Viewing Month: March 1988

Tabell’s Market Letter – March 04, 1988

Tabell’s Market Letter – March 04, 1988

Tabell's Market Letter - March 04, 1988
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– !.. . TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543.5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 – — – March 4, 19B8 – -Last week's -market'action 'was;-in -ay,-typlcDfb98.Bbce.h1iVir' ()'fa,!,!,.–p.r'ofilo1m(,-e(I——–r improvement took place, but that improvement was hardly of the sort calculated to induce euphoria. The feature, of course, Was Monday's trading, in the course of which the Dow posted a 48point advance to a new, post-October-19B7 high. However, little or no follow-through was observable over the rest of the week. Despite this, Monday's strength was impressive enough. In attaining new peaks, the Dow followed the S & P Composite and Industrials, both of which had earlier moved into new high territory. Transportation averages have been outperforming the market for an even longer period It is only the interest-sensitive utility and financial indices which have failed, so far, to push to new peaks. Those averages which have moved recently to new highs were bettering levels which, for the most part, were achieved in early January. The two months that have passed since that time have not, in our view, constituted a broadening of the base pattern, but, rather, a test of support confirming the early January breakout. Thus, the upside targets mentioned back in January still appear to be valid ones. These targets—2600 for the Dow, 320 for the S & P Composite, and around 1000 for the Dow Transports—are uniformly just under 1987 highs. Individual stock patterns, in our view, confirm targets of this magnitude, with a large number of stocks now finding themselves in intermediate or minor uptrends, but with the overhead supply from 1987 tops still to be breached. It is possible, moreover, that attainment of those upside targets could require both time and rotation of leadership. As noted above, confirmation of the January breakout required almost two full months of market action. If this sort of thing continues, the time required to mount a ,-,- 1- full-scalett…Qf the..h!ghs could,.bbe.!!'Q!!!yleii!!ilegt!!h1V'y. More and more, the market pattern, as it develops, seems to confirm the suggestion of our year-end forecast, that 1988 might be an inside year, one in which the year's high was below the August 25, 1987 peak of 2722.42 and the low remained above 1738.74, the close of October's Meltdown Monday If this were to prove to be the osse, 1988 would be the seventh inside year in the last sixty, the previous ones having occurred in 1939, 1947, 1967, 1975, 1979, and 1984. Those familiar with market history will note that almost all of these were years following major bear markets, a description which will certainly be applicable to 1988. There remain problems in fitting projected 1988 action into a broader context. The first and most obvious problem which arises is that. if no new low is going to be made, the completion of a cycle bear market required only the 38 trading days between August 25 and October 19. There is, as we have noted, some precedent for this, although it is someWhat sparse. If we can swallow this pill, we osn then assume that a full-scale market cycle was completed last October. Its beginning would have been July, 1984, and the resulting 39-month length is comfortably within historical bounds. We have reiterated our belief that a new, secular stock-market trend began in the 1980's, but the sort of flat-ta-firm market projected for the remainder of this year does not help us in deciding just what the parameters of that secular trend might be. We may be well into the 1990's before we can define the super-cycle pattern with any assurance. We have, since October, been leaning heavily on historical analogy in this space, and we suspect it may be advisable to depend less and less on this sort of analysis as time goes on. It was all too easy—both for ourselves and or others—to compare the October-1987 break to 1929 and we, along with our colleagues . uniformly did so. History, however, never repeats itself exactly. and the 1929 analogy may-prove to be leBs and less useful. Two years ago, in discussing 1929, we suggested that any repetition thereof would assume a different shape. We are all aware of what the 1930 – 1932 liquidation of margin debt looked like. Any comparable liquidation in the 1980's or the 1990's, is likely to take place in debt incurred to finance takeovers and leveraged buyouts. It is less than encouraging to note that this sort of activity seems already to have returned unabated to its pre-October levels. The ultimate liquidation of the resultant debt, if it is to occur, may well produce a market scenario qUite at variance with historical analogies. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (3/3/88) 2042.27 267.09 3593.25 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL IN C. No statement or expression of opinion or any other matter herem contamed IS, or IS 10 be deemedlo be, directly or mdlrectly, an offeror the solicrtallGn 01 an offerlo buy or sell any security referred to or mentioned The matter IS presented merely for the convenience of Ihe subscnber While we believe Ihe sources 01 our Informallon to be reliable, we In no way represent or guaranlee the accuracy thereof nor of the statements made herein Any aClIOn to be taken by the subscnber should be based on hiS own Investigation and m1orrnatlon Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, Or may later take, POSitionS or trades In respect to any securities mentioned In thiS or any future Issue, and such poSitIOn may be different from any views now or hereafter expressed In thiS or any other Issue De!aheld, Harvey, Tabelllnc, whiCh IS registered wlththa 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 Further Information on any security mentIOned herein !S available on request

