yes clearly the stock market is not zero sum for the simple reason that the seller may be simply trying to raise money for their business on the IPO, and if the stock keeps going up the all are winners. sellers are not always traders, and why can't that be for futures? let's say that hedging risk produces efficiency, so selling in a rising corn market can be good if you are a producer. sure you may have sold at a higher price but hedging allows you to plan.
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zero sum game?????????????
- Thread starter madmunny
- Start date
The only thing that matters when discussing zero-sum in the future markets is the money that is exchanged for futures contracts. What you do with your farm or your corn is irrelevant as it is not part of the futures market.Quote from Perseus:
zero sum for which players? all? how is it irrelevant?
In the futures market, there is a dollar lost for every dollar made. Anything external to the futures market may be an interesting discussion but it is not germane this discussion.
correct
why do we keep repeating ourselves
for every long futures position, there is an offsetting short - in futures
that is what makes it zero sum.
in futures, you are trading a CONTRACT, an agreement. that's all it is.
his comment was (and IS) irrelevant to the fact that futures are zero sum
of course hedgers use the futures market to offset real holdings.
duh
what does that have to do with the futures market being zero sum? absolutely NOTHING
why do we keep repeating ourselves
for every long futures position, there is an offsetting short - in futures
that is what makes it zero sum.
in futures, you are trading a CONTRACT, an agreement. that's all it is.
his comment was (and IS) irrelevant to the fact that futures are zero sum
of course hedgers use the futures market to offset real holdings.
duh
what does that have to do with the futures market being zero sum? absolutely NOTHING
It doesnt matter what their motives are or how the futures contracts offset other positions they may have. Those are external and are not part of the futures market. Yes a farmer can "lose" on a futures contract and still come out ahead because he was using it for hedging. He still lost money on the futures contract.Quote from Perseus:
you are making everyone into a trader, and they are not. for some people the futures market is only one part of a larger equation in their enterprise.
The futures market is zero-sum. If you want to add things outside of the futures market then you are no longer talking about the same thing, and frankly once you start adding in anything else the discussion is completely pointless - I will agree that the world is not zero-sum (which is basically what you are getting at when you include everything in the discussion)
i think the debate here involves two very different perceptions of zero sum. one argument is any stock transaction at the moment is not zero sum. but the other argument some are making is that over time, the net amount of wealth created by the stock market is offset by how much is lost by all participants. they believe that if it was possible for everyone to win in the stock market, that money is being created from nothing and this is impossible.
anyway, traders and econ professors have been debating this for well over a century.
it is virtually impossible to prove. hence, the ongoing debate over time.
anyway, traders and econ professors have been debating this for well over a century.
it is virtually impossible to prove. hence, the ongoing debate over time.
what you are trying to assert is contrary to economics. That trading produces value is well known, for people other than us who deal with real production.
are you trying to tell me that if i am a farmer and I sell one contract to Archer Daniels, then later deliver against that to Archer, then I and Archer have gained nothing? If the price goes down and Archer is debited, it is simply part of the cost of the corn. That's not zero sum, they just wanted to be assured of supply.
If nothing else the price signals are of enormous value.
are you trying to tell me that if i am a farmer and I sell one contract to Archer Daniels, then later deliver against that to Archer, then I and Archer have gained nothing? If the price goes down and Archer is debited, it is simply part of the cost of the corn. That's not zero sum, they just wanted to be assured of supply.
If nothing else the price signals are of enormous value.