Instead of stocks, let’s apply this logic to houses.
Houses are expensive. However, if I buy a house at a high price, I’m okay if I can sell it for more than I bought it for at some point in the future. As long as the prices continue to climb, everyone is happy, right? So let’s decide to make a law that says that a house can never go down in value; whatever the house sells for today, the next time it is sold, it must be at a higher price.
Now, let’s say that I am ready to move to a new house, and I want to sell my current house. With the new law, I now have a minimum price that I am required to sell at. However, what if no one wants to buy at that price? I’m stuck. The only thing I can do is wait until someday when someone comes by and decides to offer that minimum price. It might be a long wait.
Before the new law, if I needed to sell in a hurry, I could simply lower my price until there were buyers prepared to offer at that price.
This is exactly how stocks work. When you own a stock, no one is forcing you to sell at any price. You can decide to hold onto your stock as long as you want until you find a buyer that is willing to pay the price you want. But you may have to wait a long time if your desired price is too high. Because just as you have the freedom to sell at any price you want, the buyers also have the freedom to buy at any price they want. And a sale only happens when a buyer and seller agree on a price.
You say that you aren’t suggesting government regulation, but the principle is the same. If I decide personally to only sell my house at a profit, I may be stuck if I can’t find a buyer willing to pay my price. And I’m competing with my neighbors who are also selling.
But let’s pretend that I succeeded in convincing a large number of people that my house, and even my city was on the way up, and that housing prices will only continue to rise.
This goes on for a while, and housing prices in my city continue to rise. However, at some point, they get so high that there aren’t enough buyers that have enough money to move into my city. Perhaps the buyers will move to a different city, or they will build their own house, or they will rent an apartment. In any case, at that point home sales will stop until prices inevitably fall.
And again, it is the same with stocks. When I want to sell my stock, I am competing with everyone else trying to sell the same stock or different stocks. I am also competing with every other type of investment offer. I am competing with the bank that pays interest, real estate investments, precious metals, bonds, etc. At some point, my price will get so high that the other investments are simply a better deal.