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>Because speculative trading is a zero sum game, it creates no wealth. Speculative trading is a key component of markets. People speculate that X is undervalue
by logicchains 6y ago
>Because speculative trading is a zero sum game, it creates no wealth.
Speculative trading is a key component of markets. People speculate that X is undervalued, so they invest in X, this gives X more resources, so resources are allocated based on what people think has most potential for growth. People who continuously make bad predictions get filtered out of the market, so "what people think has most potential for growth" comes to approximate "what has most potential for growth", and we get efficient resource allocation.
- amiga_500 6y agoIt's the secondary market. Companies get nothing on a bet they win or lose. People betting on a soccer game have zero effect on the future of soccer.
- logicchains 6y agoSecondary markets can definitely influence the price of the underlying asset, especially if they're more liquid.
- amiga_500 6y agoDerivatives? Do Barcelona change their tactics because I keep winning big on the first goal scorer? This is a socially useless activity. Stop trying to force it.