But someone sold those shares of stock in the first place. Stocks don't come out of nowhere -- when issued, they represent a transfer of ownership. There might not necessarily be a short for every share, but there is (was) a seller for every buyer. An company goes public at the peak of internet mania; the first opening print is its all time high and proceeds to just go lower from there. Six months later the company is bankrupt, its stock worthless. Would you say that everyone lost money in this case? Who is actually laughing all the way to the bank, or more accurately, has been laughing for the past six months?
That sounds smooth in theory, but in reality that's not how it tends to go. When you separate it into nice bite-sized, local vision then you will never be able to see the picture of reality. Loss means different things to different people. In the minds of some, the initial stock seller lost because he didn't wait for say $260 for his sell. He lost out because while he might have hit his sale target the stock clearly was in a long term uptrend and he lost out on the running profit. In it's long definition, crude sure enough, it's all a legalized ponzi scheme. We just continue to hope for unending long term appreciation. You ride along hoping that you aren't the last sucker in the line before the crash. Profits/Losses are explained with good/bad earnings reports, good/bad management, embezzlement, profit taking and mergers. At the time that each transaction occurs, there is a sort of break even. Whether or not it was good or bad is party and timing dependent.
Sorry but this is a ridiculous comparison. You cannot say that opportunity cost in this case have anything to do with the stock market. You sell for 50k profit and put it risk free in bank. You earn interest risk free. Stock market involve risk. If you applied that you would always be a looser. Because lets say you were so stupid and bought GE 10 years ago and today made only 100k profit, after selling apple.. Then the buyer of your apple stock made 200k.. Then with your logic you lost 100k even though you took lot less risk. Doesnt work like this im afraid The stock market isnt a zero sum game. The options and futures however is. And sorry if someone commented on this already. Just had to without reading all the posts ORM
That was my argument about 20 pages ago. All stock issued becomes a liability on the company's book because they shorted it in the begining when they initially offered it.
There are many reasons why the market is not zero sum but the main one is that everyone has a different basis. I might be buying or selling to someone who is averaging up or down and, therefore, I could be improving thier position while taking profit on my end. You simply don't know the other person's basis, so to say that each trade is an absolute buy or sell for all participants is a gross oversimplification.
To say that a company doing an IPO is the equivalent of creating a short position is hard for me to swallow. If you create something in your garage, say a sculpture and then sell it to someone would you consider that you are now short the sculpture? Not every sale is a short sale, to me going short means that you did not have a position to begin with. When you own something (a company) and you sell ownership (part or full) you are not short the company, at least not by any definition that I am familiar with. Damn, I unsubscribed to this thread long ago, I can't believe its been resurrected and I'm being sucked back in.
Sorry. All: From now on, be sure to ask Buy1Sell2 for permission prior to posting in his thread. LOL...
This is the dumbest post I've seen so far at ET... and that is saying a LOT. With your inability to understand what "zero sum game" means... And your utterly reckless way of thinking and perceiving the markets... You have zero chance of ever becoming a successful trader. Stop wasting bandwidth. rm+