zero sum game?????????????
- Thread starter madmunny
- Start date
The game played the way it is established. In many instances, last man holding loses. And there's nothing wrong with this if you understand this "IS A POSSIBILITY" going in. You just hope to not be Jan.
Oh, I get it. If you make money then the game is positive sum. Duh, why didn't I think of that. Oh, I know because that has nothing to do with this. C'mon people this thread has been around for more than a month. It's 74 pages long. Everything that can be said has been said SEVERAL times over and over and over. If you don't understand the meaning of zero-sum game, then go look it up. You don't have to go very far. It has been posted over and over and over again in this thread. I understand as well as anyone that posting is a way to alleviate boredom. But, c'mon doesn't it eventually get boring to keep rehashing this.
No, and that is also why it is not zero sum
Do you seriously think that Goldman, Bear, City, MS, JPM are beatable. Never. Between them, they could milk the ass off you. They can shred the market to pieces in seconds.
But that is indulging in defeatism. And they learnt that lesson a very long time ago.
They need traders to win all the time. Otherwise they go out of business.
The only losers are in a totalitarian regime. Some pages ago I asked whether you would buy or sell the starving in Sudan.
The answer is neither, because whether you are 99m or 100m below water you are still going to drown, and, Sudan is not a capitalist democracy with no checks or balances.
So the foreigners can buy all the US treasury they want, but the US has no obligation to pay off its debt. It can just default.
The crucial point some people as missing:
For equity stocks...
"wealth" is constantly being created...
By real people ** working ** in the underlying companies.
So long term... stocks go up 10%/year and NOT zero sum game.
But short term trading of stocks (hours/days)... is certainly zero sum game.
The "wealth" creation has no impact on a 30 minute flip.
Futures/options is always zero sum game.
No wealth is created from this activity... only money/risk is transfered between players.
Any game without external "wealth" creation... is a zero sum game.
$1,000,000 goes in... $1,000,000 comes out.
It does not matter who wins/loses.
rm+
"Sellers also equal buyers in the stock market. "
but that is not relevant.
NET longs = net shorts in the options/futures markets. the sum total = 0
net longs <> net shorts in the stock market. hence, the sum is not (necessarily) zero. therefore, it is not zero sum.
there are several other reasons to explain why futures/options are zero sum and stocks are not.
this is the most basic.
you CANNOT have a long futures contract, without somebody being on the opposite side. these contracts are AGREEMENTS. that is all.
you CAN have a long stock holding without somebody being short the same stock holding.
they are differently structured markets.
but that is not relevant.
NET longs = net shorts in the options/futures markets. the sum total = 0
net longs <> net shorts in the stock market. hence, the sum is not (necessarily) zero. therefore, it is not zero sum.
there are several other reasons to explain why futures/options are zero sum and stocks are not.
this is the most basic.
you CANNOT have a long futures contract, without somebody being on the opposite side. these contracts are AGREEMENTS. that is all.
you CAN have a long stock holding without somebody being short the same stock holding.
they are differently structured markets.
I haven't read through this entire thread, but I think that the following would be true:
Equity markets - not zero sum. Why? Dividends. There is a fixed float outstanding, but a publicly traded company can add value to equation just by issuing a dividend.
Futures markets - zero sum. Why? Because longs and shorts are always matched up.
Options markets - great than zero sum. My understanding isn't quite as clear here, but due to the large sums of options that expire unexercised, I think the options markets would be positive sum. Unlike futures, options do not need to be closed out (or delivered on) at a fixed date, they can just expire unexercised.
all this talk of welath being made, would someone care to answer where the wealth being made comes from ?