<<This is wrong. Whoever sold Person A must be short 1000 shares and taking the loss, unless of course it's the company itself in which case the company sold stock at 4 which is now worth 16, they left $12 on the table>>
What loss is the person who sold to Person A taking? Lost potential? In this case we are all extrememly poor. I don't think leaving money on the table is the same as taking a loss. If you use investments as a way to finance future purchases, you are happy to sell a stock that's rising so that you can buy a car, for instance. You haven't lost potential appreciation, you've gained a car.
A company might be happy to sell shares at say, $5/share, to finance the development of say, a new switch, which might cause the value of a share to increase to $16. They did not leave $11/share on the table, they allowed the company to continue existing and grow in value.
Wealth, unlike energy or momentum, is not conserved. It can be created, or destroyed, spontaneously. Money comes in and goes out of the market in many ways. When you look at just a single company, I think you can claim that all buyers and sellers can be winners, so long as you don't include virtual wealth (lost potential appreciation).
Greg |
