Owen

Ongoing Market Sell-Off: It's Not The Short Sellers

The whole notion that stock prices goes up when people are buying and down when they're selling is a myth. Think about it: on any given day, exactly the same number of shares are bought as are sold. Even when the market is soaring upwards, each share bought is actually sold by someone, and when the market tanked this week, each share sold was bought by someone else.

So why do prices move? They move down when buyers are not willing to pay as much for it as they did before, and move up when sellers are not willing to part with their stock for the price they did before. The whole concept that sellers (short or otherwise) move prices down is based on a misconception and poor understanding of the market.

Are you willing to pay $20 a share for Citigroup? No. That's why it's trading at $18. Even if no one was willing to sell a single share of Citi, your perception of its value has just determined its price.