Tabell’s Market Letter – April 03, 1992

TABELL'S MARKET LETTER 5 VAUGHN DRIVE, CN 5209. PRINCETON, NEW JERSEY 08543-5209 MEMBER NATIONAL ASSOCIATION OF SECURITIES DEALERS. INC (609) 987-2300 April 3, 1992 We have been fortunate enough to have been able to use this letter. over theyears.a.IILavehiclefnrthe-('-elebrationof-2.n1!mb'!'! cinappy niilestcines.- We celebrate-yet another chleS;;;n ihi.;week with th acquisitin of Delafield, Harvey, TabellInc. by the , U.S. Trust Corporation. The occasion stimulated us to dig into our files with a curiosity to see what had been said in these letters at prior important turning points in the careers of its authors. The first isaue of this publication appeared on December 2, 1944. This, therefore, is approximately the 2,469th i.aue, and we Will. in just a couple of years, celebrate 50 years of continuous publication. That first letter announced that, This letter…WIll attempt to forecast the pnce trends of the general market averages and… recommend purduJses or sales of individual securities. … The opmions expressed WIll be based not on the fondamental outlook for the securities…mentwned, but simply on the writer's interpretation of their technical market action.' It i. difficult to imagine just how radical a concept this was in 1944. Indeed, it was aufficiently so that the issuing firm found it necessary to terminate each isaue with a di.claimer which stated that 'the opinions… are the personal mterpretations of charts by Edmund W. Tabell and…not presented as the opinions of Shields & Company.' The first such opinion expressed was that 'the major trend of the market ISfavorable. a forecast which turned out to be reasonably accurate since the Dow, which closed that day at 147.50 was at 212 by 1946. As a matter of marginal interest. that initial isaue. entitled Technical Market Action was printed on plain wlute paper. The switch to light blue paper with a darker blue border was made ten months later, for reasons unrecorded at the time. We have seen no reason at any later time to make change in tlns format, and the publication has always been known informally as the blue tetter. IF The first milestone celebrated Edmund Tabell's association in December, 1948 with Walston, Hoffinan & Goodwin (to become Walston & Co. 1D 1953.) It was also the first to carry the title, TabeU's Market Letter, which has continued ever since. That issue suggested the likelihood of a decline (from \73) to the 170-160 area for the Dow. It went on. however, to say, … the major… trend IS up. The trading range of the past 2 112 years, in which the averages have ranged between 160 and 195 is a major accumulation area. It will eventually result… in a definite upsule penetration of the range and an… advance to the 240-250 level. (The DnA. of course, reached 161.60 in June. 1949. The upside objective mentioned proved to be conservative.) The present author's byline first appeared on the letter in 1955. Ironically our specialty, in those long-ago days of our youth a CoPpe;Co. – – -was the preparation of conventional fundamental individual.stock.reDorts.We.c.an still.recall..the I.bo'.thatowe!!tintothefirstofothese – pieces, recOnm;endation ofth Mag;,,;. The writing of the letter became a shared duty of both Tabell's, pere etfils, for the next decade until, in 1965. it became our sad duty to announce the untimely death of its founder, Edmund Tabell. We have noted before that many of the concepts pioneered by him in those early days have remained part of our analytical equipment on into the 1990's. There occurred, in August, 1970. the next major transition. We teamed with Mat Delafield (of Delafield & Delafield) and Ash Harvey (of Montgomery, Scott & Co.) to form Delafield. Harvey, Tabell. at the time a division of the latter firm. Three long-time associates of the founders. Bob Simpkins, Joe Hanlon and George Crane. joined us. The stock market, and prevailing conventional wisdom, did not make that founding any easier. As we noted at the time, We have come through a trying period… Stock pnces have plunged 11Wre precipitously than at any time since the 1930s….1t is all too easy to bearish… but, with most stocks having declined anywhere from 30 to 90 from fairly recent highs, it is silly to pretend that the market is sailing along totally oblivious to surrounding deterioration. (We believe) that intensive investment management can produce above- averoge results in the months and years ahead. and… that… the equity market might be a pretty interesting place in which to be. It was the task of that letter. as we saw it then, to shore up confidence. Our next benchmark later. 13 years later. celebrating the formation of Delafield, Harvey, Tabell as an independent firm in October. 1983. was presented with precisely the opposite problem. After recalling the 1970 letter. we S81d. '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 achUNed the highest close in its hIStory. (1268.80) That high moreover represents the peak so far of a bull market which has, by many measurements… been the most dynamic one on record SUlce the 1920s. We noted that 'we do not… think that bull market is anywhere near its end.' We auggested, however, that at some point. it would almost cenamly be necessary to remind readers that there exist such things as bear markets and that common stocks do not go up forever. And now, finally, we join the U.S. Trust Corporation. It is a time, as was true at those prior milestones, that investors are facing new, and, to a degree. unfamiliar challenges. We have a U.S. stock market demonstrating record levels of valuation, strange things going on jn 9,!,eas markets,and ohvious signsof-political unrest and distrust of-the status quo., Our new parent, however, is, to say the least, not unfamiliar with dealing with just such challenges. It noted in a recent annual report that 'since 1853, U.S. Trust has had a tradition ofpreservmg and growing assets in good times and in bad. Our name. which has never changed, IS synonymous with mtegnty, strength, stability, a quality onentation in all undenakmgs, and a long-tenn, vaiue-oriented approach… In investment management, we have QI1 outstanding record of long-tenn success achieved through a consistent, disc!plined investment approach implemented over time. IF There eXISts, we are aware, a currently fashionable wisdom which holds that intensive and dedicated management cannot produce above-average results and expresses doubts regarding the viability of a consistent, diSCiplined investment approach. Our readers are aware that we disagree vehemently with this thesis, and it is obvious from the above that U.S. Trust shares this disagreement. We are proud to be joining with them in an effort to utilize our combined skills in aiding our clients to cope with the investment challenges which lie ahead. Dow Jones Industrials (1200) 3211.31 ANTHONY W. TABELL, CMT DEELD,HARVEY,TABELL Standard & Poors 500 (1200) 398.31 Cumulative Index (4/2/92) 7258.16 .- No slatement 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 offer to buy or sell any securrty referred to or menhoned The matter IS presented merely for the convenience of the subscnber While we beheve the sources of our Information to be reliable, we In no way represent or guarantee the accuracy thereof nor of the slatements made herem Any acllOn to be taken by the subSCriber should be based on hIS own mvesligatlOn and mformatlon Deta/lald Harvey, Tabell Inc, as a corporaliOn and Its officers or employees, may now have, or may later take, posltmns or trades In respect to any securities merltloned In thiS or any future Issue, and such posl\!on may be dlNerent from any views now or hereafter expressed In thIS or any other Issue Delafield, Harvey. Tabelilnc , 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 secufJty mentioned herein IS avallabte on request