Is the stock market a zero sum gain?
>no, holders get assets if the company defualts
Yeah no they dont get jack shit
There would be nobody on the stock market if there wasnt some idiot willing to buy shares off them for more money than they paid.
>>1203285
the more you play the more money that leaves the table
>>1203285
>In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which each participant's gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s).
Please explain hiw you feel this pertains to stocks and I will show you why you are wrong
>>1203285
>There would be nobody on the stock market if there wasnt some idiot willing to buy shares off them for more money than they paid.
the greater fool theory doesn't apply because companies appreciate in value. the real losers are the workers getting paid less than the value the generate for equity holders, in that sense it is zero sum.
>>1203375
>I will show you why you are wrong
Can you please write a sticky for this?
Because "the stock market is zero sum" is right up there with "lots of pro traders use Robin Hood, I saw it on their site".
>>1203285
No because if I buy at $25 and sell at $30 which you buy then you sell at $40 we both have made money.
>>1203408
inb4: "those other guys lost that money"
There is no possible way to know at what price they bought (or shorted).
>>1203408
by that logic we should all invest in pyramid schemes
>>1203425
Not the same at all.
The likelihood of a blue chip companies' stock value going to zero are practically nil.
The likelihood of a pyramid scheme collapsing and not paying anyone, significantly higher.
>>1203430
>I'm starting to think many people on this board do not even know what a stock is
they don't
day trading usually is.
Actual companies producing is not a zero sum gain
>>1203285
a stock is literally a claim on a company's future cash flows. As long as the company is creating or has a prospect of making money, by holding that stock you have a claim on that money. You literally own a piece of the company. If a stock is worth $5, the market has valued that company's earning potential at $5 times the amount of outstanding sharrs. Stocks have real intrinsic, legal value and are brought and sold as such. Ihave no idea where you guys get this zerosum thing out of that.
All business is zero sum. My victory is another man's loss.
>>1203285
The stock market (as in, buying and selling shares) is definitely zero sum, since at no point does a trade create more shares or more money. Unless of course you subscribe to the idea that trades don't take place unless they somehow benefit both parties, in which case any exchange isn't zero sum. I don't subscribe to this idea because it confuses actual benefit and expected benefit.
>>1203703
so if I profit 10%, someone else loses 10% of the same amount every time?
>>1203703
>I don't subscribe to this idea because it confuses actual benefit and expected benefit
Not sure I understand what you're arguing.
If he buys at $50, and sells to me at $55, whereupon I sell to someone else for $60, this has benefited both parties (I'm not including guy #3, as his basis was not established).
>>1203689
Yeah its why we still live in middl ag...
Oh dog
Um, no? People are always dumping new money into the stock market. There might be an equilibrium that's close to 0, but it's not flat out 0.
>>1203723
No more money can come out of the market than goes in, so its by definition a zero sum game.
>>1203897
do you invent lies for a living or just for fun? Go look at a chart or the S&P 500. Notice how it is not a flat line.
>>1203900
What lies? Individual players can make money on a zero sum game. Not everyone profits on the stock market. It is a zero sum game
>>1203430
I'm starting to think /biz/ is a humongous Groundhog's Day setup. Same stupid questions every day and same threads , summed up;
>GET ON THE ROCKET TO MOON ON OUR SPECULATION
>ROBIN HOOD IS THE FUTURE PENNY STOCKS ARE HOW MOST MAKE IT
>WHAT'S A X
>OMG MY X GOT FUCKED ON THE FIRST DAY
>SO SHOULD I STUDY X
>HOW DO I INTO BECOME RICH
>SOME RETARD COMES TO RANT ABOUT THEIR SHITTY FINANCE CHOICES AND ASSUME WE CAN UNFUCK 18+ YEARS OF RETARDATION FROM THE BIRTH IN ONE THREAD
>SO MANY FUCKING MARKETERS/SHILLS AND NO JANITORS
Can we at least get a few of those folks who do it for free and a basic sticky? We get people asking things that could be googled in 5 seconds.
>captcha says a picture of a mrtini glass is a pickup truck
O K
>>1203911
yes we need a sticky like /fit/ so we can post READ THE STICKY when the same moronic assumptions and questions are repeated for the thousandth time
>>1203907
It is perfectly balanced. Every dolar that leaves the stock market has to be put in by another participant; its like a big poker table. Actually if you factor in commissions and brokerage its worse than zero sum, slightly.
>>1203907
Also, if you're wondering where the losses are; someone out there is holding shares of every company that goes bust, since all shares are owned by someone. They are the losers in the game.
