Viewing Month: November 1990

Tabell’s Market Letter – November 02, 1990

Tabell’s Market Letter – November 02, 1990

Tabell's Market Letter - November 02, 1990
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– –….. TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 November 2, 1990 The chart below has appeared in this space many times in the past. Despite the fact that it is somewhat busy in appearance, we feel that it is a useful tool for analyzing a given market cycle in terms of Ilast history' CYCLE PERIOD (Iow-hlgh odyonce) I peak cycle date ,- J U UWUi1.'1 , H-! 1 -, J S d.cll …. 01 , 10… b.a. fllQtli;.t, ftall th. CUrt … t cych 1'Jh Toiol cycle odvonce (tU Oct 11 1990 295 6 …, 910 4t!. t1BOct '1' …. ,92 0 91 bon '3 The usefulness of the chart derives from its employment of a uniform horizontal and vertical scale for measuring a number of past cycles. The most recent cycle, measured by the Standard & Poor's 500, is shown by the zig-zag line at the lower left. Its upward phase occupied 659 trading days from December 1987 to July 1990, during which period it advanced 64. The low, so far, for the downward phase occurred on October 11, 1990, after a 20 , 62-trading-day decline. The horizontal bars at the top of the chart show the length of the ten previous cycles, measured from low to low, with a vertical tic-mark denoting the occurrence in time of each cycle's high. The percentage advance and the date of the high are also shown. It can be seen that the 64 advance of the current market is on the low side, with only 1966-1968 and 1978-1980 having moved ahead less. The upward phase's two-and-a-half year length is about in line with five of the last six cycles, although considerably shorter than the four previous ones. The tic-marks at the lower right of the chart are scaled to show the percentage decline of previous markets, all measured from this cycle's 368.95 high. We have already declined further than did 1953, 1984, and 1978, and we are down about the same amount as in 1957 and 1966. However, the fall so far has been considerably milder than 1962, 1970, 1974, 1982 or 1987. Bear markets are often short affairs and, as the dates at the bottom of the chart show, the three-month length of the pesent decline is not very unlik,, that of r. nun,ber of past bear markets. It has, however, occupied considerably less time than did 1970, 1974, 1978, or 1982. What is interesting is the gap in the length of downswings between the nine months of 1983-1984, and the year-and-a-half of 1976-1978. This would seem to suggest that there are only two plausible lengths for the current bear market. The first would suggest that it hss either bottomed already or will do so before the end of the first quarter of 1991. Failing this, it could last until early 1992. It is worth noting that the four long bear markets were a part of the flat secular trend which characterized the market from 1966 to 1982. The shorter downswings were part of the prior 1942-1966 phase, during which the market rose some 9 1/2 annually on a secular basis. Thus the markets action over the current cycle may tell us a great deal about the supercycle background. That background consists of a trading channel riSing about 14 a year. A bottom in the next few months would leave It essentially intact, whereas a longer downswing would penetrate it Dow Jones Industrials (1200) 2478.96 ANTHONY W. TABELL S P 500 (1200) 308.51 DELAFIELD, HARVEY, TABELL INC. Cumulative Index 11/01/90 4153.16 AWTth No statement or expresston of opInion or any other matter herein contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the sohcltabon of an offer to buy or sell any security referred to or mentioned The matter IS presented merely for the convenience of the subSCflber While 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 herern Any action to be taken by the subscnber should be based on his OWlllnvestlgatlon and Information Delafteld. Harvey, Tabell Inc, as a corporation and LtS officers or employees, may now have, or may later take, positions or trades In respect to any secuntres mentioned tn thiS or any future ISsue, and such posLtlOn may be dlfferenl from any views now or hereafter expressed tn thiS or any other Issue Delafield, Harvey, Tabellinc ,which IS registered WIth the SEC as an Investment adVIsor, may give adVice to lis Investment adVISOry and other customers Independently 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 – November 09, 1990

