[WarmWash]

>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]

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]

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]

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]

> 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]

> 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]

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.

[M3L0NM4N]

> 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]

> 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.

[M3L0NM4N]

Yes, but they don’t want to drink milk the at the same price. Price drives demand equally as much as demand drives price. That’s the point you’re missing.