Re: Investing is a zero-sum game. PX, I owe you an apology. In this week's Barrons, dated Jun 15, 1998, there is an interview of a Wall Street money manager, starting on page 40.
Quote: >The problem is that investing is a zero-sum game. In other words, you have winners in the market - and losers.<
The money manager is Theodore R. Aronson, who started at Drexel Burnham 24 years ago. So you would think he knows what he's talking about.
PX, when you used the term zero-sum game a while ago, to refer to the stock market, I disagreed with your use of the term.
My impression of the term zero-sum game, from many years ago, was a game that held a fixed amount of money, and the variable was in how the money was distributed among the players. Yes, there would be winners and losers, based on who ended up with the most money, but the total amount of money of all the players in the game was fixed or constant.
I still don't believe the stock market is a zero-sum game, based on my idea of what a zero-sum game is. But this money manager is saying that investing is a zero-sum game.
Can Lawrence Kam, who talked about strategy games a while back, or anyone else, tell me if my idea of a zero-sum game is completely wrong?
Can anyone explain how the Dow Jones Industrial Average is now worth the same at 9000 that it was worth at 1000, 17 years ago?
If a stock doubles in price, hasn't the market value of the stock gone up?
If a stock price drops from 54 to 10, like WDC, hasn't the market value of the stock gone down? The market value of WDC went down, and even if there was a short position, the market value of WDC went down and, on a practical basis, the net wealth of the shareholders has gone down as well.
So is this money manager just using the term >zero-sum game< loosely, or am I too blind to see what is going on?
Or maybe the term is now being used to refer to something else?
Anyway, my apologies to PX.
Regards,
Larry
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