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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA
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To: dvdw© who wrote (15497)12/11/2002 12:58:04 PM
From: eddieww  Read Replies (1) of 19219
 
Any single transaction may be a zero-sum game, although if I thought about it a little I think I could present logic that refutes even that. However, thinking only of specific transactions is too narrow a way to think of wealth creation/destruction. The value of a stock is set on the margin by transactions that represent only a small % of the float. When a stock declines all of the holders suffer a loss of wealth.

Since the spring 2000 top, several trillion $ has gone to clownbux heaven, possibly a couple trillion has shifted to other investments or uses, and shorts have made a little money. Short interest has never represented more than a couple % of the entire market float. There is no way to call the total effect of market action the past couple years "zero-sum". The only way you could claim that would be if short interest oscillated around 50% of total market float, so that every time a stock's price declined there would be someone gaining wealth for each one losing wealth.
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