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

Merriam Webster Online Dictionary

Main Entry: zero-sum
Function: adjective
: of, relating to, or being a situation (as a game or relationship) in which a gain for one side entails a corresponding loss for the other side


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This is easy to see if you try to find an instance where there are no losers and all participants are winners: an impossibility.

Step 1:
Google IPO at $85 (gain $85)
Trader "A" buy at $85 (lose $85)

Step 2:
Google rise to $100
"A" sells at $100 (gain $100)
"B" buys at $100 (lose $100)

Step 3:
Google rise to $200
"B" sells at $200 (gain $200)
"C" buys at $200 (lose $200)

There will never be a step where a gain is not offset by a loss.

Count in commissions and its easy to see that this is a negative sum game.
 
Quote from Matt8200:
2004 total US IPO offers raised $11 billion
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IPOs are not uniformly distributed over time. In my country IPOs and other stock issues raised 250 million $ during 2004 but more than 5 billion $ in 1999. On top of that the management owns big part of these new companies that distribute them to the investors after entering the stock market, so even more money is exiting the system.
 
Quote from 1000:

Why the sell of in treasuries soon after? If it was a non-event then there should have been a more linear sell off occuring over the past month.

Was this a knee-jerk reaction to the European selling, or going back to convexity, was someone trying to play hangman?

However, IMHO, could it have something to do with the Euro having to be kept around or above the 1.20 level?
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I suppose they say ignorance is bliss, but 1000, I wouldn't call you bliss.
 
Quote from DynamicReplic8r:

I suppose they say ignorance is bliss, but 1000, I wouldn't call you bliss.
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You can call me all you want, ignorant, shark, vulture. However, from my experience, I take aid and comfort from the cash in my bank account (all practical and none theoretical).

May be I am humbled by it, and as such realize that my bank can then make a loan for someone else to be able to eke out an existance, or buy their stuff from China. I made the effort to complete the circle.

To now, it has been a long and steep learning curve for me, and will continue to be so, to think any other way would be ignorant.:cool:
 
I don't like to see bad math, so I have to correct it:

Quote from Remiraz:

Step 1:
Google IPO at $85 (gain $85)
Trader "A" buy at $85 (lose $85)

Step 2:
Google rise to $100
"A" sells at $100 (gain $100)
"B" buys at $100 (lose $100)

Step 3:
Google rise to $200
"B" sells at $200 (gain $200)
"C" buys at $200 (lose $200)
More...

In step 2. when A sells for $100 his gain is not $100 because he got it for $85, so unless you were educated in the American public school system (understandable disadvantage), the correct gain is for A: $15.

When B buys is for $100 he doesn't have a loss or gain (yet). He simply owns a stock. He is going to have a gain or loss WHEN he sells it.

So in step 3. when B sells it for $200 he has obviously a gain of $100 (I spell it out: 200-100) and C again has no loss, he simply owns a more expensive stock.

At this point the company took $85 for each stock issued, and C holds one stock for $200. Only time and the company's business will tell if C is going to make money on it or lose, but in this example so far it was a POSITIVE SUM game, because everybody made money. Trader A has $15 gain, B has $100 gain and C has the stock.

Man, I already spelled this out in my voting options, why don't you guys read what was said before??? In the phase when the company generates wealth (or the stocks flies) it is a positive sum game and when the tide turns it is a negative sum...
 
Quote from Matt8200:

lol the post in here are getting worse and worse. The stock market is a negative sums game now haha, everyone get your money out of the stock market, its not for people to make money. Seriously where did you get your numbers? Could you provide us with some references.


This is what I found:

2004 total US IPO offers raised $11 billion
http://www.altassets.com/news/arc/2006/nz7975.php

2004 total global IPO offers raised $124 billion
http://www.ey.com/global/content.nsf/International/Services_-_SGM_-_Global_IPO_Survey_2005

$213.6 billion in dividends paid during 2004 by S&P 500 stocks
http://www.iht.com/articles/2005/01/04/business/dividend.php

The S&P 500 alone almost paid out twice the total amount of all global dividends paid during 2004.
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Sigh. For people who can neither read nor think, I have nothing more to say. BTW, check your grammar before posting next time.
 
No, please do post again. I would love for you to explain the stock market is like a lottery and how it loses most of the IPO earnings put into it. That clearly contradicts the numbers I have found.

PS, sorry, I might have missed a few commas. You need to check spelling before you post next time.
 
Quote from Pekelo:


In step 2. when A sells for $100 his gain is not $100 because he got it for $85, so unless you were educated in the American public school system (understandable disadvantage), the correct gain is for A: $15.

When B buys is for $100 he doesn't have a loss or gain (yet). He simply owns a stock. He is going to have a gain or loss WHEN he sells it.
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I'm counting in absolute dollar gain/loss per step without regard for the previous step. IMHO counting in previous steps only makes it much more confusing.

When B buys for $100 he lose $100. 99% of the "positive sum game" argument I have seen make this error. They assume stocks = money. Stocks are just pieces of paper, you only get money when you sell them.

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Thus we find the bottleneck.

If we assume stocks = money. Then the game is positive sum. At any point in time some participants are going to be holding money and some holding stocks: they're all considered winner.

But then if you do not count stocks = money until they are liquidated, then the game is zero or negative sum.

I tend to favor not counting stocks as money for the same reason that Poker is considered a zero sum game. Players bring $1000 to a poker table. They pay the banker $1000 for $1000 worth of chips. Are the chips (stocks) counted like money? If so then there are $2000 worth of chips + money in the game, Poker is a positive sum game. If not then the same $1000 remains, it is a zero sum game.

Its just how you look at it.

Quote from Pekelo:

in this example so far it was a POSITIVE SUM game, because everybody made money. Trader A has $15 gain, B has $100 gain and C has the stock.
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Thus the key to this analysis is "C has the stock". Does it count as a gain or a loss? If you count the chips as a gain, then it is positive sum.

If not, it is zero sum:

A gain $15.
B gain $100.
Company gain $85.
Total gain = $200

C bought stock for $200.
Total loss = $200

Gain financed by loss. No new money is created. Hence, zero sum.

Therefore, you are right and so am I depending on how we look at things.
 
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