Squeezing is what happens to short sellers who are wrong. I suppose "when they get squeezed" would have been more accurate, but I was failing to put that into words.
"wrong" is a very loaded word to use in this context and it's not clear what you mean.
Wirecard short sellers were "right" (as in their thesis was corect) for many years before the stock price reflected their beliefs. Some of them probably got squeezed (and quite a few got in trouble with various financial authorities).
I see the appeal in using the return as a way of judging the bet, but I think it's too simplistic.
Reason #1: In investing, you can do everything right and still lose money. This is because there is never certitude, and you can only play the odds.
So, if you make a bet with a 90% chance of winning, and yet you still lose, was that a bad bet?
Reason #2: Most people like to think stock prices reflect reality somehow and the mechanism through which that happens is people buying or selling stock to reach price equilibrium. So, in that sense, a good bet would be one that pushes the price towards reality.
