Opportunity loss? I suppose there is a 'term' for everything. I've got to laugh. The word, 'Euthanism', it works well where the markets are concerned.
all i want is for the zero-sum beleives to tell me who has lost money on google.......and by this i mean...who has lost the equivalent to the profit that has been made? so telling me your brother lost money when he bought 200 shares at 450 and sold at 375 is not required tell me who had lost the equivalent of the outstanding number of shares in the company multiplied by the current price of the stock. just tell me this....if you can then i will concede your zero-sum perception of the market is right..... in fact you pick any stock that is not bankrupt.....and show me how the same amount of money has been lost as made since the ipo...... anybody......please...... and again....opotunity cost\loss has nuthing to do with this topic.....
The stock market is not a zero sum game because wealth is created. Ex. comp a issues an ipo at 50. I buy at 50 and sell at 75, you buy from me at 75 and sell at 100, we both benefit without the other losing.
If you don´t count the dividend (hope it´s the right english word) and commissions, I still don´t see how stocks could be anything but a zero-sum game. Money exchange hands through the buying and selling of a paper, even if this paper is slowly rising for a hundred years. All the profit taken out is payed back to the market by some one else. You can create a zero-sum game where everyone wins every day, but it´s gonna cost more and to participate.
I will give you one last example of my point. Again, if you don't believe the concept of opportunity loss then you probably won't like my answer; but my advice is think about the scenario below and tell me how you would feel and if you felt you lost anything. You bought 1 million shares of GOOG at $100, the next day you sold your 1 million shares of GOOG at $101. You made $1 million profit. Then you jumped on a flight to cuba and enjoyed your new found wealth for the next year or so. When you came back home you checked your quote screen and see GOOG at $450. What would you feel? Would you feel you lost out of some profits. Would you feel you lost out on nothing? In my dozen years of trading, I have never met a successful trader who doesn't understand opportunity cost. If you are simply looking at the Investopedia.com definition then you are right, trading is NOT a zero sum game because I can buy at 50, sell at 75, and the next person can buy at 75 and sell at 100.
Stock market is not zero sum. Futures and options markets are. Money does not equal wealth, do not confuse the two terms. Its spelled "Ponzi".
Trend guy, I think of this as a theoretical discussion that doesn´t mean shit when it comes to trading This is nothing but a little amusement on a boring saturday...
Stalker, all too true. I'm going to the bar. But before I do, I'd like to pull up a quote from the initial post. I think we all agree that the futures market is a zero sum game. If you don't believe that, then you should probably go to the bar too. So, madmunny, do you think that since futures are a zero sum game no one should trade them?
I believe you are correct. I think the error in the concept of zero sum market theory is when you factor in "potential" profits. By selling you my current shares of a corp. i can book an accounting profit of X. You may sell those shares later on and also recieve an accounting profit of Xx. I technically lost the potential profit of Xx, but potential profits are always infinite when taking the long side of an equity position.