The stock market isn't a zero-sum game because stocks aren't simply ONLY investments traded from one person to another. Businesses inject money in via dividends/buybacks so wealth is constantly being created and so value is added overtime. If you subtract all the injections by businesses then yes it can be considered zero-sum. The context of the 95% statistic is too vague since it is unclear what exactly the pool of people is the 95% representing. Also, is the 5% meaning people who are consistently profitable trading or professional? Or merely people who don't lose it all? Or people who beat the market? I think what is correct is... 5% of people who set out to try to consistently make money in the stock market actually succeed in becoming professional. Regardless I'm sure the 5% is made up on the spot anyways. What matters is that its a very small percentage.
Please, do not convert this thread into another zero-sum debate. I posed specific questions that have nothing to do directly with the zero-sum game or not. I appreciate your attention. Bill
Someone posted a ways back -- I forget who it was or I'd give them credit -- a CPA firm reported that 36% of traders win (based on the returns they did) but less than 5% of them made enough money to do it for a living.
Someone stated that there was an upward bias to the equity markets.This is a very commonly stated falsehood.All the commonly published charts are not adjusted for the fake gummint published inflation let alone a real inflation rate. I know you can argue that short term it doesn't matter. I think it does matter since I agree we trade in short term but live in the long term hopefully.Why else bother with any of this. If any one believes this is a zero sum game minus costs then he should know as any real gambler ( Excuse me. It's called gaming now a days) knows there is no way to win long term. If you are lucky enough to get substantially ahead. Take your gains and run. PROFITS ARE LUCK. SMALL LOSES ARE SKILL. A motto to live by. It takes your ego out of the game.
The numbers sound very reasonable to me since most trade noise and end up either slightly up or down. But I constantly hear about this 95% losers and if it is true then something must befundamentally wrong or incomprehensible. Bill
I amend this...PROFITS ARE PROBABILITY-BASED LUCK. SMALL LOSSES RELATIVE TO THE SIZE OF YOUR WINS IS A SKILL.
Where did you see my dissagreement? Are you having a bad day or something? Do you have anything of value to contribute? Bill
Hey Bill, I would certainly like to think that more than 95% of traders are making gains on the balance. However, I think that if someone is serious about making trading their living they need the right software, hardware, time, money and emotional balance to succeed which basically eliminates a vast proportion of potential traders. I think that its also important to remember that most people who wish to start a 'business' usually do so with insufficient funds to cover losses, learn from mistakes and have live with delusions of grandeur both of which will kill any business and certainly finish a trader quickly. Successful individual traders are certainly not huge in numbers which is great, but i hope for all our sakes that a living can be made from this extraordinary business. Dave "Real knowledge is to know the extent of one's ignorance" ~Confucius