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| ▲ | quantummagic a day ago | parent [-] | | Yes, stocks go up and down; hardly revelatory. The point, regardless of the imprecise wording of my alternate title, remains. There are people who think they are getting a valuable investment, at the price short-sellers are willing to sell at. There's just as much optimism as pessimism about the stock, at that price. And that's my complaint about the title, it wants to only highlight one side of the trade -- for narrative reasons. | | |
| ▲ | WarmWash a day ago | parent [-] | | >There's just as much optimism as pessimism about the stock, at that price. No, there isn't, because the price breaks in the direction that there is more optimism or pessimism. When the pessimists run out of optimists at $135/share, they start digging for them at $134/share. The price ran out of optimists and had to move down to find more. Otherwise the price would lock at a single point. And abundance of pessimists indicates that a lot of "downward digging" is taking place, it's very relevant. You're hyper focusing on the tree here and missing the forest. | | |
| ▲ | quantummagic a day ago | parent [-] | | People respond to market forces. When they see that there are other people making irrational valuations, they may wait to buy even lower. It's not a judgment about the intrinsic value of the stock at the current price, but of opportunities in the market. It's still a hard fact that for every single trade, there is someone as fully optimistic, to perfectly match the pessimistic side. And people have to be pretty committed to a narrative to deny that fact. | | |
| ▲ | WarmWash a day ago | parent [-] | | Your hard fact is correct, but it's your extrapolation that it tells you something meaningful that isn't. The fact provides zero information. Its on par with "every gallon of milk is sold to a person" or "every leaf comes from a tree". | | |
| ▲ | quantummagic a day ago | parent [-] | | No, you're just working very hard to miss the point. Nobody can place the pessimistic bet, unless there is someone equally optimistic in the other direction. The fact that you're fixated on the price varying as each side attempts to do the best it can is just a commitment to a narrative, not a useful insight. Here's the simple way to know you're wrong. The stock price isn't zero. That means there people willing (at some price) to put their money where their mouth is, that the people betting against the stock at that price are wrong. But at that point they're both just making bets.. all it says is that there are an equal number of dollars willing to gamble at that price point. It says nothing about which side of the gamble will win. Shorts don't exist in a vacuum. They literally can't be made, unless there was someone in the market who thinks that at the short price, the stock is a good investment opportunity. Every trade is proof that the market thinks the stock is a good investment at that price. I don't know why you have such a hard time facing up to that fact, even after you admit it is one. | | |
| ▲ | WarmWash a day ago | parent | next [-] | | > Every trade is proof that the market thinks the stock is a good investment at that price. And every (short) sale is proof that the market thinks it's a bad investment at that price, which logically nullifies your point. So to climb out of this nullification, we have to consider how many actors didn't get filled at the price they want. There isn't infinite liquidity at every price point. | | |
| ▲ | quantummagic 16 hours ago | parent [-] | | > And every (short) sale is proof that the market thinks it's a bad investment at that price, which logically nullifies your point. No it doesn't. It's the flip side of the one you want to focus on, and all i've been saying is that it's not the ONLY side. If it nullifies my point, it also nullifies yours. They cancel EACH OTHER out. > There isn't infinite liquidity at every price point. Sure, but so what? That is true of literally every product sold. The price isn't zero, so there is enough liquidity to cover every short that was actually sold. You've already admitted to that. The fact that the price goes down, (and can sometimes move back up) is immaterial. | | |
| ▲ | WarmWash 12 hours ago | parent [-] | | Nullify means cancel out To make it clear to you, >So to climb out of this [cancel each other out], we have to consider how many actors didn't get filled at the price they want. There isn't infinite liquidity at every price point. And no, there is not enough liquidity, so the price has to move to provide it. That's why you cannot hand wave away price movement, it's intrinsically part of transactions being formed. And why a headline like "Heavily shorted" captures sentiment around a stock, especially one that is tanking. |
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| ▲ | M3L0NM4N a day ago | parent | prev [-] | | > No, you're working very hard to miss the point. It seems the opposite is true here. > [Shorts] literally can't be made, unless there was someone in the market who thinks that at the short price, the stock is a good investment opportunity. Every trade is proof that the market thinks the stock is a good investment at that price. Again, this isn't true. The spot price has to decrease from the point where short-selling is happening for there to be a willing buyer, unless there is a new bid. Yes, transactions happen at one singular price, but if you're only saying that every seller has a buyer and every buyer has a seller, then the guy that you replied to is correct. What you're essentially saying is that "every gallon of milk is sold to a person". This is not useful information. | | |
| ▲ | quantummagic 16 hours ago | parent [-] | | > What you're essentially saying is that "every gallon of milk is sold to a person". This is not useful information. Only because you're ignoring the other option, that the gallon of milk DIDN'T sell. It tells you that there was demand for the milk you had to sell. If there was no customer, the milk would have spoiled. There are still people who want to drink milk. There are still people who believe you're not selling poison, that milk is a worthy thing to buy from you. That is useful information. |
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| ▲ | quantummagic a day ago | parent [-] | | It has nothing to do with the shares being borrowed. That's a separate transaction that comes with a fee. The point is that the share is then sold. It's sold to someone who is taking the long position. The original owner of the share, from whom it was borrowed, makes their money in fees, and by investing any security deposit given by the borrower. They are not taking a long or short position. | | |
| ▲ | M3L0NM4N a day ago | parent [-] | | Yes, that is how short-selling works, but you're claiming that the only reason the headline isn't "SPCX is the most purchased new stock" is for narrative reasons, which is patently false. Shorting necessitates that someone decides to sell a stock they do not own, which creates downward pressure on the price. Saying "there's always someone on the other end of the transaction" is true, but not at the same price. If what you were implying were true, the price of shares would never change. You probably understand this, but share prices decrease and increase due to the number of buyers and sellers. Hence, the more people that short-sell a stock, the lower the share price goes until it can find buyers. | | |
| ▲ | quantummagic a day ago | parent [-] | | I never intended to imply that the law of supply and demand was nullified.
And I didn't say that the price was unaffected, just that there is as much money
thinking they're getting a valuable long term investment, as there is as money
shorting the stock. (By definition, since every sale is consensual, and of the opposite position) |
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