19 Stocks for Dow Peak

Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.

Not too long from now, with any luck, the most well-known measure of the U.S. stock market -- the Dow Jones Industrial Average -- is going to make an all-time high. It's only about 80 points away from that level now, a less than 1% move, and could get there with a lot more ease than bears and skeptics believe possible.

The event will be much celebrated, to be sure. But does a new high mean anything -- or is it just a number?

The answer may surprise you. The short response is that, yes, a new high is very significant and a huge positive. The long answer is that it's important for reasons that are a little bit fuzzy and strange, and it helps explain a lot about the behavior of the stock market in general.

Allure of a New High

From a practical standpoint, analysts of stock-price behavior like to say that all new highs are bullish (until the last one). This makes a lot of sense. When the stock market makes a new high, people who have money in cash or bonds do a double-take. It gets their attention. They come to think of themselves as idiots for earning 4% on their money in passbook savings accounts when they could be earning 10%-plus by taking a little more risk. After a moment of shock, they get off the dime and begin sliding cash into the stock market.

Investors in large companies do not have a lot of experience with a market going to a new high, because it hasn't happened in a while. Six and a half years, to be exact. So here's the point you really need to understand: New highs are a positive because price is the great persuader.

You see, arguments by analysts that the market should trade higher because of blah-blah-blah are one thing. They are intellectual arguments of something that might happen in the future. But when a new high actually occurs, an emotional tripwire is triggered in investors' minds: The twin electric prods of regret (at missing the prior move) and greed (for future gains) coalesce into a fireball of impulse to get on the gravy train as fast as possible.