But Pabst, "underperforming" is not losing money. People who are not in stocks are not "de facto short", because there is no necessity to own stocks. Stocks are not an expense, like one's place of residence. Besides, capital not in stocks must be invested into other things, even if it's only cash. Cash, bonds, real estate etc earn positive returns over the long-term in a growing economy.
What matters is the internal return of the assets in question - how much does the book value increase (accurately measured) and dividend/coupon payout amount to, year on year. That is the "positive sum" element which you are overlooking, and which is not present for example in most of the commodities markets.
For example, let's say company X has $100 mill in cash. It invests it and makes $10 mill in business operations. It is now worth $110m. If the stock was quoted at market cap of $100m at the start, and is now quoted at $110m, then it offers identical value to a new buyer, yet it has also returned 10% to the original owners of the stock. Thus the new buyer has not lost out - he can still buy $1 worth of stock for $1 worth of cash. And the original owners have made a 10% return on capital. Someone has gained, while no one else has lost out. That's positive sum.
If you think about it, financial markets just represent a claim on the economic assets of a country. If a country experiences economic growth in the long-term, then the markets will earn a positive return.
