Zero Sum Theory.

[u21c3f6]

Quote from u21c3f6:

"... Stocks are not zero-sum

Quote from Scataphagos:

Yes, they are. You don't see it because your view is too short-sighted.... not that it makes any real difference in trading

Ignoring commission and spread, if I buy or sell any random option what is my expected value? It is zero. If I threw darts at the option page and bought and sold options at random (and did not pay commission and bought/sold mid-spread), in the long-run my expected net is zero.

Up until a few years ago, the reason that people put money in the stock market instead of CDs was because of the "expected" return of 9% compared to 5% or less for CDs. This is very different than the options/futures market where (ignoring commission and spread) the expected return is and always will be zero (despite the fact that some will actually make or lose more than the expectation).

Again, I think some of the confusion here is semantics. A zero-sum game has a definition that fits the options/futures markets but does not fit stocks. People are adding scenarios to stocks which are not part of the zero-sum game definition.

Joe.

 

[Scataphagos]

Quote from u21c3f6:

Quote from u21c3f6:

"... Stocks are not zero-sum



A zero-sum game has a definition that fits the options/futures markets but does not fit stocks.

Obviously, your depth of analysis is shallow... you're not a thinker. Therefore anything you have to say in the future will be of zero interest and zero value to someone like me. You join my loonnnnng list of IGNORES!!

 

[Leonidas Anax]

Quote from FredBloggs:

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what did newton (an englishman) discover regarding energy? its the same with wealth: there is no such thing as wealth creation, only wealth distribution - so how could a financial market, be it stocks or futures be anything else?

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The physics analogy does not hold. The law of conservation of energy or the first law of thermodynamics says that matter (energy) can neither be created nor destroyed. However, that does not mean that gross global wealth cannot be increased.

Make a list of Neanderthal era inventions.

Now make a list of modern inventions.

Compare the lists.

What I'm saying is the creative power of the human mind can bring together natural resources in a way where the value of the sum is far greater than the value of the parts.

I'd rather have glass in the hole in my wall, to let light in and to keep cold and creatures out, rather than the constituent amount of sand.

By the way, isn't crediting your boy Newton a result of a creative reading of Principia combined with a bit of Whig history? Although I should probably let you get away with it, lest we admit credit to a German (Leibniz) or a Frenchman (shudder). In light of this unfortunate circumstance, perhaps we can find common ground to credit my boy Thales.

 

[intradaybill]

Quote from Leonidas Anax:

By the way, isn't crediting your boy Newton a result of a creative reading of Principia combined with a bit of Whig history? Although I should probably let you get away with it, lest we admit credit to a German (Leibniz) or a Frenchman (shudder). In light of this unfortunate circumstance, perhaps we can find common ground to credit my boy Thales.

Let us not get into physics in deapth here, as it is not the appropriate place, but Leibniz, although in my view the greatest of all for other reasons, he made a serious error in this area in a desperate attempt to seek support for his philosophy/ideology, he insisted that vis viva or what he defined as mv^2, was a conserved quantity. That was an error, since the measure of that quantity is reference frame dependent and it is preserved only under special circumstances. It is the center of momentum that is preserved, as Newton defined it, and which as Emy Noether showed after 300 years, it is due to translation symmetry.