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Tabell’s Market Letter – March 11, 1988

Tabell’s Market Letter – March 11, 1988

Tabell's Market Letter - March 11, 1988
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I , TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE. INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC ,, 1609) 987-2300 – March 11, 1988 —–'1988as-SUpe .. Tuesay has certainlymade us a ware-is–a—presidentialelection –year—We Ilht1A,,' p—-II- tracked tne behaVlor of tne stock market n such years back to the beginning of the century. and the results are shown below. The table shows each election year since 1900, the president elected and his party, followed by the average price of the S & P 500 for each month during the year expressed 8S a percenta.ge of the previous December's close (i.e., 110 means the market was up 10, 90 means it was down 10). Year 1900 President McKinley Jan Feb Mar Apr May Jun Jul Aug Oct Nov Dec R 101 103 104 105 100 98 98 99 97 100 108 114 1904 Roosevelt R 102 99 99 101 99 99 103 107 112 118 125 126 1908 Taft R 105 100 105 111 117 117 123 126 125 126 134 138 1912 Wilson D 100 99 102 106 105 105 106 109 109 109 108 103 1916 Wilson D 99 98 97 96 98 99 98 99 102 105 107 103 1920 1924 Harding Coolidge R 99 91 97 96 R 103 104 102 100 91 89 89 86 89 89 85 77 99 101 101 113 112 110 ll5 119 1928 Hoover R 99 98 103 109 113 107 108 III ll9 122 130 130 1932 Roosevelt D 102 101 102 77 68 59 62 93 102 88 87 84 1936 1940 Roosevelt Roosevelt D 102 108 III 111 105 109 ll6 118 120 126 129 127 D 98 98 97 98 85 77 80 82 85 86 88 84 1944 1948 1952 1956 1960 Roosevelt Truman Eisenhower Eisenhower Kennedy D 102 101 104 102 104 109 111 llO 108 111 110 112 D 97 92 93 101 106 110 107 104 103 106 100 99 R 102 100 100 100 100 103 106 106 104 102 105 110 R. 97 98 104 106 102 102 107 107 103 102 101 102 D 97 93 92 93 92 96 93 94 92 90 93 95 1964 Johnson D 102 103 105 107 108 107 III 109 111 113 114 112 1'. – – – – – –1','!Q!6.8-NN;i.on IU..,9'!nl!nJ4929!1-11'0nl104lOA41I(n).9i -'n..-4'on.Q8 H)'n, 1972 Nixon R 101 103 105 107 105 106 105 109 107 107 113 115 1976 Carter D 107 112 112 113 ll2 113 116 115 117 113 112 116 1980 Reagan R 103 107 97 95 100 106 III 114 117 121 126 124 1984 Reagan R 101 95 95 96 95 93 92 100 101 100 101 100 Incumbent party did not control Congress. Incumbent party not re-elected Presidential election years show a mildly bullish bias. Only three of them (1920, 1932, and 1940) are distinct bear markets. Thirteen of the 22 years are bull markets, and six showed a fiat trend. Another noticeable tendency appears to be flatness or moderate weakness in the first half. Half of the 22 years showed little market change through June. It is worthy of note that a downward bias tends to occur on two sorts of occasions. The first is when the incumbent party does not control Congress, which we know currently to be the case. The second is when the party of the incumbent president loses the election. Only in 1976, when that occurred. was the market up more than -6 in the first half. Thus, the direction of the market over the next few months may be a good indicator of Republican (for whiCh, read Vice-President Bush's) chances in November. An interesting figure to watch will be the average price in April. There have been nine election years in this century where that price was lower or the same as the previous year end. In six of those nine years,. the incumbent president's party was replaced in the White House. Also interesting is the distinct tendency toward a strong second half. In 18 of the 22 years, the average price for December was higher than the average price for June. This appears to be true regardless of the election results and even in bear-market years where, in the past, the market has rallied in the second half from the June lows. In only two years, 1920 and 1948, were there significant declines between June and December. The election year pattern. therefore, calls for little change in the market during the first half. Strength has been exhibited to date, yesterday's S & P being 107 of the 1987 year-end close of 247.08. This suggests that 1988 may be an exception and also augurs well for Republican chances. The second half of 1988, history strongly suggests, should see a rising market. AWTebh Dow Jones Industrials 02 00) S & P 500 (1200) Cumulative Index (3/10/88) 2022.71 263.70 3618.52 ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. No slatement or expression of opinion or any other matter herein conlalned IS, or IS 10 be deemet! 10 be, directly or Indlrectty, an offer orlhe solicltallon of an offerlo buy or sell any security referred 10 or menhOned The matter IS presented merely for the convemence of the SubSCriber White we beheve the sources of our information to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any actIOn to be taken by the subSCriber should be based on hiS own investigation and Information Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may later take, positions or trades In respect to any securities mentioned In thIS or any future Issue, and such posItiOn may be dlfferefll from any views now or hereafter expressed m thiS or any other Issue Delafield, Harvey, Tabelllnc, whIch IS registered With the SEC as an mvestmenl adVisor, may give adVice to Its mvestment adVISOry and other customers mdependently of any statements made In thiS or In any other Issue Further InformatIon on any seCUrity mentioned hereIn IS available On request

