[mathemagician54]

one of my assumptions was that people essentially have infinite bankrolls, i.e they will take high-variance positions so long as they are +EV, and they dont need to sell stocks in order to get cash for real world needs.

So the two points you brought up that don't go against that assumption is that they'll sell out of ojne position to get into a better one, and people disagree about the valuation of stocks.

But this is exactly my question... given that two parties disagree about the valuation of a stock, shouldn't they reach some kind of equilibrium where they agree that the stock is neither over/undervalued? (And if they're trying to sell out of one position to get into a more profitable one, why is that situation not going to reach the same sort of equilibrium?) Assuming both parties are INTELLIGENT, and don't let things like ego get in the way... they're both just trying to make the most profitable decisions.

It's true that people will always disagree about the valuation of a stock. But if you and I disagree, and we both assume that each other is intelligent the fact that you disagree with my valuation should lead me to change my valuation, and vice versa.

One of the things im not sure of is in the assumption that that people who cannot handle risk/ need to sell because they need $ for real life needs, have a negligible impact on the market (and hence we limit our discussion to people with sufficiently large bankrolls to handle high-risk but profitable positions). Is this true?