Hi worker, I think the 'short' topic is on the nose around here somewhat as it has been discussed to death however, I will put my 10c worth in as I have been studying it religiously in recent times..
The shorts are a relative counter weight to the optimism and froth of the long brigade of which I am one..
Optimism is not a bad thing, but stupidity can cost you dearly..
Rallys do not go forever, valuations exceed intrinsic inflated values, events and market conditions fluctuate, sometimes rapidly all of which play a part in the shorters handbook.. this is the mantra by which they live and breathe
As someone else has posted shorters can even sell sell sell, increasing a position (more profit) and drive a price lower lower lower, only to collect the stock back in a Cap raise (cover).. this the extreme though and shorters would be heroes for pulling this off..
Beware stocks trading around their tops and or stocks approaching the exhaustion stage of a rally, that also have high liquidity (shares on issue / daily turnover)
To go long at this stage in a stock cycle is high risk, some would say stupid, funnily enough one may actually be buying stock sold short at this stage.. long at the other end is optimistic but the odds of severe loss are far less...
You cannot beat shorts, they can only be caught with their pants down by the market.. but it pays to know what they would be casing/stalking and play it accordingly
They are like the apex predator, preying on vulnerable and weak positions in the market regardless of the market cap, reputation, etc etc
In the case of PLS, shorts identified the potential for a MC valuation (at $1.20 ish) that reflected previous optimistic Li spod pricing, whereas they knew and they were not alone, that spod pricing was coming off the boil... This presented a Stirling opportunity and the Li spot price correction vs the higher valuation was the confirmation..
That is why we are where we are now and why I have been buying more in the 60s at a more realistic MC
Ezi
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