zero sum game?????????????

Quote from whitster:

...this IS the case in futures. in the case of futures, EVERY SINGLE POSITION HAS AN OFFSETTING POSITION.
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For this to be a fair statement about futures, you have to ignore hedging.

Commercials sell huge numbers of corn contracts, for example. Speculators tend to buy corn contracts. The commercials don't lose money when the price of corn goes up because they are long the physical commodity at the same time. They, potentially, are fully hedged and neither make nor lose money no matter what happens on the futures market. On top of that, they will make the cost of carry on a crop that may not even exist yet.

At the same time, speculators will make money as the price of Corn rises.

As a result, it's possible for everyone to make money in futures--it's not a zero-sum game unless you constrain the argument solely to the futures market and ignore the cash market.
 
Quote from whitster:

i'll give one last example...

....

where did that extra 4,950,000 dollars come from?

it came from the BUILDING of wealth (in this case, through innovation).

ABCD is WORTH MORE.
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Do you think that because of the increase in the price of ABCD stock, there is a proportional increase in the Money Supply?

or, that because of the higher price the FED will print more money?

You forget that available money did not change and for a potential buyout of ABCD, the buyer must either sell some other EFGH stock or use liquid assets. In this respect, the wealth just created by ABCD is counterbalanced by a decrease of the wealth of another company or asset portfolio. Unless a transaction takes place, the wealth is virtual and it does not represent anything real.

Having said that, I think the issue is much more complicated than that. Is the stock market a zero sum game? probably not and maybe not provided any increase in stock prices is matched by a non-inflationary increase in money supply. Is trading stocks a zero sum game? probably yes, provided that the trading activity does not result in actions that increase the net wealth of the Economy. Not an easy one.

Ron
 
"Whitster ur very convincing but u can’t prove that u are right. So far creation > destruction. But who knows maybe we nuke each other to death, maybe Armageddon, maybe aliens will attack us. In the Armageddon case stocks are zero sum from beginning to end? There is no way of knowing that the amount of wealth 100 years from now is bigger than today, probably it is, and probably participants in the stock market as a group earns money for shouldering risk. "


you still don't get it

even if every single stock goes to zero overnight, that says nothing about whether the market is zero sum or not

cause (for the umpteenth time) that is completely irrelevant

when u finnally understand that zero sum does not (necessarily) mean that stocks ever go up again, you MIGHT have a clue

you are confusing the positive bias of the stock market with the fact that it is not zero sum.

the fact is that zero sum means wealth can be created. it ALSO means that wealth can be destroyed.

in a zero sum game, NEITHER can happen

get a clue

in a game of poker, money cannot be destroyed (rake aside, of course, which is the corollary of commissions, which are already not being discussed here).

so, again. you completely fail at reading comprehension

in a zero sum game, there HAVE to be offsetting positions/results.

so, if the stock market goes to zero, it says NOTHING about this issue

stop confusing POSITIVE BIAS with zero sum

completely tangential.

for pete's sake, try reading
 
"Having said that, I think the issue is much more complicated than that. Is the stock market a zero sum game? probably not and maybe not provided any increase in stock prices is matched by a non-inflationary increase in money supply"


again. 100% irrelevant

the lack of reading comprehension is amazing

pick up a book on game theory

familiarize yourself with what "zero sum game" MEANS.

there is no dispute.
except for those that cannot understand a simple definition

people are (the nimrods) confusing positive bias with non-zero sum

completely irrelevant

if wealth can be DESTROYED it is also not zero sum

futures markets cannot create or destroy wealth.

they can only transfer it

stock market can create OR destroy wealth

so, your point is irrelevant and based on fundamental misunderstanding

if the dow goes to 10 tomorrow, that says exactly zero about this issue

which is what u fail to understand
 
Quote from whitster:

"Having said that, I think the issue is much more complicated than that. Is the stock market a zero sum game? probably not and maybe not provided any increase in stock prices is matched by a non-inflationary increase in money supply"


again. 100% irrelevant

the lack of reading comprehension is amazing

pick up a book on game theory

familiarize yourself with what "zero sum game" MEANS.