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Tabell’s Market Letter – March 18, 1988

Tabell’s Market Letter – March 18, 1988

Tabell's Market Letter - March 18, 1988
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r '11'lii.\BUEn..n..' s 1il1lJlii.\ Ii,m rEV LrEYYIER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 March 18, 1988 ——-….–1 n .. a-pa-t te n – wh-i-Gh-has- a l-mos t-…becomether.-u I.e -i-n–rece nt…. weeks, -t he ..-marke t—s taged-a …- -t–I late surge on Thursday afternoon, taking the Dow Jones Industrial Average, along with a majority of other indices, to a new post-crash high. The October 21 peak, at 2027.85, was first broken on January 27 following an early-December test of the October 19 low. The January bastion was breached 2 1/2 weeks ago, on March 8, when the Dow attained 2081.07. That high was, in turn, bettered at yesterday's 2086.04 close. As new pinnacles are achieved, various indicators are giving conflicting signals. The bulk of the evidence, however, remains, for the short-intermediate term, essentially positive. While there is some doubt about how far the various averages might go on the upside, it appears safe to s'ay that we are looking at a stock market which, for the time being, does not seem to want to decline a great deal. The superstars among market indicators are, at the moment, those measuring market breadth. This, constitutes, moreover, a reversal of form. The high attained by the Dow two days after the October crash was confirmed by breadth, but the early-January new high saw breadth significantly below where it had been in October. Between January and March, however, distinct broadening was evident. The February 29 peak at 2017.62 was confirmed by breadth and, for the week of February 29 – March 4, daily breadth achieved new highs in advance of later peaks in the Dow. Breadth confirmed the March 8 surge and also the high achieved yesterday. This behavior is characteristic of the early stages of an advance. The fact that market leadership is broadening is confirmed by Our weekly analysis of some 5,000 individual stock patterns. Since mid-January, literally hundreds of issues have moved into short-term uptrends, and around one-third of those have moved into intermediate-term uptrends also. More evidence of improving market breadth can be seen in the resurgence of the OTe -.marke.t…–1'heDow.,andS&….E-500have-both-adv.a.ncedbout'20.f.l-.om-the-i-r-October–l.ows,—t-I The NASDAQ Industrial Average, meanwhile, has moved some 37 from its October bottom. This, we think, is of more-than-trivial significance. The small-stock sector of the market has been out of phase with the maJor-company component for a number of years. The Over-The-Counter Industrials, it must be remembered, peaked in June of 1983, with the Dow at barely 1200. To the July, 1984 low, the OTC average fell 38, and that July low was tested in December, 1984. The August high last year was not all that much above the prior, June 1983 peak. Thus the fact that OTC stocks are now outperforming large-capitalization issues lends the market picture more creditability. It is even possible on recent evidence that OTC issues could move ahead while the market is flat to down, as was the case in 1976 – 1978. 'Furthermore, it is still possible to find, in the OTe sector, stocks with mUlti-cycle bases, which go back well before the October lows. There remain some uncertainties and negatives. A puzzling phenomenon is the recent concentration of daily change in the last hour of trading. The past 27 trading days have seen 15 up and 12 down markets. However, in 22 of those 27 markets, the last hour change was positive, and accounted for a major portion of the day's total change. A preliminary study of the historical significance of this behavior is unclear. We intend, however, to explore this issue further. Meanwhile, a few fairly important negatives remain. During the same period that the Industrials were moving from below 1900 to well over 2000, the Dow Jones utilities have trended downward from over 190 to around 175, with only a modest recovery taking place this week It is not clear to us why utilities should be expected to be leaders, but, with interest rates currently being viewed with supra-normal significance, they have, indeed, in recent years, shown a leading tendency. There are other phases of the financial picture which remain disturbing. Banking-system failures appear to be reemerging, and margin debt, normally a coincident stock-market indicator, has been declining for some months. However, such bearish phenomena, for the time being at least, remain infrequent. All of this makes a forecast rather difficult. However, it is sufficient to assume, until some sort of deterioration presents itself, that major-market indices are headed higher. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWTebh Dow Jones Industrials (1200) 2093.17 S & P 500 (1200) Cumulative Index (3/17/88) 271.98 3672.33 No statement or expression of opInion or any other ma11er herein contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the soliCitation of an offerlc buy or sell any security referred to or mentioned The matter IS presented merely for Ihe convemence of the subscnber While we believe the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action 10 be taken by the subscnber should be based on his own mvestlgallOn and information Delafield, Harvey, Tabelllnc, as a corporation and Its officers or employees, may now have, or may later take, POSItionS or trades In respect to any securrtJes men\loned In thiS Or any future ISSue, and such poSition may be different from any views now or hereafter eKpressed In thiS or any other Issue Delalleld, Harvey, Tabellinc , which 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 Further Information on any secUTIty menlloned herein IS available on request

