I think it has alot to do with commissions....they play a role on it not being a true zero-sum game you can be gross positive and net negative......think about it..
The term zero sum game has nothing to do with profits or losses. I understand what you are saying El, but it has nothing to do with a zero sum game. I am not expressing an opinion. Zero sum means for every winner there is a loser of equal value. That is it. It doesn't matter about hedgeing, or commissions, or premium, or slippage. Those things have nothing to do with the zero sum instrument. Those are extraneous to the instrument. To break it down to about as simple as I can, if I sell a futures contract to you, and my commission is $5 and your commission is $4, then by what you guys are saying, there is not a zero sum. What has happened is, the term zero sum is being applied where it should not be. The term can be applied only to the contracts themselves, not the aggregate of commission, slippage, hedge, premium, profit, and loss, etc. It is the application of the term zero sum where it should not be applied that is in error on this thread.
Aphexcoil again proves how little he understands about market mechanics. For the stock market to be a zero-sum game there has to be someone short for every long. If you ever read a book on technical analysis you would know about a number called short interest. Short interest is the number of shares that are short in a given stock. The number is typically in the 10-25 percent range. This proves there is not an equal number long and short. To give you a simple example: Stock A has 10 shares total outstanding. Out of these, two are held short and long. If stock A goes up a point, was ten dollars made by the long shares AND ten dollars lost? Lets see 10-2= hmm. I'm sure you will disagree though even though this fact is like the monopoly money you play the market with, non-negotiable. MUChris
even though everything that needs to be said about this has been - ie, stocks aren't zero sum, futures are (ignoring commish) - i can see this thread going on for pointless page after page..
Personal attacks are not necessary. So, in essense, the stock market is a magical place where money is created and more people can leave with more money than they came with without that money coming from another person's pocket? Ok, you're right, I'm wrong then. I'm not going to argue with you.
Its called the wealth effect. And not just the stock market, any time you buy an asset that appreciates (stock, bonds, coins, stamps) you are benefitting from that "magic."
aphie, wealth is indeed "magically" (if you like) created every time someone starts a business (creates "value"). that's one of the great achievements of mankind (the creation of wealth) that has helped us create the kind of world we live in today.
HUH??? tell that to the people that bought the top and have lost over 8 trillion in your "magic" wealth effect..........
come on cubano, you're better than that. it simply means that the stockmarket isn't a zero sum game, not that nobody ever loses...