Tabell’s Market Letter – November 09, 1990

Tabell's Market Letter - November 09, 1990
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, .. F4' TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES OEALERS, INC (609) 987-2300 .' November 9,1990 We have often, in this space, noted the difference 'between iorecasting 'and investment policy. That distinction is especially apt at the present time, and it would seem, therefore, appropriate to repeat the sermon once again. A forecast, at the present time, is an extremely risky undertaking. We can, for the moment, accept the hypothesis that we are, or were, at least as of October 11, in a bear market. On that day the Dow closed at 2365.10. Its current level Is not all that different. The questions facing the forecaster center around how far the decline might go and for how long might the market continue to fall. We have previously advanced tentative answers to these questions. We have noted that point-and-figure charts indicate two possible logical downside objectives for the Dow, the first at 2200 and the second at 1950. We noted last week that bear markets historically have been either of the long or short variety. The latter type could, conceivably, have been over in October, and should, In any case, end before early next year. The former, lengthy variety could be expected to continue throughout most of 1991. At this point the reader Is entitled to take us, rather seriously, to task. He can, quite rightly, point out that there exists a great deal of dollar difference between Dow 2200 and Dow 1950. Likewise, there are a great many potentially agonizing months between the spring of 1991 and the winter of 1991-1992. Indeed, said reader may weli ask, Why don't you simply admit that you don't know how low the market Is going OK, we admit it. However, we don't have to care. Here lies the crucial distinction between forecasting -and policy' 'We-are,- as' noted above,- by-definition' In' a '-bear-market.' The- appropriate' policy In such a market is a defensive one. We do not need to know how low or for how long the market will decline. We need only to be confident that the market will, in time, suggest the effective end of the decline by Its own action. For the market technician, this constitutes an article of faith. The bottom of a bear market is, again by definition, a major low. Major lows ha ve, in the past, almost invariably been accompanied by one or both of two phenomena, a selling climax and a takeoff rally. Prior to the late 1970's, both generally occurred. In more recent, Institutionally dominated markets, often only the latter has manifested itself. Climaxes and takeoffs are, quite simply, days on which there occurs highly unusual upside or downside action, unusual, In terms of the extent of an advance or decline, its breadth, and its accompanying volume. Such days have, to date, been conspicuous by their absence. The averages have posted three lower lows so far, August 23, September 28, and October 1l. The first of these showed some evidence of what one should be looking for—1640 declining Issues as the Dow touched its low and 1453 advances on the August 27, 80-point rally. Volume on that day was, however, a miniscule 160 million shares. The subsequent mOVe to lower levels was, therefore, not surprising. More recently, the market has railled since its mid-October low—by almost 6 to Its high at just above 2500 this Monday. Are there any signs of a takeoff on this advance There were, at best. a couple of good days, more than 1100 advances on both October 18 and 19 in the course of a 133-point rise on the Dow. Volume Increased somewhat to just over 200 million shares. However, neither the ratio of advances to declines or that of upside volume to downside volume came anywhere near the levels one should see on a strong upside day. Quite simply, in other words, the sort of action that should accompany the end of a bear market has not yet occurred. Were it to occur over the short term, we would be perfectly willing to turn optimistic. We are also willing to recognize the possibly of sensitive indicators pointing to a relatively weak, short-term rally. However. considerably more technical evidence than has so far been provided would be necessary to induce us to suggest abandoning a defensive stance. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (11/08/90 2463.12 309.66 4207.29 AWTth No statement or expressIon of oplmon Of any other matter herein contaIned IS, or IS to be deemed 10 be, directly or IndIrectly, an offer or the solicllatlon ol an offer to buy or sell any security referred to or mentioned The matter IS presented merely lor the convenience of the subSCriber While 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 herein Any acllon to be taken by the subSCriber should be based on hiS own Invesllgatlon and Informabon Delafield, Harvey, Tabett Inc, as a corporation and ItS officers or employees, may now have, or may later take, pOSlbons 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 Delafield, Harvey, Tabelt Inc, which IS registered With the SEC as an Investment adVisor, may give adVice 10 Its Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Fur1her information on any secUrity menlloned herein IS available on request

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Tabell’s Market Letter – November 16, 1990

