Is Stock Market Investing a Zero-Sum Game?
Zero-sum game is one in which the amount of loss to those who earned a total profit is exactly equal to the amount of those lost. All forms of gambling are good examples of zero-sum games. The well of money involved in all gambling will be divided among the winners, online play casino losers and the house. The house can theoretically be counted among the losers in a given circumstance, but the game is usually a good business to be in the house wins because usually many the palms casino times more than he loses. The logical consequence is that players in general as a group more than they deserved to lose.
But what is really a redistribution of money used to do in paris. The total amount bet remains the same before and after being beaten in paris, closed the game was.
Was something of an ongoing debate about whether to invest in the stock market is a zero sum game. Those who say this is the fact that there is a winner and a loser in all trades. If an investor buys a stock and it goes up, he / she and the person who sold the shares, an equal amount lost. (We are the transaction costs for simplicity we). The winner and loser roles are reversed when the stock falls.
Those who say that investing in the market is not a point of zero-sum game in the fact that as the overall market increase in value over time, so most investors tend to be statistically ideal, blue chip casino winners should keep their positions to be in the long run. Our own thinking is that both are two arguments that have to correct them, but not tell the whole story. The second argument ignores the fact that if a seller of a cash position of the action and make big profits, the investor who buys the item is actually a fictional loss, because in theory he / she also may have purchased before, the lowest price. The first argument ignores the fact that dividend payments should be added to the roi, with a revenue stream, so the “pot” is always sweet, increases the casino arizona return to all investors on capital gains easy purchase and subsequent sale. Hmmm…
Complicated matters. What do you think? The equity trading is a zero sum game, like the game? Or is there a qualitative difference in this form of risk taking, market participants, more winners than those who are at a loss?