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Tabell’s Market Letter – March 25, 1988

Tabell’s Market Letter – March 25, 1988

Tabell's Market Letter - March 25, 1988
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TABELL-S MARKET LETTER 600 ALEXANDER ROAD, eN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 March 25, 1988 – – – …..A new- book ChaoS-;-lly-J ames…..Glf!tl!!lC is;-in'1'ii''''''''''w-. abstruse mathematics intelligible to the lay reader. It examines the recently emerged concept that the true shape of most objects in nature is far too complex to be represented by the familIar Euclidian geometry of hnes, planes. and cubes. Consider, for example, the problem of measuring a shoreline. It is easy to describe a seacoast's length by drawing a straIght line between two pamts on a map of that coast and measuring the mlleage between them. A typical coastline, however, contams coves and promontories. If we were to decide to include such features in our measurement, we would have. instead of a straight line. a zig-zag pattern whose total length would be somewhat longer. It would be possible. moreover, to arrive at longer and longer lengths simply by contmuously reducing the mterval between measurements. The process could be carried all the way down to the level of atoms. The pattern produced by this procedure was named, by its discoverer. Benoit Mandelbrot. a fractal. and It is interesting that one of the measurements involved in exploring such complex shapes was a price-tune series, which defmition. of course. includes the stock-prlce charts with which we are aU familiar. We have always considered that the task of the market techniCIan should be to bring order out of chaos. and recognition of the chaotic nature of such phenomena as equity prices underscores the difficulty of this task. One technique long used by market analysts in trying to quantify the phenomenon of stock-price changes involves the use of a filter. (Since we are recommending books, it should be noted that probably the most extensive work in thIS area has been done by Arthur A. Merrill and IS summarized in his book. Filtered Waves, published by Analysls Press. Wilton. Connectlcut). We were persuaded to make filters the subject of this letter by the fact that the market's latest high. scored a week ago. is a haIr above 20 higher than the October low. As our readers know, we have suggested in recent years that a 20 futer seemed to be a good rule-of-thumb for establIshing the eXIstence of a bull or bear market. Given Industrials It is a simple matter to apply a 20 fIlter to the Dow Jones to the 1929' One century. It faus. however. to cope with markets of We are a price-time series, and cycles should roughly resemble each other in both dimensions. During the 1930 – 1932 bear market. there were no fewer than four counter-trend upswings of 20 or greater. ranging from 22 to 56 days lfl length. Comparable swmgs occurred while the market was moving ahead between 1932 and 1937. It turns out that we can adequately describe the period from 1929 to 1942 by applying a 38 filter. This yields cycles, measured from low to low. of 789 trading days in 1930 – 1932, 1707 days in 1932 – 1938, and 1227 days from 1938 – 1942. These are, of course. magnitudes that one normally associates with major cycle moves. However. we are not done yet. A filter as broad as 38. when carried beyond 1942. recognizes only one 8071-day upswing from 1942 to January. 1973. Our rule-of-thumb. 20 filter handles this period better but still falls somewhat short. The 12 years from 1949 to 1961 never produced a 20 correction, and this era. when filtered at that level. appears as a continuous 3239-day rise. It becomes apparent that a more sensitive tool IS needed to measure the price patterns of the 1950's. By hmdsight. a 13 filter works pretty well, accounting with reasonable accuracy for what we believe to be the five completed cycles occurrmg during that time period—1942 – 1946. 1946 – 1949, 1949 – 1953, 1953 – 1957, and 1957 – 1962. These cycles ranged between 764 and 1304 trading days in length. For swmgs after 1962. our 20 filter appears to be appropriate, or. at least. had appeared so until recently. As we have repeatedly noted 10 thIS space, the 1273 days between August. 1982 and August. 1987 are an awfully long span for a single bull market. By utIlizing a smaller futer, we can recognize a 493-day cycle in 1982 – 1984. thus making the upswmg from the 1984 lows appear more normal. However, the serIOUS conceptual dIfficulty with this interpretation is that It suggests that a major bear market was completed in just 38 trading days between August and October of last year. lOB days have elapsed SInce that low. and the pessimist can claIm, despite the 20 advance, that what we are seeing is a bear-market rally. However. we are lookmg at a market that has behaved excellently. If one wishes to take an optimistic view. and not too badly, it must be admitted by even the most confIrmed bear. If the Dow remains. as we suggested m our year-end forecast that it might. in a range bounded by the 1987 high and low. we will have only prolonged a period which is dIffIcult to identify cyclically. A short-term position, therefore. IS the only Olle we can responsibly take. but. it must be emphaslzed. such a VIew must be an optimIstIc one. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWT,ebh Dow Jones Industrials (1200) S & P 500 (12,00) Cumulative Index (3124188) 2009.45 263.39 3637.92 No statement or expression of opinion or any other matter herein contained IS, or IS to be deemed 10 be, directly or Indirectly an offer Of the soliCitation of an offer to buy or sell any security referred 10 or mentioned The matter IS presented merely for the convenience of the subSCriber While we believe the sources of our Informalion to be reliable, we m no way represent or guarantee the accuracy thereof nor 01 the statements made herem Any action 10 be taken by the subscnbershould be based On hiS own InvestlgaltOn and mlormaltOn Delafield, Harvey, Tabelllnc, as a corporallon and rts offIcers or employees may now have, Of may later take, poSlllons or trades In respect to any securities mentIoned In thIS or any future Issue, and such poSItIon may be dlfferem /rom any views now or hereafter expressed In thiS ar any alher Issue Delafreld, Harvey, Tabell Inc , whICh IS reglslered With the SEC as an mveSlmenl adVisor, may give adVice 10 Its Investment adVISOry and other customers Independently 01 any statements made m thiS or In ….ny O1.her Issue Further Informahon on any securr\y mentioned herem IS avadable on request

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Tabell’s Market Letter – March 31, 1988

