Investors often use 52-week high and low indicators to inform their buy and sell decisions. These indices refer to a stock’s per-share prices over the previous 52 weeks. Such high/low numbers over the course of a year can tell investors whether a stock is trending upward or downward, which is a primary element of momentum investing. Other investors use the difference between the 52-week high and low closing prices to determine volatility levels.
An investment bank will assess a company’s current and projected performance and soundness to ascribe a value to the business when it goes public. The company, investment bank, and investors then meet in a series of “road shows” to help establish the best initial public offering (IPO) price. After that, the company will meet with the exchange on which it will be listed, and together they decide whether the IPO price is appropriate.
Once trading begins, a company’s share price is determined by supply and demand. In other words, high demand for shares will increase their price. If fewer people seek to buy shares, the price will drop.
Viewed as a technical indicator, a 52-week high is the highest closing price for which a stock has been traded over the previous 52 weeks. Conversely, a stock’s 52-week low indicates the lowest closing price per share within the past 52 weeks.
Example of a 52-Week High and Low:
Say that, over a year, stock XYZ trades at a high of $150 and a low of $100. That puts the stock’s 52-week high/low prices at $150 and $100.
Usually, the $150 is viewed as a resistance level, while the $100 is considered a support level. What this means is that traders will start selling the stock when it reaches the resistance level and will start buying it after it hits $100.
Whenever averages such as the S&P 500 are in a protracted upward trend, many investors are prompted to identify the latest 52-week highs for NASDAQ and NYSE exchanges. The aim is to swiftly find the stocks that have the highest chance of even more upward movement.
It is common for a stock’s trading volume to spike after it crosses the 52-week mark. In fact, a Pennsylvania State University study shows that small stocks, after they surpassed 52 weeks, produced 0.6275% excess gain in the next week.
Those who engage in momentum investing often use the 52-week high/low figures to see how stocks are trending. The strategy assumes the way a stock has performed over the past 52 weeks is likely to continue in the near term.
Some investors use the indicators to see how volatile a stock has been over the past year. Others might view a high/low gap as indication that a stock has room to grow. Further, a stock that establishes a new high or low can cause an investor to buy or sell.
Stocks that have reached a new 52-week high or low are listed daily on the NASDAQ website, as well as those of the New York Stock Exchange and the American Stock Exchange.
The stock market is inherently volatile, which means share prices are constantly changing. For some investors, this means employing a strategy that they believe gives them the best chance for returns. The 52-week high/low indicator is one such strategy.
Regardless of whether they are firm believers in momentum investing, many investors find 52-week high and low information useful. How they use the data depends on their investing style, with the proviso that past stock performance is no guarantee of future returns.
Stock market volatility can require constant investor attention and result in worry and stress. To counter that, investors are increasingly turning to alternative investments. Such investments are not directly affected by public markets and can generate consistent secondary returns.
Take the online alternative investment platform Yieldstreet, for example, which offers vetted, curated opportunities in art and real estate with a variety of yields, durations, and minimums. To date, more than $3 billion has been invested on the platform.
Seasoned investors and financial experts widely agree that in order to offset the volatility inherent in the stock market, it is likely best for investors to diversify their portfolios.
Alternative investments can be a good way to help accomplish this. Traditional portfolio asset allocation envisages a 60% public stock and 40% fixed income allocation. However, a more balanced 60/20/20 or 50/30/20 split, incorporating alternative assets, may make a portfolio less sensitive to public market short-term swings.
Real estate, private equity, venture capital, digital assets, precious metals and collectibles are among the asset classes deemed “alternative investments.” Broadly speaking, such investments tend to be less connected to public equity, and thus offer potential for diversification. Of course, like traditional investments, it is important to remember alternatives also entail a degree of risk.
In some cases, this risk can be greater than that of traditional investments.
This is why these asset classes were traditionally accessible only to an exclusive base of wealthy individuals and institutional investors buying in at very high minimums — often between $500,000 and $1 million. These people were considered to be more capable of weathering losses of that magnitude, should the investments underperform.
However, Yieldstreet has opened a number of carefully curated alternative investment strategies to all investors. While the risk is still there, the company offers help in capitalizing on areas such as real estate, legal finance, art finance and structured notes — as well as a wide range of other unique alternative investments.
Stock price 52-week highs and lows are generally viewed as indicators for investors who utilize technical analyses, although as noted, share price histories do not guarantee future performance.
To help neutralize the volatility that is intrinsic to the stock market, many investors are diversifying portfolios with alternatives, which are not directly tied to public markets.
Yieldstreet can help with such diversification.
All securities involve risk and may result in significant losses. Diversification does not ensure a profit or protect against a loss in a declining market. Alternative investments involve specific risks that may be greater than those associated with traditional investments; are not suitable for all clients; and intended for experienced and sophisticated investors who meet specific suitability requirements and are willing to bear the high economic risks of the investment. Investments of this type may engage in speculative investment practices; carry additional risk of loss, including possibility of partial or total loss of invested capital, due to the nature and volatility of the underlying investments; and are generally considered to be illiquid due to restrictive repurchase procedures. These investments may also involve different regulatory and reporting requirements, complex tax structures, and delays in distributing important tax information.
Yieldstreet provides access to alternative investments previously reserved only for institutions and the ultra-wealthy. Our mission is to help millions of people generate $3 billion of income outside the traditional public markets by 2025. We are committed to making financial products more inclusive by creating a modern investment portfolio.