Divedend paid and/ or the appreciation or depreciation from the original issuing price is what makes it a zero sums game. For ever dollar the stock goes up from the ipo price, the company loses 1 dollar due to their liability to the shareholder, for every dollar that it moves down, the company has gained that dollar at the shareholders expense. No matter how you look at it in stocks, someone is always profiting at the expense of others due to the fact that the stock that is orignally issued is "technically a short position " due to the liability it is to the company.
zero sum game?????????????
- Thread starter madmunny
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Divedend paid and/ or the appreciation or depreciation from the original issuing price is what makes it a zero sums game. For ever dollar the stock goes up from the ipo price, the company loses 1 dollar due to their liability to the shareholder, for every dollar that it moves down, the company has gained that dollar at the shareholders expense. No matter how you look at it in stocks, someone is always profiting at the expense of others due to the fact that the stock that is orignally issued is "technically a short position " due to the liability it is to the company.
Pekelo, certainly the stock market is not a closed system but there is an upper bound. This bound is the GDP growth. If the stock market functions efficiently then this is the most that the average investor can extract as return. The available data support this. You just have to check the historical returns of various stock markets around the world. At most the real stock market growth (inflation adjusted) + dividends equal the country¢s GDP growth. As I already said earlier in this thread if an investor is making more than this mediocre return (3 – 4% annually) it will take it from the loss of another investor.
What happens when the country doesn't have a positive GDP?
(and I am sure it happens one time or other)
Does that mean that in that case its stockmarket became a zero or negative game?
As a logical positivist, I tend to think that a sentence , like: The stockmarket is a zero sum (or non-zero sum) game." is meaningless, because simply we just can not tell. Certain stocks are positive games, certain ones are negative and another ones are zero. Generally it is a non-zero sum game, because of the 3 party set up (buyer,seller,company), but other than that, we can not tell for sure. I actually think that a stock can be both negative and positive sum, depending on which timeframe we are looking at.
If I can just find 1 (repeat, one) company that is a negative sum game, you can not say that the stockmarket itself is a positive sum game.
It is like saying: ET traders are profitable. Some are, most probably aren't, we just can not tell as a generalization...
This is just unreal. Regardless of hedging, trading ability, or anything else, as whitster says, futures and options are zero sum. Stating otherwise is like saying 2+2=5; quite literally. I have little interest in belittling anyone, but this is just getting ridiculous. There is nothing to dispute here. Within the confined arena that is a derivatives market, no wealth is ever created and thus it is axiomatic that said markets are zero sum. PERIOD. But, but, but, nothing.....