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

could one of you academics who beleive the stock market is a zero sum game please explain this idea to me? I personaly think if you actually believe the market is a zero sum game you dont belong in it and should probably try to get a job as a university prof teaching theory and not actuality.

the way i see it...the only way it can be a zero-sum game is if every company in the market went bankrupt and became worthless and im pretty sure this wont happen.

maybe im wrong.....if i am please show me the error of my ways cause i am really gettin pissed off at all these posts i read where people state that the market is a zer0-sum game and if you can prove me wrong i can stop being pissed off at my percieved stupidity of you.

2. ### DynamicReplic8r

For every buyer, there is a seller. Therefore, when the long makes money the short loses money.

This is easy to see in the future and options markets.

In the stock market, I suppose it may be a little different. If you buy in the primary market, perhaps it could be a positive sum game for investors (at the opportunity expense of the company). But, once you get to the secondary market, and there is a fixed number of shares outstanding, for every buyer there must be a seller...for every winner, there is a loser.

Perhaps you could explain why you think it is not a zero-sum game. Lay out a scenario where more money is made than lost. Do you think that money is just magically created in the markets?

3. ### granville

Given that when one person buys a futures contract, someone must sell it to them. (One side makes delivery of the underlying at expiration, one takes delivery at expiration).

At expiration, one of them will have made \$X amount and the other will have lost \$X amount.

The total sum is zero [\$X-\$X = \$0].

This is what is meant by a zero sum 'game'. Nothing more, nothing less.

People apply the term broadly as though everyone has the same time horizon and so therefore markets are effecient.

4. ### ElectricSavant

Its a NEGATIVE SUM game my friend...from the first nano-second you enter, because of the spread, the games and the commissions...

yes for every buyer there is a seller....but that does not mean one has to lose money.....take a stock..any stock....google for instance......its ipo was somewhere around \$85...say i buy every share at 85 bucks.....and then sell them all to a different buyer at \$200....who then in turns sells them to another buyer at 350......

who has lost money here???...

until a stock becomes worthless from bankrupcy someone has always profited more than the losers have lost.....

so how can this be a zero sum game?

6. ### easyrider

What difference does it make? There is an opportunity to take some money for those who can do it. Thats all that really matters.

7. ### trend_guy

If you sell a stock at \$50 and it goes to \$60, does one or more people make the \$10?

If you buy a stock at \$50 and if goes to \$60, does someone miss out on that gain of \$10 you received?

IMO, it's completely a zero sum game except for this little thing called commission; but that can be considered zero sum as well because someone is paying and someone is receiving therefore if you minus the receiving from the paying you get ZERO!

8. ### ElectricSavant

Well the point is that time is not on your side...no matter what the edge is.

9. ### trend_guy

Your missing the point, by selling at \$200 you gave up \$200 plus in potential gains and those gains are in someone elses pocket or probably many other peoples pockets. IMO, giving away \$200 is the same as losing \$200.

10. ### ElectricSavant

You do not see all that the market has to give...because its a negative-sum game.

The trends you see are reduced because of this...the charts represent to you the resulting movement, when they could be so much more reflective of buying and selling...

#10     Feb 25, 2006
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