>>1203285
Its zero sum around the growth rate. If growth is 4% then your 6% return is balanced by someone's 2%.
>>1203949
lurk more
>>1204079
>b-b-but professor in econ101 says the stock market isn't zero sum!
gas yourself noob.
>>1203285
Trading stocks is just like trading any commodity. Why aren't you complaining that selling apples is a zero sum game?
>inb4 stocks have no real value
>>1204091
ok. I buy TSLA @ $50 and sell it @ $200. Who just lost $150 to cancel out my gains?
>>1204110
The guy who bought TSLA
>>1204124
Except that guy went short at $250, so he actually made $50 a share.
>>1204124
he didnt lose anything. He now owns one share of TSLA, worth $200. It is legally a $200 asset.
so who lost $150?
>>1204166
>he didnt lose anything.
But he did, he lost $200. His bank account is $200 less, or if he bought them with cash he is now without $200 in bills. He lost $200. But he (maybe) can get it back when he sells it, to someone else, who will also lose <X> dollars, to account for his gain.
>>1204176
no. he legally has the exact same amount of assets minus a trading fee.
go browse investopedia. You are painfully uneducated
>>1204183
>he legally has the exact same amount of assets minus a trading fee.
But they're in a different form, namely not cash. He is, until he sells, down $200.
>>1204176
>But he did, he lost $200
Like I said before, what if he went short?
You have no idea if buying at $200 was immensely profitable for him, do you?
>>1204190
Why are you talking about profit? It doesn't matter if an individual player gets out more or less than they put in, only that the total amount put in/taken out (of the market) are the same.
Here I made you a nice little infographic.
>>1203703
You're a fucking idiot.
>>1204190
Note the unchanging total cash and number of shares.
>>1203461
>where you guys get this zerosum thing
Theyre socialists... or people who believe rich people are evil. No understanding of economics.
>>1203955
>since all shares are owned by someone
Not true. Not all shares have to be released to the public. Companies can release shares at their whim.
>>1204183
>You are painfully uneducated
He's a socialist.
>>1203949
So let's say there's a stock market with literally zero companies listed. Then a new plumbing company decides to go public on this market, with no other stocks on it. The company was started by the CEO for $500 in equipment (don't argue it's a hypothetical amount). When the CEO and issuing bank agree on a stock price they decide to issue a total of 1000 shares at $10 a piece. This is because over time his company has proved it can make money so the $10 represents the cash flow that he's had now for however long. The bank as issuer keeps 100 shares as does the CEO. That means the bank and CEO now have $1,000 in total equity.
Already the CEO has made $500 more than what he put into the company when he started it and the bank has made $1,000 for helping to issue the shares. Now say over the course of the next year other people decide to own a part of the stock because they see the company is profitable and a worthwhile investment. The price goes up in a straight line over the year by $0.01 a day (Again, don't argue it's hypothetical). This means each share is worth $13.65. Now you decided 6 months (180 days) you also thought this looked like an equitable investment (At a price of $11.80). Now whomever sold you whatever number of shares you purchased at that price STILL made money, $1.80 a share to be exact, assuming they bought at the IPO price.
Now in this scenario literally no one has lost money, Therefore, you're a fucking retard and either don't know jack shit about stocks, the stock market, or most likely either, or you have literally no clue what 'zero sum' means. Even in this scenario after reaching $13.65 it begins to drop to due a back earnings report down to $12.80, you've still made money overall if you sell at that price. Whoever buys now has their own cost-basis of $12.80, just as you had it for $11.80. Yes, some people who bought at $13.65 and sold at $12.80 have lost money but that will still not cancel out everything.
TL;DR
You're a retard
>>1204271
>Not all shares have to be released to the public.
That just means the company owns them.
>>1204281
Holy shit, you're too retarded. You're literally beyond saving.
>>1203461
>you have a claim on that money
>which is thrown into the garbage when they default
>>1204320
>cognitive dissonance overload
Don't worry bro I know that feel.
>>1203729
He's technically right (if I'm giving you money I wont give those same money to someone else), but really, it's just semantic.
>>1204265
Uh no, its from the movie wall street and Gordan Gecko uses it ti justify being edgy as shit. You should be expecting it as shitposting here since that movie is like the wolf of wallstreet except for us neets/janitors
>>1204345
Sounds like you're conflating two separate things.
Granted, a trade between two people won't raise or lower the amount of capital invested in the market.
But the mechanics of the market will.
