anyone mention commissions?
[and your time is worth something, as mentioned]
marc
[and your time is worth something, as mentioned]
marc
Is the stock market a zero-sum game?
- Thread starter Phill Twist
- Start date
The market is decidedly not zero sum. However some market activities, like buying and selling options and futures are since one party has to lose exactly as much as the other party wins.
I'd push back pretty hard on the "market is a ponzi scheme" idea. Google didn't exist 20 years ago, they're now making billions a year in profits and not paying dividends. That doesn't mean that if you bought 20% of Google early on for $1 which is now worth $100B you own nothing, which is what you're saying when you say its a ponzi scheme. You would own 20% of their roughly $15B in profit each year and the rights to any future increase in that profit. That's a real thing, not a ponzi scheme.
I'd push back pretty hard on the "market is a ponzi scheme" idea. Google didn't exist 20 years ago, they're now making billions a year in profits and not paying dividends. That doesn't mean that if you bought 20% of Google early on for $1 which is now worth $100B you own nothing, which is what you're saying when you say its a ponzi scheme. You would own 20% of their roughly $15B in profit each year and the rights to any future increase in that profit. That's a real thing, not a ponzi scheme.
Oh ffs not another zsg thread. No stocks are not zsg in the same sense as futures. With futures there is an infinite supply of contracts. You and I can magic them up out of thin air, not so with stocks.
Partly I agree yours. If index goes from 15000 to 18000, then every trader should make 20% in average.
Likewise, if index drops 20% down, then every traders lose 20% in average.
Therefore it is zero-sum with respect to index change, if there is NO commission and tax.
For example, for 50 years from 30 and 80, most traders pay comm+tax bigger than his initial seed (brought by his savings) If you pay 2% for comm+tax for 50 years, then who can survive after 50 years in average?
No, not a zero sum game because of two reasons.
1. Trading reduces the probability of famines, because if some people think food will be in short supply, then they will store it and sell it later for a higher price. Making cash money and avoiding famine.
2. It provides credit to companies to grow and advance technology. Check out "the ascent of money" and how the medici family carried society in the 15th century.
However, the financial system could be improved, but don't want to rant about that because don't want to be annoying.
Finally, it feels like zero sum when I'm losing!
1. Trading reduces the probability of famines, because if some people think food will be in short supply, then they will store it and sell it later for a higher price. Making cash money and avoiding famine.
2. It provides credit to companies to grow and advance technology. Check out "the ascent of money" and how the medici family carried society in the 15th century.
However, the financial system could be improved, but don't want to rant about that because don't want to be annoying.
Finally, it feels like zero sum when I'm losing!
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