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Originally Posted by Slava
This is really interesting discussion and thanks for your posts. I am really re-thinking things here. The thing is that we know the market is finite. So if the total market today is worth a set amount (whatever that is), and someone gains in the market then by definition someone else must lose.
And BBS, your example doesn't quite fit here. Is the gold actually increasing the value of the overall economy or is it just commanding a bigger share of the economy? I think its the later, where the gold doesn't actually mean that the economy is increased by that percentage, but that you get a slightly larger piece of the same pie.
That said though, I can see the point you guys make regarding the overall growth of the market and I can't completely account for that. So I guess I feel like the market is zero sum at any one point, but maybe that doesn't hold in the longer term, big picture. I don't know if that makes sense either, but I think that's where I am...
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In your first paragraph you say that the market is finite, but that's simply not true. The market as a whole can/does grow and shrink. Yes the market is finite, but that doesn't mean it can't grow over time, and as they say, a rising tide lifts all ships.
As to your second point, yes the gold does increase the value of the overall economy. If it didn't then we would never have seen any sort of growth in weath, or standard of living. We've clearly seen both of those things, so saying that creating/finding something of value simply commands a part of the already existing economy rather than adding to that overall value is just incorrect.
As for your final paragraph, it's not that the market is a zero sum game at any one point, that's not even true for a single stock. In fact it's the exact opposite of that.
If the market/a stock starts a a certain value, then at some point in time it will either be higher or lower than at that starting point. At that point in time on the whole it is either a net positive or negative gain. Yes there will be some winners and losers, but if the price is higher than it started, the sum total of winners and losers will be positive, if it's lower, then the sum total will be negative. The point of creating a company or market is to increase value. You do that by finding or creating something of value which adds to the overall value of the company. By it's very nature the market cannot be a zero sum game.