The Telltale Ticker

And while the length of our lives is somewhat arbitrary, the focus of our attentions is decidedly within our control. Our lives are ours and ours alone. Each precious moment is ours to spend as we wish.

And because there are only so many hours in the day, both our time and conscious attention carry a high price. What makes your attention so valuable is that capturing it is the only way that I, or anybody else in advertising, can encourage you to make a purchase decision. From stocks to shocks, lox to clocks, it's hard to buy something you've never heard of.

Did I just say that I was in the advertising business? You bet. As a trader, I can buy a stock and hope it will go up, or I can buy a stock and help it along the way. You do this by moving the market and advertising the attractiveness of your position. Allow me to explain.

People make investment decisions by gathering information from a number of sources. Some people follow the fundamentals, others check the charts. Some people invest by the stars, others by their conscience. The one piece of information that we're all looking at, however, is the only one that actually matters: the price. And when it comes to price, the best advertisement for XYZ is XYZ.

As I wrote last week, I primarily use market orders to get into a position. When it's time to get into a stock, I buy the "ask" and pay, in effect, the highest price possible. Why? Why, if XYZ is bid at $50 and offered at $50.25, would I want to buy it at $50.25, and hope to pay even more? Because this is a numbers game, people. Let's not underestimate the psychology of playing those numbers.

Trading is an ongoing process of price discovery. Is Cisco Systems (CSCO) worth $16 a share, or $60? In a free marketplace, the answer is determined every day. Price is a function of perception and expectation. Doesn't matter what a company does, a stock is worth only what someone is willing to pay for it.

So if XYZ is bid at $50 and offered at $50.25, I'll use a market order and hope I pay $50.38. If I had to pay $50.38, it's only because there wasn't any XYZ to buy at $50.25. Demand is outstripping supply and the price is moving up. And if I'm buying the stock, that's exactly what I want to see happening.

So to begin with, a market order filled at a higher-than-expected price tells me that, in effect, I'm on the right track.

Perhaps more important, a well-timed market order is a great way to encourage my holdings higher. I see the market as an ongoing story. When one of my positions is trading strongly or making significant highs, it's my turn to tell the story. So if I'm bullish on XYZ, the best way to advertise the stock's prospects isn't to tout it on television or post on the message boards, but to put my money where my mouth is. I let the ticker do the talking by using a market order to buy a significant high, thus advertising the stock. Significant highs include 52-week highs, multimonth highs, or highs above key moving averages, trendlines or psychologically important round numbers.

Use a market order to buy a new significant high, and in one single step, even with as little as a few hundred shares, you are getting the attention of literally millions of people. In a world of information overload, you've just bought your way into the record books, onto millions of computers screens and into hundreds of newspaper's business sections.

Most people are frightened of buying a stock near its highs because they're afraid of buying the top, looking foolish and losing money. They would much prefer to wait for a pullback, use a limit order and buy on the cheap. From an advertising perspective, buying a stock in the middle of its 52-week range is blowing the budget. Simply put, nobody sees the buy. It's like buying time on the midnight rerun of "Mr. Belvedere."

You want to be first in line to buy, not last, so if you like it at $70, buy it at $70. Like it at $70, love it at $71 and adore it at $73 — especially if you happen to be sending it to a new 52-week high, pushing it over a key moving average, hitting a big round number or carving a new higher notch in the weekly chart.

If you agree that stocks are worth only what someone is willing to pay, than you've got to start by paying what you think XYZ is worth. And by buying as high as possible, I am attracting the attention of millions, many of whom are short and mighty fearful of a rally. When you buy a stock making significant new highs, you are in effect defining what XYZ is worth. You aren't just moving the market — you're making it.

In the early days of television, even test patterns got ratings. But as information technology has proliferated, so has the competition for our attention. The average American adult sees more than 600 advertising messages in a single 24-hour period. We view more ads in one year than people 50 years ago saw in an entire lifetime.

Cutting through the clutter isn't easy. But by using market orders to buy new, significant highs, I'm getting a heck of a lot of eyeballs at a fairly affordable price. Used in conjunction with good money management and sound risk parameters, advertising is an effective tool for marketers and money managers alike.

Jonathan Hoenig is portfolio manager at Capitalistpig Asset Management, a Chicago-based hedge fund.