Originally posted by QQQBALL
ZSG implies that there is a ZERO SUM..... the stock market is not ZSG. my example was fairly simple - who lost $100 - the answer is also very simple - NOBODY! Gum, cousins and all manner of confusion will not change that.
a) there is no free lunch.
b) if there is no free lunch, then somebody must be paying for it.
Do you understand the fractional reserve system? Do you understand that fiat money can be created and destroyed via strokes on a keyboard, that massive dislocations of capital in either direction can rip apart the structure of an economy, that retirees are dependent on younger generations holding up the value of their stocks as they cash out, that the only way the masses can win long term is if a minority creates a sustainable rise in value through some form of innovation or action and then shares it with the rest of humanity, that wealth transfer is a real and constant phenomenon, that capital consistently flows from irrational hands to rational ones just as water seeks its own level, and that it happens in a million different ways both intentional and unintentional?
There are clear losers when the money supply contracts, just as there are clear losers in a game of musical chairs. When credit flows expand at a rate faster than true value is being created, they will necessarily contract sooner or later, causing messiness and pain in the process as fools reap their folly. This happens over and over because people are prone to overreaching. In your "who loses" question you assume no one loses simply because the loss hasn't been realized yet, but the length of holding time is irrelevant, the ultimate cashout point is what matters. As long as credit flows are expanding, everyone can be winning- TEMPORARILY- just as no one is losing in musical chairs when the music is still playing. But the only way credit flows can expand PERMANENTLY is IF some real value, some sustainable gain, is created that then establishes a new floor (value players prefer buying as close to this 'floor' as possible). And if new value is created, then it was smart thinking or hard work wot done it- again not free, had to come from someone's hands or head. The government and many people think and act as if gains are free but they are really not. Fiat paper is free. Sustained value add requires innovation and hard work. And there will always be rubes who get too excited and shills to egg them on, thus there will always be booms that go too far in response to progress and inevitable busts in response.
It's a zero sum game that expands and contracts and never stops, though the size of the game gets bigger w/ time. Winners today can be losers tomorrow and vice versa, and with equities the decision can be put on hold for 5 or 10 or even 100 years, unlike a futures contract with an expiration date. But in the short run output must always be matched by input. If your stock goes down on Monday and back up on Tuesday, it was different dollars that pushed it back up. Output must match input in the long run too- ZSG minus the vig- but the picture is muddled by the fact that we are heavily betting that long term inputs will continue on an upward trend. The whole world is dependent on a minority of individuals to maintain a continual inflow of knowledge and productivity resulting in long term value add.
