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> indicates that they can't find growth opportunities at any price. This is a great way to put it! Thank you. Would it be fair to say that this suggests the ma

> indicates that they can't find growth opportunities at any price. This is a great way to put it! Thank you. Would it be fair to say that this suggests the market isn't really expanding and has essentially become zero-sum (or technically I guess it could mean that expansion is free, but that seems unlikely)?

bluecalm 7y ago
Even if the companies never expand and the stocks are priced perfectly the market is not zero-sum. It's still an asset that produces value and pays back every year. There are people for whom it makes sense to own something that gives steady returns and there are people who for whom it makes sense to have cash on hand. Trading might be zero-sum which is great for everyone but owning stocks isn't.
- y96V89C668e7Q74 7y ago
  Fair point, stocks do have inherent value even if they are just paying dividends. I guess that in that case it's market growth that is zero sum (eg, one company growing must mean that another company is shrinking).
nostrademons 7y ago
The public market isn't really expanding and has essentially become zero-sum. This doesn't preclude the existence of other capital markets that might actually be taking share away from publicly-traded companies - for example, late-stage VC/PE financing (a la Uber, Lyft, and most other Silicon Valley unicorns), crowdfunding, or cryptocurrency ICOs & STOs. Nature usually abhors a steady-state: when you think you've reached one, it often means that there's a competitor that's too small for you to see but growing exponentially.
- y96V89C668e7Q74 7y ago
  Good distinction, thank you. I wonder if there are stats somewhere to see what percent of capital is in public markets vs private. Also, now that so many of the unicorns like Uber and Lyft are going public, I wonder how much of the market is currently still private. Not to mention, many of the unicorns are horribly unprofitable and potential a net negative for the market.
mactrey 7y ago
No, the market can still expand, it's just that shareholders (as proxied for by boards and management) would today rather have the marginal dollar in pocket rather than invested in some growth opportunity. Companies have invested billions in growth opportunities in past decades and we're currently seeing how the returns from those investments play out, and that's where today's growth is coming from. There just aren't as many good places to put money to work in the market right now.

bluecalm 7y ago

Even if the companies never expand and the stocks are priced perfectly the market is not zero-sum. It's still an asset that produces value and pays back every year. There are people for whom it makes sense to own something that gives steady returns and there are people who for whom it makes sense to have cash on hand. Trading might be zero-sum which is great for everyone but owning stocks isn't.

y96V89C668e7Q74 7y ago
Fair point, stocks do have inherent value even if they are just paying dividends. I guess that in that case it's market growth that is zero sum (eg, one company growing must mean that another company is shrinking).

nostrademons 7y ago

The public market isn't really expanding and has essentially become zero-sum. This doesn't preclude the existence of other capital markets that might actually be taking share away from publicly-traded companies - for example, late-stage VC/PE financing (a la Uber, Lyft, and most other Silicon Valley unicorns), crowdfunding, or cryptocurrency ICOs & STOs. Nature usually abhors a steady-state: when you think you've reached one, it often means that there's a competitor that's too small for you to see but growing exponentially.

y96V89C668e7Q74 7y ago
Good distinction, thank you. I wonder if there are stats somewhere to see what percent of capital is in public markets vs private. Also, now that so many of the unicorns like Uber and Lyft are going public, I wonder how much of the market is currently still private. Not to mention, many of the unicorns are horribly unprofitable and potential a net negative for the market.

mactrey 7y ago

No, the market can still expand, it's just that shareholders (as proxied for by boards and management) would today rather have the marginal dollar in pocket rather than invested in some growth opportunity. Companies have invested billions in growth opportunities in past decades and we're currently seeing how the returns from those investments play out, and that's where today's growth is coming from. There just aren't as many good places to put money to work in the market right now.