When a stock explodes due to earnings, the amount of capital added will eclipse any short positions (losses) extant. After all, the short float won't be anywhere near 100%.
Can you explain where in the market this added capital was taken from?
>>1204275
What a bunch of retarded gobledygook. You forgot the people that paid for the shares to begin with. I don't know why you bothered conflating the premise with a growth rate
Investopedia literally has a page explaining how the stock market isn't a zero sum game.
http://www.investopedia.com/terms/z/zero-sumgame.asp
>>1204621
yeah, listen to a website run by the elite money masters. It won't be biased towards the banks at all.
>>1204454
From future buyers that enter the market later?
The future buyers who see potential in the value of a stock at that given price?
I studied international relations, and am studying economics now. And to my understanding the stock market is not a zero sum game - in the sense that realism within IR argues that world politics are a zero sum game, or in the sense that poker is a zero sum game.
Stock value is a psychological component, and there is no fixed number of capital, it fluctuates.
This is not the case in lets say poker, whereby there is a fixed table, with fixed chips, or in say Realist IR where there is a fixed amount of resources and land (planet earth) that has to be divided amongst people.
I might be wrong, but this is my understanding of a zero sum game; and why the stock market is not one.
>>1204621
>gambling is a zero sum game because all the money people make goes inti the prize
Instantly dropped
>>1205084
lmao idiot zerosum posters
>>1203689
not true at all. people place different values on different things. if I sell a man dying of thirst in the desert a bottle of water for $50, we both benefit.
>>1204189
so someone with a million dollar portfolio is broke since they don't have cash
dumb ass
>>1204454
>Can you explain where in the market this added capital was taken from?
nowhere. it's not real. if I had 100 apples at $1 each I have a market cap of $100. then I sell one apple for $10 and suddenly the market cap is $1000, even though no new money entered. it's just a valuation
>>1204357
>ousting self as janitor
wew lad
>>1205237
>no new money entered
$9 did, right around when someone decided to pay you $10 for your $1 apple.
>>1205237
>its not real
Well, according to the law and everyone other than you, it is real. Let us know when you change the legal definition of assets
>>1203285
> Is the stock market a zero sum gain?
It's just a video game now.
>>1205385
I dont think you even know what market cap is.
The law says $100 in stock is just as much of an asset as $100 in cash. Deal with it.
>>1205412
It isnt backed by jack shit, except for what some other retard is willing to pay you for it. If a company defualts you get told to screw off.
>>1205430
ok buddy.
www.investopedia.com
>>1205097
>Stock value is a psychological component, and there is no fixed number of capital, it fluctuates.
Stock value is a misnomer. A more accurate phrasing would be "most recent stock sale price". Value implies more to it than there is.
>>1205222
>so someone with a million dollar portfolio is broke since they don't have cash
Yeah if they don't sell any shares they won't be able to pay rent or buy food, literally as broke as a hobo.
You guys seem to be getting confused by all the surrounding concepts of business, share creation and so on.
Can you at least see how the forex market is zero sum?
>>1205593
>You guys
Well, we're not the ones arguing that the stock market is zero sum, you are.
If you want to change the argument's subject to forex because you hope that's more favorable to your point of view, feel free.
>>1205611
>If you want to change the argument's subject to forex because you hope that's more favorable to your point of view, feel free.
Actually I was going to make an analogy between shares and forex. Specifically that, for instance, buying or selling shares in apple is just the same as if you were trading AAPL/USD, and since it's pretty clear that forex is zero sum you should see then that shares are zero sum also.
the stock market isn't the zero sum game - cash is.
>>1205084
Volatilestock.com
I stumbled on it with like 20 pages of google and made 17% of $2,400 playing safe with a bit of research. I'm going to increase the bet because it's going good.
>>1205750
The best one was BBVA waiting for the bottom at near 6 and selling almost at $7
>>1205664
>owning equity in a company is the same thing as betting currency movements
ITT literal retards
let me spell this out for you:
if you own one share of Apple, you literally own a percentage of Apple the company. Are you saying Apple the company has no value?
>>1203285
Trade creates value that can't immediately be captured in the deal.
I give a banana for a chocolate bar. There is still only a chocolate bar and banana after the trade. The surplus is what you then do with these items. All markets operates on these principles.
>>1205664
>Can you at least see how the forex market is zero sum?
>since it's pretty clear that forex is zero sum
Wow.
Who taught you how to argue, if I might ask?
Because that "ask a rhetorical question, then act as if its been agreed upon" technique is pure gold.