Tabell’s Market Letter – November 16, 1990

Tabell's Market Letter - November 16, 1990
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 November 16, 1990 The essential stock market conundrum remains the same one that has existed for more than a month now —whether or not we have seen the lows of the bear market which began on July 17'at Dow 3090-and,-eofer-at-least,-hss-scored-its-Iowat-2365.1Oon.October II. We have two basic figures which enable us to compare the hiatus of the current downswing to previous interruptions of major declines. First, the Dow, through Wednesday's high, h.ad advanced 8.2 from its October low over 24 trading days and, correspondingly, there have been, through yesterday, 25 days since the averages last posted a new low. No. of Longest No.of Bear Market \ No.of Largest No.of Rally. Interval 20-0ay Start -D-e-c-l-in-e- Days \Rally Days 8\ Set.Lows —— ——– ——— Intervals ——— Sep 3 1929 47.9 56 18.9 2 2 11 0 Apr 17 1930 86.0 665 35.1 28 15 103 8 liar 10 1937 49.1 317 14.8 51 5 98 1 Nov 12 1938 41. 3 1040 23.5 127 5 450 6 lIay 29 1946 23.2 93 4.2 4 2 24 2 Jun 15 1948 16.3 281 8.1 22 1 77 4 Jan 5 1953 13.0 176 5.3 42 0 53 3 Apr 6 1956 19.5 389 14.5 104 2 163 4 Dec 13 1961 27.1 134 15.0 41 0 51 1 Feb 9 1966 25.2 167 6.2 13 0 46 3 Dec 3 1968 35.9 367 7.7 54 0 87 5 Jan 11 1973 45.0 481 15.9 46 4 146 5 Sep 21 1976 26.9 362 8.7 35 1 96 4 Apr 27 1981 24.1 328 9.3 43 2 101 4 Nov 29 1983 15.6 164 5.0 18 0 30 4 Au9 25 1987 36.1 38 5.9 9 0 13 0 Ju1 17 1990 21. 2 61 8.2 24 1 25 2 . – .— – The above table provides some statistics for 17 bear markets, beginning back in 1929 and including the current one to date. It shows, for each downswing, the start day, the extent of the decline, and the number of trading days it lasted. There have, as the table shows, been declines considerably less extensive than the current one, but, it is important to note, not many have been shorter. This is part of the reason we have felt that the downswing has longer to run. The Dow's ability to pose a 8.2 rise is, we must admit however, impressive. We have often remarked that the oft-cited bear-market rally is, largely, a mythical beast, and the table shows that a large number of the declines, since World War II at least, have never posted bear-market rallies as great or as long as this one. Furthermore, in many cases, raliies of this extent have often occured not during the course of the bear market, but in the process of base formation which followed. These figures tend to buttress the contention that the Dow could well have hit its low back in October. The lack of a new low for 25 days is less decisively bullish. The table demonstrates that many bear markets have had much longer interruptions, including five of longer than 100 trading days in length. Most past bear markets have had multiple interruptions of 20 days or longer, thus suggesting that the present decline has a bit more downside probing to do. In addition, as we noted lust week, the rally has fai!.ad to demonstrate the breadth and volume characteristics normally shown at major reversals. This action continued in this week's trading. Wednesday's rise to the rally high of 2559 produced only modestly above-average volume and fewer than 1000 advancing stocks. The rally of October-November is, then, a fairly impressive phenomenon, but, in the absence of confirming statistics, we continue to feel that caution should be the order of the day. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (1200) S P 500 (1200) Cumulative Index (11/15/90) 2535.39 317.17 4356.75 AWTth No statement or expression of opinion or any o1her mailer herem contained IS, or IS to be deemed to be, directly or Indirectly, an offer or the sohCltatlOnof an oHerto buy or sel! any secUrity referred to or mentioned The mailer IS presented merely for the convenience of the subSCriber While we beheve Ihe sources of our Information 10 be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herem Any acllon to be taken by the subSCriber should be based on hiS own Invesllgatlon and Information Delafield, Harvey, Tabel! Inc, as a corporalion and Its oHlcers or employees, may now have, or may later take, positions or trades m respect to any securities menMned In thiS or any future Issue, and such pOSI\!on may be dlRerent from any Views now or hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabellinc , which IS registered With the SEC as an Investment adVisor, may give adVice to ItS Investment adViSOry and other customers Independently of any statements made ' thiS or m any other Issue Further InformaMn on any secUrity mentioned herein IS available on requesl

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Tabell’s Market Letter – November 23, 1990

