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Old 10-19-2007, 04:28 PM
Badger Badger is offline
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Join Date: Dec 2005
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Default Re: Is the Market Like Sports Betting

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Like in sports betting someone wins and someone loses. In stocks, companies grow... Like buying a a total market index you'll come out ahead in the long run, betting every game you won't.

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To the extent that I'm trading shares with someone else who has absolutely no plan on doing anything with the shares other than selling them for a gain or taking dividends, it's a zero sum game. If you made an economic profit from buying the shares, someone lost that exact profit selling you the shares and taking cash. Whether markets go up or down in the long run is immaterial.

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Nobody lost profit by selling shares that went up. Yes they would have made more if they held on to them, but they didn't actually lose anything by selling.

I believe that in a sense it is immaterial if markets go up or down. However, that's only if the market going up is being driven by supply and demand of the stock available for the company. The market's underlying assets, companies, generally appreciate in value.

To draw a poker analogy from the player's perspective:
Raked poker is negative sum game. As a group the players lose.
Rake free poker is a zero sum game. The group doesn't win, but individuals do only to the extent that others lose.
Rake free poker where a non player adds to the pot. There will still be winners and losers, but as a whole the group wins. I think that this analogy (although the least common in poker) best represents the stock market.
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