“New All-Time Highs”
- Joshua M Brown
- July 6th, 2011
I'm going to tell you a few things about what it means when a stock hits a "new all-time high" and I suggest you pay attention because I've been doing this for a long time.
130 stocks hit new all-time highs yesterday - so says my friend Ivaylo Ivanhoff, the genius behind so much of what makes StockTwits great. These were not year-to-date highs or 52-week highs off of a low base, these were NEW ALL-TIME HIGHS.
You know some of these tickers, you may even own a few of them:
MLI,AZZ,EE,AH,EZPW,TNAV,BWLD, CRMT,NFLX,TSCO,PEET,AGP,SODA, DRI,SBH,FCFS,EL,ILMN,CLH,GGG, BJRI,CNSL,JAZZ,TDG,GCO,CVLT, MJN,CHT,UA,DMND,TYL,PCP,ROSE, OC,HS,DLTR,OZRK,TWIN,LULU, SBUX,NPO,SOLR,COH,FOSL,GLNG, TRS,ESL,LQDT,NTGR,INFA,POL, CSH,TIF,TPX,SBNY,IPHS,ROC,CPO, PETM,MAA,SPG,AAT,HME,WPI,AVB, IPGP,LBTYA,BTI,ELS,N,LKQX, OSIS,PPO,MGLN,SCSC,IBM,PSMT, CLB,CMG,FTNT,ULTA,MKTX,CATM, GRA,ACC,AVEO,CRM,GTS,GDI,GTLS, DDD,CRR,PII,AIRM,DTV,IPAR, TECH,GMCR,SQM,FLDM,RYN,SLH, NEOG,SYNT,TCBI,VOC,ST,PEGA, AMZN,ESS,PNRA,LPSN,NGLS,TMH, EXR,TGI,VOLC,CE,SZYM,CPHD,DSW, DPZ,AVGO,MIDD,FPIC,MKTG
So what, Josh?
I'll tell you so what. There is more meaning in an all-time high than meets the eye. This isn't just a data point or a plotted roadside rest stop on the open highways of chartdom. This is a coronation of sorts.
When a stock hits an all-time high it means that people were willing to pay a price that no one before them has ever paid.
It means that no one has a loss in the stock or is "waiting to get back to even so they can sell".
It means that a host of people who had been waiting for that pullback to get in are now ripping their own skin off in aggravation.
It means that it is the new favorite stock of those who are long, one that they will not easily part with because it is now "one of their winners" and it "has been good to them".
It means the people who "bought small" are pissed even though they are up, these are the people sitting just below the offer like Tick Tock the crocodile loitering below Captain Hook's gangplank - just waiting for a bite.
It means that every single analyst downgrade or estimate revision lower or silly piece of neutral commentary has been instantly invalidated - it all meant nothing and was a waste of ink.
It means that everyone who sold along the way, in varying degrees of course, was wrong - even if they were up big.
It means that any and all media carping over the company's "fundamentals", "model", "management" or "outlook" were a total and utter waste of time and energy.
It means that these are the stocks that will be brought back to life the fastest from the depths of any market-wide sell-off or correction as they are now the hot money names.
Finally, it means that the stock must be on its best behavior from here on out. There will be more margined-up positions and quicker trigger fingers on any adverse headlines than ever before. There's an apropos piece of advice that branch manager Lou Mannheim once gave to his broker Bud Fox: "Kid, you're on a roll. Enjoy it while it lasts, 'cause it never does."
But even still, being on the new all-time high list is the single best place for a stock to be, period.
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.