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To: Tai Jin who wrote (951)	9/2/2000 12:38:13 PM
From: dannobee	Read Replies (3) \| Respond to of 1426

Anything that consistently returns on average, 11.8% per year is not considered a "zero sum" game. If we're talking options, then sure, THEY are a zero sum game, as they eventually expire worthless. One winner and one loser for each contract. But the stockmarket, in the aggregate, is far from a zero sum game. If you're attempting to daytrade it, and lose on long or short positions, you are attempting to "time" the market, but the similarities between "daytrading" and "investing" I would consider analogous to the flipping of a coin. If you think of it as a coin toss, with daytrading you're betting on the odd or even outcome. With investing, you ignore the odd or even flips, but the coin itself becomes more valuable as time progresses. For what any of that is worth. Danno

To: Tai Jin who wrote (951)	9/3/2000 12:52:18 PM
From: booters	Read Replies (1) \| Respond to of 1426

<Zero sum is truly only meaningful in a closed system> Not sure I understand this, I think you may have this backwards. The futures market is an open system and with out a doubt it is a zero sum game. Shorts must always equal longs because it takes both sides to create a contract. As many contracts are created as there are people willing to take both sides. This is not true with stocks, it is closed in that there are a finite number of shares. <Consider a stock that opens at some price and increases without any downticks to close higher. In this case all day traders make money> Only if you assume that all the people selling the stock that day sold at a higher price than they bought at and that no body sold it short and then bought it back later in the day at a loss. <Since its inception, the market has generated net wealth. Some people have been losers, but overall the winners have far exceeded the losers (both in numbers and in value). So far all the evidence suggests that the market is not a zero sum game.> Certainly have to agree with that. boots

To: Tai Jin who wrote (951)	9/3/2000 4:00:18 PM
From: Londo	Read Replies (1) \| Respond to of 1426

The market is a zero sum game. When a trade is made, money changes hands. The "buyer" does not have his cash destroyed. It simply goes to who sold the stock. The fact that equity values have increased by 11.8% or 12% or whatever as an aggregate is attributable to the fact that money is injected into the market with corporate earnings. In theory, when somebody buys a 50 cent pack of gum from Wrigleys, that money indirectly gets injected into the stock market... the 10 cents of earnings that Wrigleys makes selling that pack of gum goes to guess where? The shareholder. Dividends, of course, are subtracted from this zero sum game. Before somebody argues that if GDP goes up only 3% on a historical average (I have no idea what the real number is), why does the stock market increase 12% a year? Well, because of the simple fact that worse companies can only lose 100% of their money. Good companies can increase their money by more than 100%. Since bad companies eventually get delisted from the market average, that tends to skew the average up. Amazon could go up to $10,000 per share, and it would still be a zero sum game: somebody has to pay for the stock. And somebody receives $10,000 where they can take elsewhere.