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The difference is gambling is zero sum. For everyone that gains, someone else loses. In fact these games are negative sum, since the middleman takes a hefty pro
by Houshalter 11y ago
The difference is gambling is zero sum. For everyone that gains, someone else loses. In fact these games are negative sum, since the middleman takes a hefty profit for himself. These games have negative expected value, but use tons of clever psychological tricks to make people think they don't. Humans aren't perfectly rational after all. We evolved on the savannahs of Africa, not in a Casino.
- vonklaus 11y ago> For everyone that gains, someone else loses. How is this untrue in the market? Especially options. Someone is on the other side of this as they aren't based on created value. If someone lays out a huge short, it is priced by the likelihood that company goes down, in the event it does in fact go down, either the underwriter or whoever bought calls pays, either directly or indirectly. Also, in the broader market. I don't think it still resembles the, "company with solid fundamentals needs cash for expansion" model, where investors participate in the companies growth because they believe in the product.
- Houshalter 11y agoIf there were no markets, then trade would be really inefficient. Prices would be higher, they would fluctuate more. If there was no fantasy football, the world would be a better place.