quietvoice wrote: It is a zero sum game—someone wins, someone loses.
Wrong.
You see desperate, when someone thinks that they know something, they will often offer up foolish statements.
As an example, let us say I have just made a profit of $10,000 by selling the stock of a company that sells lumber. Let’s call this stock LUM, for the hypothetical company Lumber Incorporated. According to quietvoice, because I profited $10,000, this means another person had to lose $10,000. That is a zero sum game, and applied to the stock market, that is ignorant.
The reason I made a profit, was because Lumber incorporated sold more lumber. They harvested more trees, growing their business. This made the stock I had initially purchased more valuable.
When I sell my stock, it is because another person feels like it is a fair trade. They believe the Lumber company will continue to grow. They believe the Lumber company will continue to expand.
Why do I sell? There are many possible reasons. Maybe I think the Lumber company is no longer headed in the right direction. Maybe I think the value will go down. Or maybe, I think the Lumber company will continue to grow, but I’ve seen a better opportunity in a manufacture of Trains. I think the Train manufacturer will grow faster than the Lumber company. It isn’t a zero sum game.
People that believe stocks are a zero sum game…well, they are ignorant on how markets work. They don’t understand what stocks represent.