5 ms·

But there is a buyer and seller in the transaction regardless of whether one person is gambling or investing.

ptero 6y ago
And for early trades of a stock, in the analogy of the poster you replied to, the seller is a creator (inventor, builder, etc.) who needs money to build or expand and a buyer provides money for him to do that for part of future profit. That should be a profitable trade for both sides. The secondary market (where people just swap ownership) serves (spikes and manias aside) to reallocate money to more productive companies. This, by the way, is the area that is really suffering under current "only invest in indices because EMH" mantra. My 2c.
tekkk 6y ago
True, but when a company sells their stock in for example IPO, it is a mutual goal of yours and theirs to see that the company rises in value.
- chrisgd 6y ago
  Maybe. Or to buy at 19 and sell the next day at 24
robjan 6y ago
That doesn't make it a zero sum game. The transaction is zero sum but not the market. If the market were zero sum, the indices would never change.
gandalfian 6y ago
You buy a share, it goes up. You sell it to me. Share goes up more. We have both won. How? Because the company created more stuff and injected it into the equation. We can literally get more out than we put in.
- chrisgd 6y ago
  Me buying a share from you has no impact on the company. They only benefit if they can sell primary shares. A company’s ability to monetize a rising stock price is time consuming, you can’t decide tomorrow to issue $100m worth of shares and be able to sell them
  - gretch 6y ago
    No, a higher stock price (caused by the demand and transaction volume generated) is valued immediately as compensation. If your stock goes up, employee morale is high and ppl want to stay the rest of their vesting schedule. If the stock goes down you have to compensate employees with more cash. Also, acquisitions are made in stock deals

And for early trades of a stock, in the analogy of the poster you replied to, the seller is a creator (inventor, builder, etc.) who needs money to build or expand and a buyer provides money for him to do that for part of future profit. That should be a profitable trade for both sides. The secondary market (where people just swap ownership) serves (spikes and manias aside) to reallocate money to more productive companies. This, by the way, is the area that is really suffering under current "only invest in indices because EMH" mantra. My 2c.

tekkk 6y ago

True, but when a company sells their stock in for example IPO, it is a mutual goal of yours and theirs to see that the company rises in value.

chrisgd 6y ago
Maybe. Or to buy at 19 and sell the next day at 24

robjan 6y ago

That doesn't make it a zero sum game. The transaction is zero sum but not the market. If the market were zero sum, the indices would never change.

gandalfian 6y ago

You buy a share, it goes up. You sell it to me. Share goes up more. We have both won. How? Because the company created more stuff and injected it into the equation. We can literally get more out than we put in.

chrisgd 6y ago
Me buying a share from you has no impact on the company. They only benefit if they can sell primary shares. A company’s ability to monetize a rising stock price is time consuming, you can’t decide tomorrow to issue $100m worth of shares and be able to sell them
- gretch 6y ago
  No, a higher stock price (caused by the demand and transaction volume generated) is valued immediately as compensation. If your stock goes up, employee morale is high and ppl want to stay the rest of their vesting schedule. If the stock goes down you have to compensate employees with more cash. Also, acquisitions are made in stock deals