Tabell’s Market Letter – March 31, 1988

Tabell's Market Letter - March 31, 1988
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r TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NEW YORK STOCK EXCHANGE, INC MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 March 31, 1988 -.,— estertB.),,'s Wall Street. J ournal tt1!rIl .!!llCJ ..gn,,sQrnethlfg ,it L-CLaJ.1ed….!ixed-O.-hx…..which ..it I cited 88 8 plan many financial advisors were recommending for risk-averse individuals. The strategy for such a plan was descrlbed 8S follows. A set percentage of the investment is put in each of several asset categories—foreign and domestic stocks. bonds, and real estateThen at the end of each year, the investor adjusts the holdings, selling (the investments) that have gone up in value and buying more of those that have declined, so that each fund has the same proportion of the total investment as at the start. It is an interesting approach and it has been cited by a number of other sources, one of WhICh calls It an equalizing plan. That source explains that in a declIning market. when stocks have declined 20 percent, the fund is again equalized; i.e., brought back to the 50/50 stock-bond ratio In a rismg market. at each rise of 25 percent the fund is equalized by selling stocks and buying bonds. ThIS explanation is found in a text entitled, Investment Timing By Formula Plans. by H. G. Carpenter. The subtitle is. Today's Approach to Investment Programs. TlToday presumably refers to the publication date of the book—1943. The comcidence is an example of a phenomenon which we have remarked frequently of late. After 34 years in the securlties industry, a great many of the events which characterized the start of our Wall Street career are occurring once again, sometimes in completely modernized form but. occasionally, with very little change. Formula plans. as they were then called. were all the rage in the early 1950's. and today's FIxed Mix was then known as a constant-ratio plan—as distmgulshed from a cousin, the constant dollar plan. By 1954, such plans had been widely adopted by prestigious institutions, and the approaches had become a great deal more sophisticated. Thus, constant-ratio plans gave way to variable-ratio plans—m one of which there were seven brackets. based on the Dow Jones IndustrIal Average. which determmed the percentage of stocks that an institutional mvestor should appropriately own. Such plans had been extensively back tested, and, indeed. had worked wonderfully during the 1930's and the 1940's. producing a modest profit over those two decades, which ended with the Dow at ——–Ilessthan- half….its–192-9…Jtigh …-The seven' bands -were fIrmly grounded n !o.the- h-iBt-ory'ofthe prior———-ll—I 20 years. They rose at an annual rate of 3 percent, totally consistent with the market pattern of those years. There IS. in plans of this sort. almost invariably a flaw. often produced by Ignoring a possible market trend which seems, on the face of it. patently ridlculous. The possibility of a market which would rise consIstently, bringmg the Dow to 1000 in the ensuing dozen years was considered at the time to fall into such a category. The plan took ItS hapless practitioners totally out of the market at DJIA 300 m March, 1954. An investor who stuck with the plan would have been out of the market ever since. Using the plan's formula today, an overvalued level would exist above 820 for the Dow. Another example of a financial formula. gussied up so as to appear m a thoroughly modern guise. is