View Text Version (OCR)
TABELL'S MARKET LETTER 35 WALL STREET, NEW YORK 5. N. Y Digby 4,4141 It is rather trite to say that a correctionary decline in the market is overdue. The market has advanced approximately thirtythree pOints Since the June lows without any reaction of consequence. There have been periods of consolidation, where the market rested and then resumed its advance. Last week a questionable overbought signal was registered on the short term gauge when the market reached 191.44. This was the first overbought signal registered on this gauge Since the advance started in June. This week the market moved into new high territory at 193.63. The signal did not prove valid but may be an indication of caution for the short term. The longer term pattern remains favorable. It seems wise to pursue a cautious attitude toward new buying in speculative issues. The higher grade investment issues still show favorable patterns.Subject to moderate correctionary de- . clines, they indicate higher prices. i ! . There are many individuals whose only concept of invest- ment in the market is through the purchase of speculative-type securi- ties for capital appreciation. What the individual often fails to realize is that this type of investment usually pays no dividends or, at the best, very small dividends. If, as in some cases, high dividends are paid on a low-priced stock, it is usually on a very irregular basis due to an erratiC earnings record. We should like to point out, therefore, the high yields currently available in many of the sounder common stocks. Over 200 stocks listed on the New York Stock Exchange have been paying continuous divi- dends for the past 25 years and, in many cases, for as much as 50 to 100 years. The decline in the market plus the good earnings of many of these leading issues have placed the yields at exceptionally high levels. Many of the issues providing 6 and 7 return on one1s investment, normally' provide yields in the 5 to 5 1/2 range. As these issues again return to their more normal yields, they will provide appreciation and still maintain the good yields'on'one1s'original investment. As an example, May Department'Stores,paying continuous'dividends Since 1911, is current- lyon a 3'annual rate and'selling at approximately '45, which gives a yield of 6.7.' If this st6ck'were'to'sellat 'even a 5 1/2 yield, which would not be out of line for a stock of this quality, it would then have a market value of 54 1/2, an appreciation of 9 1/2 points or over 21. While this is only one of many ways of projecting possible market values, it does point out that current price levels of many high grade equities seem very modest considered from the long term standpoint. A roster of 196 common stocks on the New York Stock Exchange that have paid cash dividends for 25 to 101 years, and are yielding from 3 to 12, was recently published in a special edition of he Exchange, a monthly publication of the New York Stock Exchange. Consult your registered representative for this list. November 4, 1949 EDMUND W. TABELL WALSTON, HOFFMAN & GOODWIN i i This memorandum is not to be construed .n an offer ot solicitation of offers to buy or, sell any seeurlhes. From time to time Wain, Hoffmlln & Goodwln may have an interest in some or all of the securities mentioned herein. The foregoing material has been pepared by. us as./J matter of Inlormlltion only It Is. blled upon Information believed reliable but not necessarily complete, II not gUllranteJd as accurate or final, and IS not Intended to foredose Independent InqulI'Y.