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Politics : Just the Facts, Ma'am: A Compendium of Liberal Fiction -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (51084)	9/12/2006 5:34:23 PM
From: Solon	Read Replies (1) \| Respond to of 90947

I'm sorry. I told you from square one that your "argument" can be used to negate the meaning of all zero sum games and to present them as something else. I could argue that my intentional loss of a zero sum poker transaction makes it a non zero sum transaction because I win a future transaction because of this psychological "hedging". But if we input variables of value beyond the zero sum transaction, then you are simply rationalizing away the zero sum transaction by shoving it into a larger context. I can do this with ANY zero sum game, thereby claiming that both the other guy as winner and myself as loser are both winners. But that would be disingenuous, so I won't... "The futures market transfers risk" Again you are talking about the overall value of the game and the benefits and losses that naturally accompany that game. Reducing your risk through a hedge does not change the fact that everything you lose or gain over all your transactions will be equalled by the exact same gains or losses of other parties. This is why it is called zero sum. If you wish to rationalize outside of the closed system of the zero sum (a chess game, poker game, soybean contract), then you could perhaps realize benefits from your losses. At the extreme you could claim that you enjoy losing and I would not argue against your subjective benefit. But if you sell me a corn contract then my losses will equal your gains and vice versa. And that is what zero sum means; and that is why trading in futures is zero sum. When you hedge, you win or lose a transaction to the exact same amount as the other party to the transaction. The fact that it helped you in another transaction does not change the fact that in that other transaction, as well, the winner and loser offset one another's losses and gains. Regardless of the skills and techniques you used to play your game, you either won or lost at the end of the day and the difference was reflected in the wins or losses of the other parties to your contracts. That is what zero sum means and that is why I gave you an analogy several posts ago showing how equities trading was non zero sum and futures trading was zero sum. You seem to think they are both non zero sum and I find that very odd.