Stock market sayings, in more thought
I tried posting this earlier but it got eaten by a glitch.
here are two sayings I hear often in the stock world which always made sense to me until I thought about them in more depth recently and realized maybe it is not as intuitive as it sounds:
1) A short seller is a future buyer.
This is not necessarily true. If this were true, why don't more people say "a longer buyer is a future seller"? Somebody can hold their equities until death, but people can also short companies until bankruptcy. If one is true, the other is too. Yes, short squeezes happen because a margin call is more likely on the short side than the long side, but that is seperate.
2) When everybody has sold, there will be nothing left but buyers
When everybody has sold...to who exactly? There CANNOT be a sale, without both a buyer and a seller. You can't sell to thin air, and you are not selling your stock back to the company. The only people that really HAVE to buy are specialists. But specialists don't have enough cash to buy the outstanding shares of the company they represent. So, how can everybody have sold, if not everybought has also bought?
Please somebodu disprove my second point. I know contrarian investments work, and I know it kinda makes sense at first glance, I just dont see how there can possibly fear without greed on the street....how can everybody sell without everybody buying?
As always, feedback much appreciated