Bulkowski on The Price Mountain Trap

In August 2000, during the height of the technology bubble, Intel reached a high of 75.81. That's up from the June 1998 low of 16.42, so the stock made a massive move higher.

In 2020, the stock made it up to 69 and change. Someone was unlucky enough to have purchased the stock at 75.81 and they are still losing money almost 21 years later.

Have you ever said, "I'll just wait to get my money back." That wait can be years: 7 is the average.

This is the same chart as shown in the overview.

Micron shows two price mountains, A and B. In 1993, the stock was trading below $2 a share. Two years later, it had peaked at 47.38, forming the first price mountain (A).

If you bought in the mid 40s, it would have taken 5 years before you'd get your money back, as the horizontal red line shows.

The second price mountain (B) is even taller. Price climbed to a high of 97.50. Recently, the stock has come close to exceeding the 2000 peak by reaching a high of 95.75.

This is a more recent example of a price mountain, two of them, in fact.

The one at A shows the stock peaking in mid 2017 at a high of 86.25. Just four months later, the stock made a higher high of 95. Price mountain B took 3 years before price exceeded the peak. My statistics says that's quicker than the average of 7 years to exceed a peak and even faster than the median time of 5.4 years.

The point of these pictures is to serve as a warning that if you overpay for a stock, it can take a long time before you get your money back. Don't fall into the trap of buying high and seeing price drop, then hoping to get your money back. Don't fall into the trap of looking at a chart and saying it reached $x, so it can climb back up their again. It might not or it might take decades to hit your target. Set realistic targets.