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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: MulhollandDrive who wrote (152642)9/30/2008 12:24:16 PM
From: GraceZRead Replies (2) of 306849
 
somebody was on the right side of the trade (despite their meddling in the market with the 'no short list) and a trillion was MADE


Nope. Losses or gains in market capitalisation occur because all prices are marked to the last trade, these are largely paper gains and losses, they aren't real...yet. Changes in market cap can happen in high volume or extremely low volume, but changes in market cap do not tell you enough to know what the realized gains and losses are that occur in each participant's account.

One bad trade could change the the market capitalization of an issue, no trades could change the market cap if something happens overnight to change the perception enough about an issue and the corresponding b/a moves far enough away.

zero sum gain

Only closed games can be a zero sum game. The equities markets are an open game.

The stock market as a whole, is not a zero sum game because even though a certain percentage of money leaves the market constantly via commissions and spreads (which if all things were equal, would make it be a less than zero sum game- or have a negative expected return), money is added to the return of investors via stock dividends, in other words, money is constantly added to the pool of money that is the sum of all the money placed into the market by buyers and sellers.

Because of this the equity markets are not a "closed game". Any closed game that charges a spread that then leaves the game (think Vegas) is always a game with negative expected return, one that has money coming in from the outside flowing to market participants has a positive expected return.
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