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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: MulhollandDrive who wrote (152712)9/30/2008 3:10:27 PM
From: GraceZRead Replies (1) of 306849
 
Hey, what can I say, you aren't the first person to not understand probability and the implications for expected returns, yet one would have to assume you still make money in the markets otherwise you wouldn't still be here!

The only reason I brought the subject up is because, based on your use of "zero sum game", you don't understand what the term actually means.

Someone who doesn't understand how one arrives at a zero sum has little hope of understanding how you drop below or rise above zero, in terms of expected return.

If the sum of stock buying and stock selling is zero, a zero sum, then please explain where the commissions and spreads come from? They have to come from the money put up by each buyer and taken out of each sellers proceeds. Add this all together gives you a sum less than zero, a negative expected return. The ONLY thing that tips the game toward a sum greater than zero is money paid out in the form of dividends.

for those who wish to continue to 'hold long' (their entire lives, not recommended btw)

If you think it isn't advisable to benefit from the long term positive expected return of the stock market by holding, I suggest you had better call up Warren Buffet and warn him of this because the guy has been doing it wrong all these years!
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