of our n!ormatlon to berehable, we In noway represent or guarantee the accuracy thereof nor 01 the statements made herein Any acllon to be taken by the subSCflber shOUld be based on hiS own Investigation and Information Delafield Harvey, Tabell Inc as a corporation and lIS ollicers or emptoyees, may now have, or may later take, pOSitions or trades m respect to any securities mentioned In thiS or any future Issue, and SUCh POSition may be dlHeren! from any views nONor hereafter eJl;pressed In Ihls or any other Issue Oelafleld, Harvey Tabel! Inc …. hlCh Is registered With the SEC as an Investment adVisor may gIVe adVice to Its Investment adViSory and other customers Independently 01 any statements made In thiS or In any other ISsue Furlher Information on any securll y mentioned herein IS available on request

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Tabell’s Market Letter – January 24, 1986

Tabell’s Market Letter – January 24, 1986

Tabell's Market Letter - January 24, 1986
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 1- – January 24, 1986 –. L…– —;;-' r . We suggested last week that, paradoxically, it -would be constructive for the market to pull back and test its earlier lows. This. indeed, it did In this week's trading. and the apparent reasons for this weakness were interesting and deserve comment. The spur to the market decline was, of course. plunging oil prices, as it became apparent that OPEC was willing to embark on a full-scale prIce war. The prospect of dramatically lower petroleum prtcing. obviously, has implications not only for the oil industry itself, but also for the economy as a whole—witness the renewed worry this week regarding the banking system and Mexlcan debt. As far as the oil price itself is concerned, a few observations can be made. First, it is not an oversimplificatIon to say that there eXlsts, at some level, an equilibrium prIce for oil in today's economy. That price is undoubtedly lower than the 30 plus per barrel that OPEC was extorting a few years agu and, certainly, higher than the 3 or so a barrel which prevailed before the Arabs discovered the supposed virtues of oligopoly. Beyond this. it is difficult to be specific, since the sort of free market for oil which would allow rapid adjustment to the equilibrium prlce has almost never prevailed. The past decade has seen an attempt at cartel pricing. which collapsed for the classic reason—inability to maintain production discipline. OPEC cannot agree on a means to shut off the tap; therefore. this incremental volume has resulted in lower prices. The apparent current strategy is now to drive non-OPEC producers out of the market. This is theoretically possible. since Middle East crude possesses the lowest lift cost. However. since alternative production facilIties are already in place—North Sea oil derricks, for example—implementation of such a strategy would suggest that the price of oil over the next few years might remain as far below the normal equilibrium price as it was. recently, above it. We are. thus. unwilling to argue with even the most dire price projections made by some analysts. Under these conditions, one might expect the price action of oil stocks, a major market component, tofildicateirftlendffi-g—doom I afi'd7'inae-ed ,- sell-recomme11clatioffs-'-onthe—ifrdustr-.rnaVe been a conspicuou'''sr-feature for the last few weeks. Interestingly. however. oil-stock price patterns suggest that. while the stocks are not without substantive risk at the present time. they are something considerably short of potential disasters. Currently, the majority of oil issues are close to downside breakouts. which would suggest further short-term price weakness in early 1986. Support. however. eXlsts not too far under current levels, and the distribution patterns are hardly major in scope. The implication seems to be, in other words, that, as far as Oll issues are concerned I much of the anticipated product-price weakness has already been discounted in the stock market. This statement would appear to be equally true as far as some of the consequent broader lmplIcations of low-priced oil are concerned. A major factor in the recent economic environment, possibly the most salient factor as far as stock prices are concerned, has been disinflation. In terms of the overall price level, the past two years have been almost unique in recent history, with the producer price index currently below its figure of spring. 1984. A sharp short-term rise in the last quarter has caused some worries that this trend might be reversing. As lower oil prices become fully felt. further weakness in wholesale prices is highly likely to manifest itself. Also, the Fed may be given more incentive to ease monetary policy. In other words. the disinflation trend of 1984-1985, expected by many analysts to end 10 1986, now appears more likely to continue. Again I however. thls is a development which seems to have been largely discounted in the market- place. Disinflation-hedge stocks have been market leaders now for at least a year and a half, and our readers are familiar wlth our thesis that they are currently fully priced. TeChnical patterns would sug- gest. therefore, that most of this week's news concerning oil prices themselves and disinflation in general was long before efficiently reflected in the marketplace- , . – – – – – – – – – – It is important to recall, however, that eras of disinflation have been abundantly proved to have favorable implications for stock prices. This relationship was emphatically demonstrated by the bull market of the past 3! years. REgardless of short-term swings, it seems to us that lower oil prices. insofar as they contribute to mitigation of inflationary pressures, will, over the long term, produce a background favorable for common stocks. ANTHONY W. TABELL AWTlt DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrlals (12 00 p.m.) S & P Composite (1200 p.m.) Cumulative Index (1/23/86) 1520.17 204.70 2687.32 NO statement or epress!on 0\ opInion or any Olher matter herein contained Is, or IS \0 be deemed to be dlrecllyor md!rectly, an ofler or the sohc!la\lon of an oller to buyor sell any secuflly relerred 10 or mentIoned The malter !s presenled merely for the convenIence of the subSCriber Wh!le we bel!eve the sources of our IOformal!on to be rehable, we 10 no way represent or guarantee the accuracy thereof nor of Ihe statements made herem Any action to be taken by tho subscriber should be based on his own Invesllgatlon and Information Delafield, Harvey, Tabell Inc, as a corporalion and ItS ofllCfOlrs or employees may now have, or may later take, poslt!ons or trades In respect to any secunt!es mentioned m this or any future Issue, and such pOSition may be dtlfeent from anyv!ews now or herealter ewpressod In thiS or any other Issue Delafield, Harvey Tabel! Inc whlch!s registered With the SEC as an Investment adVisor, may give advice tOlts Investment adVISOry and other cuslomers Independent!v of any statements made In thiS or In any other Issue Further Informat!onon any security mentioned herein IS available on reQuest

