"Fair enough, but the stock market does not create wealth, the economy does." correct. but in the LONG TERM (we are all dead ha ha), prices in the stock market reflect the value of those companies, which is a reflection of the value OF the economy. the reason why MSFT is worth many many times its stock value 1 yr after IPO is that the value of the company has grown, not merely some ephemeral opinion of MSFT's stock value. since the economy grows, the value of the stock market grows. stocks are a forward looking price/discovery method. they are not a zero sum game, because there is (believe it or not) a growing intrinsic value beneath the price of the stock. the PRICE swings wildly due to difference of opinion, hype, fear, whatever. That's how we TRADERs make money . but in the long run (pull up some quarterly/yearly charts), the average stock price will plot relatively closely the value of the company. in some sense, it is a feedback loop.; while the growing economy (and growing companies) grow, which in turn results in increased stock values, the loop works the other way, in that issuance of stock provides capital to the companies that allow them TO grow. that is why companies issue stock in the first place. it is true that if you buy at 1, then sell to me at 2, then i sell at 3, etc. it sounds like a zero sum game. but what u don't understand is that there is underlying capital improvements/value improvements that this growing stock price is reflecting. while short term swings (a la 2000) can move prices grossly out of line with value, in the long run, price regress to a mean. the fact that prices DO regress to a mean is why contrarian investing is such a great way to make money, as is spread trading, but i digress. a stock is priced at whatever people think it is worth. thus,. stock prices are purely opinion. however, a stock has an underlying tie to value - it is a specific percentage of a company. THAT is not debatable. if everybody agreed on the price of MSFT (efficient market theory), then the market would instantly adjust to whatever that value is/was. which is the absurdity of efficient market theory of course. one share of AAPL is worth X% of the actual COMPANY aapl. thus, if AAPL grows wealth, as it did phenomenally since steve jobs took over (which is also why i bot PIXR on weakness and banked heavily but i digress), the stock WILL reflect that. in the long term it is not a zero sum game as long as stocks are tied to underlying entities (companies). companies grow wealth. the economy grows. stockprices grow. see the relationship? contrarily, if a massive problem hits the US economy, and US companies on average lose 50% of their value (thru some catastrophic event), then it still won't be a losing game. overnight, billions of $$$ in stock value will dissapear. that's not a zero sum game either, of course. throughout history, naysayers have tried to talk the greatness of our nation and economy down. the smart money, otoh, has benefited from the growth in our economy by taking the opportunity to own some of the greatest companies and capital developing engines ever known to man. i suggest you do the same.
all interesting opinions, the bottomline is you should be playing the market to buy something for a dollar and sell it for more than a dollar. If you can do this there is no better job on earth IMO... unless maybe you are Jay Z! LOL
Stalker yes but your fogeting about the money the person who sold you your dirty socks made....so its still not a zero-sum game is it...and then there is still that original $1 i paid you for your dirty socks...so at one point when one of us gets sick of selling these socks back to the other one and quits.....the other will be positive $1.......... So...please stop tellin me its a phucking zero sum game its it aint
Stock hitting new high every day from first day of trading (ipo). Stock beeing bought out by privet investors and taken from market[stock market]. ENYONE that traded this stock is made money , still sum zero ?
not to mention that a dirty pair of socks does not (usually) grow wealth. US companies do. .00001% of MSFT (or whatever %age of the company = 1 share) is WORTH far more now than it was the year of MSFT's IPO. that is why the same share (which of course has split many times) is worth so much more. it is NOT a zero sum game because there is an underlying entity beneath the stock that has growing value. see my other post where i wank about this ad nauseum
MM, only way it isn't zero sum is if you can't account for the gains and losses, you still haven't been able to prove yourself. zero sum is only an accounting method, your missing the point badly.
Auction theory An instrument and its underlying price movements A purely Technical application of the quote system... Put it together and there is slop...
True, stocks grow in value as the underlying company grows in value. The company creates wealth. The only reason the stock grows in value is because new money comes into the market. Where did that new money come from? It came from wealth created by the economy (in part by that company). It's not the fact that the stock changes hands that causes the increase in value.
no Trend Guy ...it is not i who misses the point......i understand that zero-sum works in accounting.....if i pay you 1 for a stock you are +1 and i am -1......so for accounting books the net is zero....but the fact is i still own 1 stock work $1 so i have lost nothing so i am not actually -1...........so to say that for every winner there is a loser is wrong because the person who owns the stock at this moment is not really in the negative becuase they own the stock and they can turn around and sell it for a profit and the person they sold it to could then sell it for a profit and in fact that could go on indefinitely so that in actuality no-one ever lost money owning the stock if it continued to grow in value forever. My point has been trying to point out that in the stock market for me to make 1000 dollars somebody else does not need to lose 1000 as zero sum implys. the only case where this would happen is if the stock went to 0 because of bankrupcy.