IMO our existence and everything in it is part of a zero sum game. e=mc^2
I agree.
The conventional wisdom is derivatives trading are zero sum, but many will then stress equities are not zero sum because 'companies grow' and this is then used as an argument for the holy grail of "long term investing".
My take is the economy as a whole at any point in time is zero sum. The money supply at a fixed snap shot is fixed. But over time the economy's money supply grows due to money printing as its a fiat currency. But the stock market 'is not zero sum' only for the reason that money is redirected from the economy and into the stock market via money flow and payment of dividends (from money that companies scourge from the economy) that are distributed to its shareholders.
But its just a redistribution of money. So while looking at only the stock market, it does appear to be non-zero sum, the economy as a whole is very much zero sum. All we are doing is redistributing money from on place to another and aggregating it to a segment of the populus (the shareholders). The reason why central banks love fiat currency is because it can grow the money supply. So we can continue to drink the koolaid. You see, companies make money, and they borrow money, and they pay shareholders. The stock market also sees continued money inflow from continued investments to cause multiples expansion. All this creates the elusion of wealth generation, when it is merely wealth aggregation with continued money printing by central banks to increase the money supply at a later date. Wealth creation is a facade Companies that "grow" are simply money aggregators and "wealth generation" is simply the market's way of prioritizing economic wealth distribution to efficient enterprises.
The stock market, while during bull markets and with a robust growing economy, appears not to be zero sum, the economy is zero sum for the simple fact money supply is fixed. This is the only reason why you can say that buying a quality company now, you can sell to another buyer at a later date, and that buyer later becoming the seller, and still not leave anyone being net losers. Its because of dividends and money inflow into the stock market. If that were not true, and companies paid no dividends and the number of market participants were fixed with fixed pool of capital, then the stock market then becomes zero sum.
Essentially, central banks create more money over time. There is net inflow of capital into the stock market where it ultimately aggregates like a sink. The rich gets richer and amasses more and more of that supply of money. The rich don't spend nearly as much money as they collect. And the central banks keep printing more and more leaving the transacting money supply used in the economy being relatively constant. But essentially, it just leads to a greater rich-poor divide with the rich simply getting richer and richer and they can't help it too. Thats just how the economy works.
