Are financial markets like the stock market Zero Sum games?
September 27, 2008 : Posted by: Roman : Category: Finance, Investing : Add Comment
Is the money that you are making from a transaction on the stock market really someone else’s? Odds are yes! But don’t feel bad. The stock market works on supply and demand. What you are buying someone else is selling or the pricing will be reduced till there is a value is sufficient for someone to either buy or sell it. The reason why that it is not a zero sum market is that in some rare cases the market maker can control the price, by either reducing the price of the traded item or controlling the quantity of the stock in the market.
The main reason why I think that the stock market is not like a zero sum game is that value is always created. This value does not coming from another person but from the company itself. Dividends are a perfect example of this. The investor gains value without having that value annexed from another investor. People always forget the most import part of being a shareholder also has value. As a shareholder you get to assist in setting the policies of that company by voting for either amendment the charter or in electing board members. That in itself has a value. The ability to change, manipulate and improve what is around you. A share holder can even get issues to be noticed by the company.

September 30th, 2008 at 6:17 am
Hey Roman,
Thanks for the comment - yeah, I definitely will get on the AdSense stuff as soon as possible. I guess I’ve just been more focused on getting up content I think people might find interesting enough to follow? Also designing, etc.
But then again, you know more about this stuff than I do…haha.
Anyhow, I see you have a financial blog - I found an article recently that I found interesting. It’s about renting vs. buying property, and though I have read about this debate before, I liked the way this guy broke it down. You probably already know, but I thought I’d share: http://realestate.yahoo.com/promo/renting-makes-more-financial-sense-than-homeownership.html