Is the stock market a zero-sum game?
- Thread starter Phill Twist
- Start date
No.
It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another."
Why do you care and what did you get when you googled it?
http://www.pragcap.com/is-the-stock-market-a-zero-sum-game/
Since there is really no obvious answer, that indicates the question is actually quite complex. At the above link the guy says, it is a positive sum game because "in the long-term because the pool expands as a result of market value expansion." Also if we count dividens that helps with the positive side.
On the other hand we have most companies never paying dividens, or some of them never actually making money (thus they kind of operate as a Ponzi) not to mention spreads+commission (you have to pay the casino, I mean house) and we are either on the negative sum side or at least gone back to zero sum...
Did this answer your question or would you like more confusion?
http://www.pragcap.com/is-the-stock-market-a-zero-sum-game/
Since there is really no obvious answer, that indicates the question is actually quite complex. At the above link the guy says, it is a positive sum game because "in the long-term because the pool expands as a result of market value expansion." Also if we count dividens that helps with the positive side.
On the other hand we have most companies never paying dividens, or some of them never actually making money (thus they kind of operate as a Ponzi) not to mention spreads+commission (you have to pay the casino, I mean house) and we are either on the negative sum side or at least gone back to zero sum...
Did this answer your question or would you like more confusion?
Last edited:
what is a zero-sum? if it means when one made money on the trader his counterpart has to loose money?
then no, it is not a zero sum game
example:
John bought 100 shares of XYZ at IPO at $10 dollars per share, then sold them to Peter @ $11 per share, Peter in turn sold it to Victor at $12 per share... Victor sold it at $13 ...no one lost in this scenario
the magic of the bull market ....he-he... everybody feels himself as great trader - everybody made money
but if zero-sum means that market does not create money - then yes it, is zero-sum game
all money made by the "geniuses" during periods of the bull market paid by suckers who will keep buying during the period of the bear market
then no, it is not a zero sum game
example:
John bought 100 shares of XYZ at IPO at $10 dollars per share, then sold them to Peter @ $11 per share, Peter in turn sold it to Victor at $12 per share... Victor sold it at $13 ...no one lost in this scenario
the magic of the bull market ....he-he... everybody feels himself as great trader - everybody made moneybut if zero-sum means that market does not create money - then yes it, is zero-sum game
all money made by the "geniuses" during periods of the bull market paid by suckers who will keep buying during the period of the bear market
If the quantity of money in any given market is increasing, the aggregate trades is a positive sum game.
you may still lose to inflation.
especially if minimum wage goes to$15/hr.
