The
price discovery process (also called
price discovery mechanism) is the process of determining the
price of an asset in the
marketplace through the interactions of buyers and sellers.
Why does this NEED to involve a group that acquire shares off-market to dump on-market, adding artificial sell pressure in the “marketplace”, not to mention tactical timing and triggering further selling through stop losses, thus snowballing sell volumes from which to cover for a short-term milking?
Imo it does not NEED any such group; the price discovery process occurs naturally through the interaction of genuine buyers and genuine sellers, adjusting their genuine holdings based on their varying assessment of value and risk.
“Extra liquidity” etc is just a convenient excuse to find something “useful” to justify it imo.
And btw I don’t buy the idea that it “doesn’t matter” just because some instances of banning shorts have not significantly altered prices, since those analyses do not have an accurate control for comparison - you cannot simply say that shorts were banned and “had no effect” unless you KNOW all the specific other influencing factors, how they also varied, and their specific effects on pricing.
That’s the trick of governments comparing their wonderful effect on the economy/jobs compared to the previous government! THEY were usually not the only thing that changed!
Please explain why the interaction of genuine buyers and genuine sellers, adjusting their genuine holdings doesn’t provide adequate price discovery. Why on earth does it “need” a double dose of selling. You know as well as anyone here, if someone borrowed say 200m shares tomorrow and started dumping them on market, the price would not remain where it is, simply because the current price is what “the buy side is willing to pay”. It would drop like a stone and force (and scare) many genuine holders out too.
We all know various tactics being employed to push prices and scalp pips, accumulate, etc, it is not like the shorters are doing the market some type of favour by somehow “exposing” what the “real” price should be in a balanced market.
This is indeed nonsense imo!