there is no dispute.
except for those that cannot understand a simple definition

people are (the nimrods) confusing positive bias with non-zero sum

completely irrelevant

if wealth can be DESTROYED it is also not zero sum

futures markets cannot create or destroy wealth.

they can only transfer it

stock market can create OR destroy wealth

so, your point is irrelevant and based on fundamental misunderstanding

if the dow goes to 10 tomorrow, that says exactly zero about this issue

which is what u fail to understand
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Explain how this wealth is created. Do we harvest it from the wealth tree ?



If a stock is trading at 50, it does not mean every single share can be sold at 50 at the point in time. Where do you think the $50 is coming from that is used to buy your shares ? It was not just created out of thin air, perhaps it came from someone's savings, or from the sale of a asset so when they give you $50 for your 1 share zero wealth is created, it is only transferred from one person to another.
 
pick up a book on economics, if u don't understand how wealth is created.

there are a million examples.

everytime somebody makes an invention, for instance, that makes a production system more efficient- wealth is created.

that is one example in many

find me one (ONE) economist who disagrees that wealth can be created

nobody disputes this.

because not only is it supported in theory, but in the entire history of the world literally millions of times over.

take your position as a counterexample.

if wealth cannot be created, then it can ONLY be transferred

if that is true, then we cannot have more wealth now in the USA, than we did in 1931. and if we do have more wealth than 1931, then every cent we grew in wealth had to be transferred from somewhwere else (iow, somebody else lost wealth)

do u think we have more wealth?

hth

fwiw, every economist agrees that not only are WE more wealthy, but the WORLD (including the 3rd world) has GROWN wealth over the centuries.

simply put - we are richer.

do u honestly believe wealthcannot be created in an economy?

if u understand this, then u can understand how it can be created in capital markets

the only markets that cannot create (or destroy) wealth are zero sum markets - which are DESIGNED to have exactly equal offsetting positions.

obviously, you can only transfer wealth in such a system
 
Quote from whitster:

pick up a book on economics, if u don't understand how wealth is created.

there are a million examples.

everytime somebody makes an invention, for instance, that makes a production system more efficient- wealth is created.

that is one example in many

find me one (ONE) economist who disagrees that wealth can be created

nobody disputes this.

because not only is it supported in theory, but in the entire history of the world literally millions of times over.

take your position as a counterexample.

if wealth cannot be created, then it can ONLY be transferred

if that is true, then we cannot have more wealth now in the USA, than we did in 1931. and if we do have more wealth than 1931, then every cent we grew in wealth had to be transferred from somewhwere else (iow, somebody else lost wealth)

do u think we have more wealth?

hth

fwiw, every economist agrees that not only are WE more wealthy, but the WORLD (including the 3rd world) has GROWN wealth over the centuries.

simply put - we are richer.

do u honestly believe wealthcannot be created in an economy?

if u understand this, then u can understand how it can be created in capital markets

the only markets that cannot create (or destroy) wealth are zero sum markets - which are DESIGNED to have exactly equal offsetting positions.

obviously, you can only transfer wealth in such a system
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You are confusing wealth with money.

Say I buy some land and drill for oil and hit it big. I can transfer/ exchange my oil to Mobil for money. They in turn refine and exchange it for money from consumers. Wealth has been created for me but the amount of money remains the same between me/Mobil and the consumers as it has only been transferred.
 
i am not cofusing the two

money is irrelevant

the issue is wealth creation

inflation aside, we as a nation and the stock market as a system have far more wealth than they did 70 yrs ago.

inflation aside, the futures market has the exact same amount of wealth as it has ever had


the EXACT same. a net of zero
 
Explain how you think wealth is created in the stock market.

Where do you think every dollar that comes into the market comes from ? The wealth tree ?
 
Quote from whitster:

inflation aside, we as a nation and the stock market as a system have far more wealth than they did 70 yrs ago.
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And how much more debt have we incurred since then too ?
 
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