CHAPTER XIV. TECHNICAL CONDITIONS
Technical conditions refer to the conditions that usually affect the supply and demand, such as short interests, floating supply, and stop loss orders.
It is sometimes said that supply and demand must be equal or else there could not be any sales, but that is not so. There are always some people who are willing to sell at some price above the market who will not sell at the market; and when the demand for stock is greater than the supply, it goes up until it is supplied by some of these people who are holding it at a higher price.
It works the same way when the supply is greater than the demand. There are always some people who will buy at some price below the market. Therefore, when the supply is greater than the demand prices must go down.
A stock may have an intrinsic value of $100 a share and yet be selling at $50 a share, and it can never sell higher than $50 until all stock that is offered at that price is bought.
However, you should keep this in mind: if the real value is $100 a share, sooner or later the market price will approach that figure. That is why we so strongly urge our clients to buy stocks that have actual values, or at least prospective values far greater than their market prices, and either to buy them outright or margin them very heavily, and then hold them until the prices do go up.
Of course, when one finds that a mistake has been made, the sooner one sells and takes a loss the better.