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To: Robert Graham who wrote (961)	9/3/2000 4:58:30 PM
From: booters	Respond to of 1426

<One statement I have found in a previous post that proposed that the number of buyers need to equal the number of sellers for there to be a "zero sum" game is very erroneous. For each transaction, there is always one buyer and one seller> It appears different meanings of the term 'Zero Sum' are being used through out the current post. For it to be a true zero sum game there must be one long and one short. You are correct Robert, there must be a buyer and a seller but in the stock market the seller is not always short. In the futures market there is a short for every long. Zero sum means for every gain there is a corresponding and equal loss. No wealth is created it is only transferred. This is not true in the stock market. There does not have to be a corresponding and equal loss to every gain nor a SHORT to every long. boots BTW Robert, I do not intend to infer your statement was incorrect. Many of the statements made lately about zero sum seem to be poking around different aspects of zero sum effects and theory and I think you where correct in your address to some of those. All I am trying to do is give a basis to analyze zero sum against. Some people appear to think it is a theory, it is not. Zero sum is an accounting fact with a mathematical definition. The stock market is not a zero sum game, but in regards to daytraders and perhaps their dominance of a short period of trading in a stock one could maybe consider this action 'zero sum'.

To: Robert Graham who wrote (961)	9/3/2000 5:40:14 PM
From: Apakhabar	Read Replies (1) \| Respond to of 1426

Bob, The word "sum" in "zero-sum game" cannot mean anything but the total sum of all the money that has been put into the game and what that money is now worth right NOW. Shorter time frames, future values, and the results for certain individuals compared to other individuals is irrelevant. The question of whether or not the equities market is a zero-sum game is a simple one because "sum" means "sum" i.e "the whole amount" and not, as some may have it, parts here and parts there. That said, it is possible that the game will not remain positive-sum, as it is now. For example, if tomorrow, every short position was covered and immediately after that the entire market collapsed to where every share of every stock was worth just one penny, then at that moment, the game would become a minus-sum game. There is a point, I don't know at what price but it does exist, to which the market could collapse that would make the game zero-sum. But of course that moment would be subject to immediate change. Of course the fact that the equities market is positive sum does not mean that all traders and investors will profit or even that the game is necessarily less dangerous. Although options are a minus-sum game for traders the total loss to one trader is well-defined prior to each trade, whereas, in the equities market, one could sell an equity short and have a potential loss that is bounded only by that traders ability to meet margin calls. The 11.8% return absolutely IS proof that the equities market is not zero-sum (unless the commissions and fees equal 11.8%). But the statement can be misleading, of course, if one uses it to argue that the equities market is a safe place for your money. As everyone knows, past performance does not guarantee future results. IMO, for a trader, whether or not the markets are zero-sum or not is not even worth thinking about (my interest is in the debate, not the ramifications of zero-sum). The individual trader is always involved in a game that, from his or her perspective, has all the characteristics of being zero-sum, even if in fact it is manifestly not. ******* BTW in a previous post I stated that options are a minus-sum game; I should have said they are minus-sum to traders. As a "game" options are zero-sum, since the commissions "lost" and "won" by the MMs.