po'tfolio insurance, whose antecedents go back at least a century. This approach. as we all IClrned last October If we did not know it already. involves selling stocks after they have declined by a certain percentage. This is. of course. no different in principle from the long-familiar stop-loss order. The only essential difference is that derivative products are utilized rather than the sale of the stock Itself. such a technique reducmg transaction costs to a pOInt where the method can. on the surface. be demonstrated to appear plaUSIble. Just as 1954 formula-plan advocates were totally unprepared for a 12-year bull market, portfolio insurers were likeWIse unprepared for last fall's crash In which bids for futures fell through the floor. Still another famihar tendency has recently emerged. This bemg the persomfication of Wall Street as villain. responsIble for Just about every socially rep'ehensible trait. This IS a manifestatIon WhICh erupts at nregular mtervals. Back in the last century. William Jennings Bryan was able to run for President on the premise that fmanclers should not be allowed to crucify mankmd upon a cross of gold Tl Not too long afterward. Matthew Josephson characterized the Morgans and Vanderbilts as Robber Barons. In the 1930's. the blame for a sick economy was laid. popularly, at Wall Stre.t's door. Although the medium is new. it is not surpnsmg that there should appear today a popular movie dedIcated to provmg that the fmancw community is domInated by rather unattractive malefactors of great wealth. Thus one by-product of the October crash was the'emergence of Yupple Jokes. Now there is mdeed. in our view, a perfectly plausible JustifIcation of the securities industry as a socially-useful mstitutIon although we will not go into it here. It IS unfair, in our VIew, to chastise financial markets because they are. as they have been for a thousand years, vehIcles through WhICh some of the more unattractive aspects of human behavior—greed and fear—are able to assert themselves, The financilll commumty should be regarded as an institution, and. as such. it has. in our Vlew. achIeved success. In any case, It has been an mteresting place to earn one's daily bread for some three and one-half decades. ANTHONY W. TABELL DELAFIELD, HARVEY, TABELL INC. AWT ebh Dow Jones Industrials (12 00) S P 500 (12,00) Cumulative Index (3/29/88) 1967.84 257.49 3597.46 No statement or expresSIOn of opInion or any other matter herem contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the SOliCItation of an offer to buy or sell any securrly referred 10 or mentioned The matter IS presented merely for the convenience of the subsCriber While we believe the sources of our mformallon to be reliable, we In no way represent or guarantee Ihe accuracy thereof nor of Ihe statements made herein Any action to be taken by the subSCriber should be based on hiS own Investigation and informatIOn Delafield, Harvey, Tabelllnc, as a corporallon and Its officers or employees, may now have, or may later take, posrtlons or trades tn respect 10 any secuntles menllOned In thIS or any future Issue, and such poSition may be different from any v,ews now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelllnc, which IS registered Wlthlhe SEC asan Investment adVisor, may give advree to Its 1fwestment adVISOry and other customers mdependently of any statements made m thiS or In any other Issue Further Informallon on any securrly mentIOned herem IS available on request

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