>>1205434
But i'm right anon. Go buy 100$ of a companies stock before they defualt and ask to be compensated for your 100$ in assets.
>>1205766
How is it any different? You have two parties making an exchange. Nothing is created or destroyed, every quantity is conserved.
>>1203285
My old man lives off the stock market, he was a stock broker back in the 90s though so he already had tons of money by the time he was 35 and good knowledge and connections so he's set way more than any of us are.
He's literally wolf of Wallstreet tier though and I barely ever see him so he hasn't taught me shit. Feels bad.
>>1205850
A-are you implying forex isn't a zero-sum game?
>>1205982
He's probably confused about what zero sum means. Some people think it means an unwinnable game. Stock market is zero sum if you consider shorts.
my god this thread is scary
the more i read, the more i realize it's brainwashing
>>1206022
Mm its pretty scary that humans are so susceptible to mass delusion
>>1205430
>>1205893
>>1203949
That's not how stock works.avi
Lemme make this clear
A stock is a future promise of payment in various forms, when you buy a stock you buy a part ownership in exchange for funds that the company will use in it's costs. It's a humongous moneydrive to gather funds for the company, that's why you need to research your company so you know they aren't using it on hookers and blow but instead on things that are benefitful for you as a part owner.
A publicly traded company is owned by the shareholders and 13G/D's have the ability to veto much of the CEO's and director's bad decisions. If majority of owners vote "no" to a proposition, by law, the company must adhere to that. By theory there's a payout, just like stockholder payouts happen when a company is sold.
When a company is liquidated, the money raised by it is paid to people depending on their importance and ownership, by Section 507 of the Bankruptcy Code
1.The company's secured creditors, like secured bondholders (Government bonded stakes, mortgage holders aka all collateral loaners)
2. 1st tier Unsecured holders aka suppliers, employees, banks, taxes (these would often be counted as 1st tier but they're unable to prove collateral 100%)
3. 2nd tier Unsecured holders aka stockholders
Now assuming a company grows by selling more, it's worth aka earning power per stock grows. The value of a stock is directly tied to it's future earning power per share and current earning power by share, so people are willing to pay more since they speculate/calculate that it's earning power per stock is in the good side. That's why an INVESTOR always looks for dividend, the payout of the future four times a year/ROI. In a good company when this earning power is good and the company again needs more money they issue new warrants or a new class of shares (Like Berkshire B-Class share) so new investors can be brought in without the longtime holders being disturbed.
>>1206039
Well so we know that stockholders dont even get to eat the jizz in the event of a bankruptcy
>but a stocks value perfectly represents that risk
Please stop fantasy roleplaying in public discussions
>>1206498
>stockholders dont even get to eat the jizz in the event of a bankruptcy
Its definitely happened to me, but that's what you get for catching the falling knife of troubled companies. Either the rise profits you greatly, or the company fails and you eat shit. Given that the stock is probably cheap, at least it doesn't cost you much.
That's why people who are after value buy stock in companies that this has a minuscule risk of happening to.
>>1203285
dividends
it might be a zero sum game in the short term among speculators but in the long term shareholders as a whole take out more than they put in
>>1206498
>>but a stocks value perfectly represents that risk
>Please stop fantasy roleplaying in public discussions
That was never implied even, that's why you need to analyze the stock you touch. Read this part until you know it by heart,
>you need to research your company so you know they aren't using it on hookers and blow but instead on things that are benefitful for you as a part owner.
A price is never a guarantee of anything, some things are too dear to hold and some are too dear to buy. When a company is liquidated, if it has decent brands, those usually end up paying everyone out. I know you're trolling, but it's like you don't even understand enough to troll. It can not be zerosum because business grows and many succesful companies have been going steadily up for decades. How do you explain Berkshire Hathaway's stock pricing if you feel it's a zerosum?
Id say no because not all of the money that is made in the stock market goes back in. If it were zero sum everything would be internal. Just a passing thought.
>>1206485
>W-where did I say that?
You don't state an implication you fucking retard, the only reason to make the point you did is if you thought what I said was untrue.
>>1207870
>if you thought what I said was untrue
I wasn't talking to you. Read the ID's you congenital idiot.
Also, fuck off.
wow this autistic thread is still up
>>1205575
So if you have no cash, but you have a share of ownership in a vegetable garden, and a gun to hunt with, and a roof over your head, are you a hobo?
Because that's essentially what stock ownership is. When you're buying a stock, you're buying equity in a very specific means of production, and giving up your liquid cash to do so.
