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Non-Tech : Meet Gene, a NASDAQ Market Maker
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To: Robert Graham who wrote (949)9/2/2000 12:12:44 PM
From: Tai Jin  Read Replies (3) of 1426
 
Even in a day trader stock, use of the term zero sum is not very meaningful. Consider a stock that opens at some price and increases without any downticks to close higher. In this case all day traders make money. Not even the investors lose any money. The only people who can possibly lose money in this scenario are those who went short. And for it to be considered zero sum the shorts have to equal the longs.

If considering the market as a whole on any given day, zero sum is still meaningless. Zero sum is truly only meaningful in a closed system, and the market is not a closed system due to net inflows or outflows and the changing set of investors. Since its inception, the market has generated net wealth. Some people have been losers, but overall the winners have far exceeded the losers (both in numbers and in value).

So far all the evidence suggests that the market is not a zero sum game.

...tai
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