The ‘All-Time High’ and Why It is my Favorite Market Indicator

The all-time high list is my go to indicator. Since we have had a few crashes in my career (2000 and 2008) I have made some adjustments to allow for 5 year highs on occasion.

I watch these lists daily with my partner @ivanhoff and over 3-6 months ANYONE can get a feel for what is working. I have found (and written about on this blog) that what is working in the private (early stage) markets can show itself in the public markets, but I am unsure if that works in reverse. I really DO NOT care what is not working. The rest of the world talks about failure and pain endlessly. Oil, Russia, Greece, interest rates, failed hedge funds, gossip, cheap stocks. I rarely see anyone talk about what’s working.

My friend Josh Brown wrote this great post on the subject and I have clipped my favorite part:

All-time highs …

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 this does not mean that the coin is about to flip tails or the roulette wheel’s destined for to land on the other color any time soon.
And so while our DNA and 100,000 years of evolutionary programming may lead us to believe that a new all-time high is a precarious perch and presages an imminent turn in the other direction, it isn’t ever quite that simple. Many new all-time highs are merely stepping stones toward the next set of new all-time highs, after all.

Ivan and I have a simple product that we created to help anyone read the tape like us. It’s a premium product yes, but it cuts through all our work that we have done on a daily basis and delivers a plan, ideas and mentorship on a daily basis.

I highly recommend it. Give it a try here.