Are markets zero sum game?
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how is me selling it for what the market is offering AT THE TIME of selling it have any relevance to "if it drops to $10 later". (i spent +12 hours of my day and have had no life while studying the market I am involved in. I take the risk of buying it and than risk selling it at $50 (it could also go up to $100+)
If somebody wants to buy a cheap worthless course and spend 30 minutes a day on the screen and be so greedy and reckless to buy a stock that could later drop 80% how is that a "zero sum game". Why did this "poor guy I sold it to" buy it?? TECHNICALLY, I DIDNT EVEN SELL IT TO HIM. I offered it for sale on the "market" and he bought it. I sold it at what the market offered, he bought it at what he thought was fair (and likely thought could sell it for much more) Both participants took a risk and have to be adults about their business decisions.
Caveat Emptor,
If somebody wants to buy a cheap worthless course and spend 30 minutes a day on the screen and be so greedy and reckless to buy a stock that could later drop 80% how is that a "zero sum game". Why did this "poor guy I sold it to" buy it?? TECHNICALLY, I DIDNT EVEN SELL IT TO HIM. I offered it for sale on the "market" and he bought it. I sold it at what the market offered, he bought it at what he thought was fair (and likely thought could sell it for much more) Both participants took a risk and have to be adults about their business decisions.
Caveat Emptor,
I started a company from nothing with a small venture capital round. The company now earns more in a year than the entire venture round. Those investors made good money selling their shares because actual value had been created. Hard to call that a zero sum game.
Stock markets are no different. If you bought a share of Google at the IPO you were buying a small company without much profits. Like my little company but on a far more vast scale, Google which IPO'd with a market cap of $23B had net income of over $35B for the 4 quarters ending in March of this year. That's not zero sum, that's a company making significant amounts of real cash providing a whole suite of services that didn't even exist 50 or even 25 years ago.
Stock markets are no different. If you bought a share of Google at the IPO you were buying a small company without much profits. Like my little company but on a far more vast scale, Google which IPO'd with a market cap of $23B had net income of over $35B for the 4 quarters ending in March of this year. That's not zero sum, that's a company making significant amounts of real cash providing a whole suite of services that didn't even exist 50 or even 25 years ago.
It does not matter why, the point is, your stock trading activity can create losers, even though the stock market is not a zero sum game.
So this idea that the stock market is "morally better" than zero sum games (like the Forex or the Futures) is simply not true.
"your stock trading activity can create losers", please expand on this, it is a rather bold statement, so please back it up a little. How does "my activity", "create losers". And be specific as possible please.
"a zero sum game" means for me to win, someone has to lose, like chess for example, for me to lose someone has to win, like a coinflip. This is why communist & lazy, greedy, player haters like to argue that trading is a "zero sum game", to try and shame people instead of congratulate them where they themselves have failed. We already went over why this isnt the case, but if you could please explain how you drew your conclusion, thank you in advance.
Also, If I buy a stock and the company goes bankrupt and stock goes to zero, who won exactly?
"a zero sum game" means for me to win, someone has to lose, like chess for example, for me to lose someone has to win, like a coinflip. This is why communist & lazy, greedy, player haters like to argue that trading is a "zero sum game", to try and shame people instead of congratulate them where they themselves have failed. We already went over why this isnt the case, but if you could please explain how you drew your conclusion, thank you in advance.
Also, If I buy a stock and the company goes bankrupt and stock goes to zero, who won exactly?
My english is not great but actually i ment what gives value to currency in general.
Someone or something must pay the difference in speculation(car sales or stocks or fliping housing)
all those specialists need food and other resource to continue hustling.
Human, robot, automation , whatever is moving resource out of mother earth, or producing something out of it .
Other than evaluating stocks or flipping cars , houses etc.
Its bad example but IMO if noone would be actually moving themselves for currency+all automation would be stopped.
And everyone started speculation tomorrow.
Currency would be paper, not even great toilet paper.
Or bits in computer ,as useful as score in videogame.
Soon the computers would turn off due to no electricity, unless robots/automation would have failsafe automated maintance of automation.
Car has to be built,maintained etc. Speculation does not directly add that type of physical value IMO.
To my knowledge liquidity is only useful for other specialists who are on opposite side.
But can price go 2 opposite ways simultaneously benefiting both opposing parties?
If its spread widening, then middlemen benefit.
It does seem like zero sum game in that sence.
Also investors can be balancers , adding money&motivation where its needed.
Gaining on correct decisions.
Gain might be others loss at least with human labour.
With robotics and automation it may be harder to classify loss if little maintance.
Rigging the playing field is also popular.
https://en.m.wikipedia.org/wiki/Lemon_socialism
Privatizing Profits And Socializing Losses seems like 1000+year old zero sum scheme.
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Even in those cases it isn't zero sum. Unemployement was sub-5% when I started my company, the employees I hired certainly had plenty of other opportunities and chose to work for us, so clearly they were getting something out of it. Absent significant employee exploitation, employees don't suffer negatively to an equal extent that the company does well, as would be required if that were indeed "zero sum".
Moral hazard is a problem but isn't inherently zero sum either. In fact there are a large number of situations where we purposely socialize losses in a manner that actually significantly increases the total size of the pie. For example, one of the main jobs of the SBA is to issue government backing for small business loans. That is the government explicitly taking on the potential of losses while allowing the small business owners (and banks doing the SBA lending) to keep the profits. While I haven't participated in those programs I understand they've allowed literally millions of small businesses to succeed which form a significant portion of our economy that wouldn't be there otherwise, which isn't zero sum.
Just the existence of a public stock market has created real value. When investors in Sig’s company have an option to realize their investment, they are more willing to make the initial investment in the first place.
Deep liquid markets make financing easier which allows for more productivity.
Deep liquid markets make financing easier which allows for more productivity.
- From wikipedia......zero-sum thinking as:
A general belief system about the antagonistic nature of social relations, shared by people in a society or culture and based on the implicit assumption that a finite amount of goods exists in the world, in which one person's winning makes others the losers, and vice versa ... a relatively permanent and general conviction that social relations are like a zero-sum game. People who share this conviction believe that success, especially economic success, is possible only at the expense of other people's failures.[1]
Zero-sum bias is a cognitive bias towards zero-sum thinking; it is people's tendency to intuitively judge that a situation is zero-sum, even when this is not the case.[4] This bias promotes zero-sum fallacies, false beliefs that situations are zero-sum. Such fallacies can cause other false judgements and poor decisions.
I fail to understand what is false in thinking so.
Law of physics states...
The law of conservation of energy states that energy can neither be created nor destroyed - only converted from one form of energy to another. This means that a system always has the same amount of energy, unless it's added from the outside.
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Exactly;
+ markets makers/specialists/exchanges/dividends can profit also. And can be some exceptions to any rule; grain elevators,,,,,LUV airline hedging fuel. And a realty derivative like a mortgage can profit plenty of players.