Tabell’s Market Letter – November 23, 1990

Tabell's Market Letter - November 23, 1990
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TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (609) 987-2300 November 23, 1990 There is an old joke about a husband who informed a friend that he made the big decisions in his fampy, wile his wife made the little ones. Pressed for clarificaion, he explained, I decide whether we sh6ulinnvadelraq and-whaCtodo -abOut the- budgeCdeflcit-. She decides where .we will live, what kind of car we will own, and where to send the kids to school. The fable is applicable to today's stock market. When one looks at the big picture—at the overriding issues of the day headlined in each morning's newspaper—It'is quite easy, for reasons we will expand on below, to become both angry and frustrated. It is, likewise, easy to translate that anger and frustration into a bearish attitude toward the stock market. When one takes a more parochial view and, as does the market technician, looks only at the market itself, it becomes difficult to visualize Armageddon as being immediately at hand. Our own view of the market, a view based solely on technical factors, is well-known to our readers. We think we are in a bear market. (Indeed, we can say that, by definition, we definitely were in one on October 11, when the Dow closed 20 below its July high.) Such a phenomenon, however, should hardly be regarded as a major disaster. Indeed, bear markets transpire, with a fair degree of regularity, approximately every four years. (This timetable has been slightly out of kilter lately, but that is another story.) Our ongoing lack of optimism is due, as readers know, to the total failure of most technical indicators in the course of the 8 1/2 rally off the October 11 lows, to provide us with anything resembling the kinds of signals that we would expect to accompany a major turning point. Accordingly, we think it prudent to retain the expectation that the October low will be penetrated and modestly lower levels will be attained. The point is, though, that there exists nothing in the present scenario suggesting anything worse than a run-of-the-mill cycle bear market—one which, if, as we believe, it has not already seen its lows, is not today too far from them. This technical view contrasts with the opinion of a great many pundits, who, inspecting the biggerp1ure,Jind.inJtportents of the end — -ofWesternCivilizafiori .——- – – –c — — – — There can be little doubt that there exists, in the mind of the American public, some degree of malaise. One of the more interesting announcements of the week was the release of the University of Michigan Consumer Sentiment Index for October, which managed to post the biggest three-month decline in the 44-year history of the indicator. Seventy-one percent of all respondents polled in the survey thought bad economic times were ahead. It is worth noting, however, that lows in consumer confidence generally tend to be more or less coincident with lows in the stock market. (It should also be noted, to be fair, that there is no evidence that the lows for the Sentiment Index have yet been seen.) There is ample reason for the consumer to feel the way he does. We have moved, in 1990, from euphoria over the end of the cold war and debate on how to spend the peace dividend, to a possible hot war with an enemy we did not know we had. We have been regaled with stories about the ever1!xpanding magnitude of the Savings and Loan crisis, Which, for all the concomitant chicanery, was, at heart, a real estate problem. Indeed, the most fundamental factor behind the consume!'s pessimism could well be the realization that his home, the typical consume!'s most important asset, is now likely worth considerably less than it was a year or so ago. While all this is going on, we are assured, by conservatives and liberals alike, of the wickedness of the ongoing budget deficit, and, as a result, are privileged to witness the sort of charade that accompanied passage of the recent tax law. With great good sense, the consumer continues to demonstrate that the portion of the deficit about which he is most concerned is his rising tax bill, an expression of opinion we in the state of New Jersey were two weeks ago, particularly privileged to witness. There is, under these conditions, little reason to be surprised that pessimism still exists among market forecasters and, as evidenced by institutional cash levels, money managers. The point is, however, that technical factors, while not arguing for immediately higher prices, do not seem to suggest the sorts of economic disaster apparently expected by the more extreme prophets of doom and gloom. Indeed, the current deterioration of sentiment looks very much, to the market historian, as the sort of thing that tends to take place around bear market lows. ANTHONY W. TABELL DELAFIELD, HARVEY, TAB ELL INC. Dow Jones Industrials (12 00) S & P 500 (1200) Cumulative Index (11/21/90) 2549.50 315.70 4338.76 AWTth No statement Of expression of oplnton or any other matter herein contained IS, or IS to be deemed to be, dlreclly or mdlrectly, an offer or the solicitation of an offer to buy or sell any securrty referred to or mentioned The matter IS presented merely for the convenience of the subscnber While we beheve the sources of our mformatlon to be rehable, we In no way represent or guarantee the accuracy thereof nor of the statements made herein Any action to be taken by the subscriber should be based on hiS own Investigation and Information Delafield, Harvey, Tabell Inc, as a corporatIOn and ItS ollicers 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 nowor hereafter expressed In thiS or any other Issue Delafield, Harvey, Tabelllnc, which IS registered with the SEC as an Investment adVISor, may gIVe adVice to Its Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Information on any secuflty mentIOned herein IS available on request -e

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Tabell’s Market Letter – November 30, 1990

