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

[fletch2]

Quote from bighog:

Where is this magical growth of wealth coming from?

Technology is but one example, and there is nothing magic about it. When the cotton gin was invented, the world became more wealthy. All cotton products became cheaper to produce and higher quality, without any corresponding loss. Those machines created wealth.

There are countless other examples.

Fletch

 

[777]

Trading, like Casino Poker, is not a Zero Sum Game.

In a Zero Sum Game (such as two people betting an equellamount on a coin flip) for every dollar lost another player has won a dollar.

In a Casino Poker Game the house charges an hourly fee to play (or takes a very small percetage of each pot) so if the players were close in ability they would all lose in the long run.

If a group of friends all played poker together with no "house fee' or dealer tipping, etc.. This would be a Zero Sum Game.

In trading, money is continually siphoned out of the game via slippage, commissions, etc.

HOWEVER, games do not have to be Zero Sum for the "Expert Players" to make a living if they have a large enough edge and do enough volume.

 

[goldenarm]

When the cotton gin was invented, then cotton manufacturers became wealthy, not "the world". Demand was created for cotton products and a Darwinian cycle was created among the cotton companies. There were winners and losers as manufacturing processes became more advanced. Automated processes drove costs down and left many laborers unemployed. Demand for cotton caused manufacturers of linen and synthetic fabrics to go out of business. Wealth was not "created" from thin air. There was a reallocation of wealth from other industries. Hence, the zero sum game.

 

[777]

Trading, like Casino Poker, is not a Zero Sum Game.

In a Zero Sum Game (such as two people betting an equal amount on a coin flip) for every dollar lost another player has won a dollar. Money is not siphoned off the game by a non-player.

If two expert Tic Tac Toe players played each other, they would break even in a Zero Sum Game. If fees for playing were charged, both players would obviously lose in this game.

In a Casino Poker Game the house charges an hourly fee to play (or takes a very small percentage of each pot) so if the players were close in ability they would all lose in the long run.

If a group of friends all played poker together with no House Fee or other fees, etc.. This would be a Zero Sum Game.

In trading, money is continually siphoned out of the game via slippage, commissions, etc.

HOWEVER, games do not have to be Zero Sum for "Expert Players" to make a living If The Experts have a "large enough edge" (positive expectation) and do enough volume, they can prosper.

 

[Cesko]

Quote from goldenarm:

When the cotton gin was invented, then cotton manufacturers became wealthy, not "the world". Demand was created for cotton products and a Darwinian cycle was created among the cotton companies. There were winners and losers as manufacturing processes became more advanced. Automated processes drove costs down and left many laborers unemployed. Demand for cotton caused manufacturers of linen and synthetic fabrics to go out of business. Wealth was not "created" from thin air. There was a reallocation of wealth from other industries. Hence, the zero sum game.

WRONG!!

Today's American poor have more luxurious life than Kings and Queens 1000 years ago.

!50 years ago in America 30% of population could hardly feed the country (agriculture). Now it's being done by what 2-3% of population?? How come we aren't all fucking unemployed? Do the freaking thinking for God's sake.

 

[goldenarm]

Slippage and commissions in trading are considered part of Costs of Goods Sold and are fixed costs. All traders factor this into the stock trading game as an expense to be overcome, along with systems costs, desk fees, etc. This doesn't mean that trading is not a zero sum game.

Trading commissions belong to another zero sum game: the back office game that broker/dealer firms, clearinghouses, exchanges and systems platforms engage in. There are winners and losers in this game as well as is evidenced by the corpses of many daytrading firms and systems platforms.

 

[goldenarm]

I'm not saying that WEALTH is a zero sum game, because wealth can be created from brain power which is theoretically infinite. Heck, look at YouTube and the wealth that was generated by its founders!

But stock trading, a game with a finite group of participants and finite prices, IS a zero sum game for all of the players taken as a whole (though some are more consistently profitable than others). For each winner, there's a loser (or group of losers) somewhere out there, even among different time frames.

 

[uncleTom]

Futures is a zero sume game.

Nowhere and I mean nowhere does it ever state or even imply that equities are zero-sum.

End Discussion.

 

[volente_00]

Quote from whitster:


for every person LONG MSFT, there is not a corresponding short position

I disagree, every share issued by the company is technically a short position since all outstanding shares are a liability to the company. If they choose to do a stock buy back and the original shares were issued at 10 and are now trading at 20, where do you think the 10 dollar profit you get is coming from ? Wealth is not created out of thin air, just transferred from one party to another.

 

[bighog]

New wealth. Really? You start a company, you get investors, the banks loan you money, people buy or use your product.

You make IPO in the mkt, people buy the stock etc.

These are choices others made to HELP you acquire some money from OTHER people. Where is the new wealth?

This can get wrapped up in semantics so lets not go that far. But, i stand by my contention that new wealth is not created unless a TOTALLY new SOURCE is found. I myself have not found a huge gold nugget undiscovered before. I have made money from trading, but that is not creating anything.

PS, BEARS SUCK!!!!!!