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

[jamis359]

Ha! You people are all wrong.

The stock market is rarely ever a zero sum game. In bull markets the liquidity and capitalization of the entire market is increasing. During capitalization expansions there does not have to be a loser for every winner. Likewise, during bear markets, liquidity and capitalization are contracting, and there are more losers than winners.

People who say it's a zero sum game forget that the market inhales and exhales with inflows and outflows. Zero sum game only holds true if the market had zero inflow and outflow and the total capitalization was held constant.

 

[mahras2]

Quote from Lights:

yes, that's what it is.. a theory.

Actually a theory is something based on facts.

Laymen seem to think that theory is assumption. Well thats hypothesizing not theory.

So game theory is a concept based on facts that have been repeatedly tested and found to be true.

 

[mahras2]

As for the topic:

http://www.investopedia.com/terms/z/zero-sumgame.asp

Options, futures, FX etc: shift wealth from one side to another.

Stocks: wealth can be generated.

 

[Bernard111]

>>Options and future contracts are examples of zero-sum games (excluding costs). For every person who gains on a contract, there is a counter-party who loses. Gambling is also an example of a zero-sum game. >>

'counter-party who loses': that's why the counter-party ID (one of the X_Trader column) is so important for some FCMs to establish a strategy?....

 

[Lights]

profits and losses are realized when positions are CLOSED. so an open winning position in a bull market may eventually be closed out at a loss during a bear market. it is near impossible to calculate the real winners or losers from any one transaction because a long or short position can theoretically be held forever unless delisted or stopped out on margin call.

Quote from jamis359:

Ha! You people are all wrong.

The stock market is rarely ever a zero sum game. In bull markets the liquidity and capitalization of the entire market is increasing. During capitalization expansions there does not have to be a loser for every winner. Likewise, during bear markets, liquidity and capitalization are contracting, and there are more losers than winners.

People who say it's a zero sum game forget that the market inhales and exhales with inflows and outflows. Zero sum game only holds true if the market had zero inflow and outflow and the total capitalization was held constant.

 

[Lights]

Well I know that the efficient market theory is bullsh*t.

Quote from mahras2:

Actually a theory is something based on facts.

Laymen seem to think that theory is assumption. Well thats hypothesizing not theory.

So game theory is a concept based on facts that have been repeatedly tested and found to be true.

 

[mahras2]

Quote from Lights:

Well I know that the efficient market theory is bullsh*t.

Most people don't use the correct terms for that either. Its known as the Efficient Market Hypothesis (EMH). Yes, I do agree with your assessment somewhat.

http://www.e-m-h.org/

There are very few true theories when it comes to economics.

 

[Lights]

Actually, the Efficient Market Hypothesis is the central part of a larger field of economics called the Efficient Market Theory (EMT).

Quote from mahras2:

Most people don't use the correct terms for that either. Its known as the Efficient Market Hypothesis (EMH). Yes, I do agree with your assessment somewhat.

http://www.e-m-h.org/

There are very few true theories when it comes to economics.

 

[mahras2]

Quote from Lights:

Actually, the Efficient Market Hypothesis is the central part of a larger field of economics called the Efficient Market Theory (EMT).

Makes you wonder why its called a theory when its central dogma is a hypothesis You are very correct though.

Wild academics....

 

[whitster]

efficient market theory/hypothesis/wildassedguess has very very very little to do with the fact that futures/options are zero sum, and equities are not

the former is a (at best) conjecture about the possibility of "beating the market", which is absurd, but at least theoretically arguable

the latter is simply an irrefutable statement about the structure of the market

nobody (NOBODY) argues that a poker game is not zero sum.

futures/option are no different. for every option bought, there is a writer who wrote it, and somebody who bought it. no wealth is created. the net is zero. this is totally different from the stock market where wealth is created every day. there is not a net zero sum necessarily in the stock market. there is in the options/futures market. they are different in structure

usually, at this point, somebody starts protesting

"i can make $$ in the futures market, so it's not zero sum", which is totally irrelevant

i trade futures for a living. has zero to do with the fact that they are zero sum.