personally, i think the market is a minus sum game. if i bought a inet stock at its all time high, how much has the rising capitalization done for me after the stock declines. if there is a buyer for every seller than there are alot of people holding the bag on some of these huge capitalizations that were mentioned in another response. the reason it is a minus sum game is because when you enter a trade you pay a commission, when you exit you pay a commission, whether you win or you lose. so you are winning less than you should and losing more when you lose. the only way the capitalization idea presented makes sense is if a stock never declines. how many have sat thru the 50 percent pullback in amzn i wonder?
here's a standardized example, many have participated in a bachelor party poker game. it is often typical for the bachelor to get a piece of each hand dealt, usually, one of the antes. for simplicity, suppose five players each show up with ten bucks and the ante is a dollar. the first hand is dealt, the winner makes 3 bucks instead of 4 after one goes to the bachelor. the totals now show one player with 13 and the rest with nine. the bachelor has one. the more times the game is played the more money the bachelor will make, while draining the money available to the actual players. ten hands later, the bachelor is holding 20pct of the total money available, after collecting his "commission" for playing at the table.he's got 10, the players are now down to 40 between them all. now, think about that when a brokerage is charging you to play, but also charging you again to fold. there's a new bachelor in town and he goes by the name e-broker.
milesov |