Tabell’s Market Letter – November 30, 1990

Tabell's Market Letter - November 30, 1990
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,, TABELL'S MARKET LETTER 600 ALEXANDER ROAD, CN 5209, PRINCETON, NEW JERSEY 08543-5209 MEM8ER NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC (6091 987-2300 November 30, 1990 ;nAs forecar,!, we arE! wrollg often enough to be allowed, on occasion, to beg our readers' indulgence for rilco-tinting instance-where we -were right -(iiortofY;- Back in July -1982, this space contained a discussion of the residential real estate market, and, in discussing that market, we used the following language Let us consider a process which has emerged from time to time in almost all markets in which assets are traded. (1) The price of the asset in question rises sharply for a protracted period. (2) It gradually becomes the general expectation that this price rise will continue into the indefinite future. (3) Advancing prices continue to the point where there is absolutely no economic jUstification for purchase of the asset on an investment basis other than the expectation that it can be later sold at a higher price (the greater-fool theory). (4) Increasing willingness to finance the purchase of the asset with borrowed money becomes manifest. (5) The interest rate for said borrowed money eventually reaches astronomical figures. tiThe above series of descriptions, applied on a widespread, pervasive, and nationwide basis, fit two markets that come readily to mind — common stocks in 1929 and residential real estate in the late 1970's. Now the reason we qualified the correctness of the forecast above is that it was, to say the least, a tad early. The real estate market has been slow for some years now, but, even at current prices, the Census Bureau Price Index for new homes remains some 28 above its level at the time the forecast was made, which means. of course, that housing prices in many areas have more than doubled. Nonetheless, weakness is now sufficiently widespread to have reached the front page of the Wall Street Journal which, this Wednesday, discussed falling prices for houses in California—a market, where, we noted back in 1982, the housing market rivalled Disneyland in exhibiting fantasy. The most amusing sentence in the Journal article noted that buyers in a recent development now allege that the builder has a 'moral obligation' to make sure they don't lose money on their homes. Those of us familiar with markets do not find this' attitude surprising, having, many times, – — confrontetlinvestors -whoseemea-to IeelTJiaCtneyposseSSed- a–GOagiverrMglit-to -becomerich-by mean-s – of the stock market. The entire history of the market for housing was, up until a couple of years ago, one of gradually rising expectations which inevitably, at their peak, became unrealistic. The important thing to note here is that we are looking at a market phenomenon, an example of collective, not individual, action. This, it seems to us, is especially important to recall when considering the Savings & Loan crisis which, we noted last week, is, essentially, a real estate phenomenon. It is certainly true that the S & L debacle produced its quota of rogues and scoundrels, but the phenomenon of financiers bribing legislators is at least as old as the South Sea Bubble. The stories in the press about individual swindlers may serve to sell newspapers, but the basic S & L problem was a universal, collective expectation that real estate prices would continue to rise and inflated loan values were therefore appropriate. The key question, of course, is Where do we go from here Those of us involved with the stock market are familiar with what happened when a credit-fueled expansion in equities was taken apart in 1930-1932. It is worth noting here that the real estate market is quite different from the stock market, in, at least, the respect that one cannot live in a stock certificate. The ultimate unwinding of the recent price inflation will probably manifest itself, not in the collapse of prices under forced liquidation, but in a contraction of activity such as we have already begun to experience. We thus see housing starts now down to the lowest level since (interestingly) 1982. We have not changed the opinion we expressed in 1982 that the eventual resolution to an over-priced real estate market will not take the form of price collapse, but of contraction of future price increases to a rate probably not in excess of inflation. Inevitably there will be those who, as the weaker real estate market continues, will want to project this weakness onto the economy as a whole and, of course, onto the stock market. It is this sort of pessimism that we discussed in last week's letter, noting the fact that the technical stock market outlook was, if not exciting, not all that disastrous. We concluded our piece eight years ago with the statement, It is furthermore a truism that none of the descriptions applied to real estate .are currently applicable to equities — they have not been rising; they are historically cheap; there exists no universal expectation of significantly higher prices; and their holding is financed only to a limited extent by borrowed money. The long-term investment implications, it seems to us, are obvious. Despite the equity price rise of the 1980's that description remains today, we think, not too far off the mark. Dow Jones Industrials (1200) S & P 500 (12 00) Cumulative Index (11/29/90) AWTth 2518.32 315.94 4155.29 ANTHONY W. TAB ELL DELAFIELD, HARVEY, TABELL IN C. No Slalement or expression of opinion or any other matter 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 the convenience of the subsCriber While we believe 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 10 be taken by the subSCriber should be based on hiS own Investlgallon and mformaliOn Delafield, Harvey, labelllnc, as a corporation and Its officers or employees. may now have, or may later take, posllIOns or trades In respect to any secufilies 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 Delaffeld, Harvey, Tabelllnc, which IS registered wrth the SEC as an Investment advisor, may give adVice to ItS Investment adVISOry and other customers Independently of any statements made In thiS or In any other Issue Further Informabon on any setUrity mentioned herein IS available on request

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