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Tabell’s Market Letter – January 31, 1986

Tabell’s Market Letter – January 31, 1986

Tabell's Market Letter - January 31, 1986
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'U'&umrEn..n..' s IiUil IR2IXUEU' n..rEU'''U'rElR2 600 ALEXANDER ROAD, PRINCETON, NEW JERSEY 08540 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 January 31, 1986 — -So naturalists observe, a flea '. HathsmallerflE!l!SJhat0!l.,.himpr.l'y; – And these have smaller still to bite 'em .– —- And so proceed ad infinitum. -Jonathan Swift Like anything else, the stock market is subject to an almost infinite series of subdivisions. This was first recognized by Charles H. Dow, when, in what was almost a throwaway comment in one of his editorials, he adumbrated the basic principal of what his successors refined into the Dow theory. One of those successors conceived the analogy between the market and the tides of the seashore, noting that those tides, or long regular movements, could be subdivided into a whole series of waves and ripples. Performing this exercise on the market of the last few years may help provide some idea of where we are situated at the moment. As far as the great tidal movement of tl\estock market is concerned, we have two easily identifiable benchmarks. The first is August 12, 1982 — Dow Jones Industrials, 776.92. The second is January 7, 1986, just over three weeks ago, with the Dow at 1565.71. It is the very extent of this move, more than a double, and its length, almost three and a half years, that constitutes a source of concern to many analysts, including, as readers of this letter are aware, ourselves. Major market cycles in the past have seldom achieved significantly greater magnitudes in terms of either extent or persistence. While recognizing this fact, however, it is still worthwhile to engage in the process of further subdivision. The doubling of the Dow mentioned above breaks down into two obvious components. The first such was the 15-month runup between August, 1982 and November, 1983, which took the indicator up 66 percent to 1287.20. That high was not to be bettered for fifteen months, finally being exceeded in February, 1985. From November, 1983 to the following July, –t-here-oecurred-an-almost16–pevcentdecline ,to .1086 .57.-F.rol!lthatpoint.thesecondphasLoJ'- 1 the major expansion, running for a year and a half through at least this month can be said to have beg-un. Subdividing that year and a half is a bit more complex, but it can be done. There were essentially, three major rallies within the advance. The first was finished in less than a month, producing a 14 percent move to 1239.73 on August 21, 1984. A series of subsequent highs occurred but, in March. 1985. the average was still at essentially the same level. Spring of last year saw the second component lift-off, which reached 1359.54 by last July. A modest decline into September followed and as, since we are all familiar with recent history, we know, the third advance carried the index ahead another 20 percent to the peak of early this month. Finally, it is necessary to deal with the short history which has passed since January 7th. It constituted only 17 trading dayS, beginning with a three-day, 3.3 percent decline to 1513.53. There followed a four-day rally and another four days of fall, effectively testing the old lows at 1502.29. A five-day advance produced a test of the high on Wednesday of this week, with a slightly lower closing high and the January 8th intra-day peak of 1578.10 being exactly equalJed. The point which needs to be emphasized, it seems to us, is that, even if we assume the last 17 days to be part of a new process, its magnitude is, as yet, not at all clear. To take the most bullish case, it may, simply, be the first consolidation of the most recent advancing phase, which began on September 20th. If this is true, it should be over with shortly and new, and significant, new highs should ensue before too long. It could, however, be that we are seeing the start of a corrective process for either of the two larger-magnitude swings mentioned above, the one from July, 1984 or the major bull market from August, 1982. If either of these last two alternatives is to be considered, more evidence will have to develop. As we have noted, market breadth posted a new high along with the averages earlier this month and has not shown significant deterioration since. -The Dow-Jones Transportation Avorage, as of Wednesday, had moved almost 7 percent above its early January high, suggesting a major uptrend still intact. The Utility average, which had been lagging, showed improved action in this week's trading. Furthermore, there has been some evidence of emerging new leadership, notably in basic-industry and technology stocks. Both these areas possess the potential to provide impetus for a further advance. Our most recent subdivision, in other words, is first of all, only three weeks old, and has secondly featured market action which can hardly be said to be that bad. It has, so far therefore, given no indication that a serious corrective process is under way. AWTjrh ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow-Jones Industrial (1200 p.m.) S & P Composite (1200 p.m.) Cumulative Index (1/30/86) 1570.87 209.66 2224.51 NO statement or epresslon of Opinion or any other matter herem contained IS. or IS to be deemed 10 be, directly or IJldlfectly, an 01lel ollhe solicltatlOlI ot an ofler 10 buyor sell any secunty lelened toor mentioned The mattellS presented merely for the convenience 01 the subSCriber While we believe the sources of our tnformatlOn to be rei table, we In no way represent or guarantee the accuracy Iht!reof nor of the slatements made hemin Any acllon to be laken by the subSCliber should be based on his own Investigation aild tnformatlon Delaheld, Harvey, Tabel! Inc, as a corporation and tts o!ttcers 01 employees, may now have, or may later take poSlllons or trades In respect to any seCUrities mentioned In thiS or any future Issue, and such pOStlton may be dlHerent from any views nower hereafter erpressed In thiS or any other Issue Delafield, Harvey, Tabell Inc which IS registered With the SEC as an Investment adVisor, may give adVice tOils investment adVISOry and other customers Independently 01 any slatements made In thiS or In any other Issue Further Informallon on any security mentioned herein IS aallabte on request

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