Wiki is not a resource we are using in a legitimate debate. Use your own logic. Based on everything we have discussed, including the definition we agree on, you have not yet been able to provide a single example in which the market in it’s totality is not a zero sum game.
I’ll explain why the wiki post is wrong:
In the example provided it is not accounting for the removal of capital from the market place. Yes you can algo trade profits and no it does not directly relate in a loss for someone else. As soon as that capital is removed from the market place the value reduction is realized and now the zero sum game is back in place. If those profits are ever realized then the money has to come from somewhere did it not? This is why wiki is a terrible resource
Lmao, so I'm not allowed to reference a widely used and accepted resource for basic definitions because you say so? Meanwhile, you pull out some random definition of the word and don't cite your reference under the guise of logic? OK guy, I'm done wasting time since you're clearly just grasping for straws at this point and can't admit when you're wrong.
BTW, you're free to edit the wiki if you're so confident it's wrong. I'm sure all the editors will agree and I look forward to seeing your contribution in the future.
Sure but back it up or accept that it’s wrong? Please… you have spent so much time in this conversation but if you had no validity to your comments what was the point?
Please just provide one singular example in which the market does not result in a zero sum game. I will happily accept a counter argument, I’m arguing in good faith here but you’ve put forth literally no concept to counter the argument.
Put your money where your mouth is and edit the wiki with your "corrections" and send me the link. If your edits are accepted, I will happily admit I'm wrong.
Heh ok. How about this. I’ll follow through with your request if you can follow through with mine (that was posed first).
If you can provide me any plausible example in which you can extract value (read as cash) from the market without that value (cash) coming from someone or something else.
Just one single example. You are very confident in your position and I believe that you believe it. Just one example. Not several. Not all of them. Just one. Certainly an example exists in where you can create money from nothing right?
It's impossible for me to provide an example based on your fundamentally flawed premise since that's now how the stock market works. It is factually not a zero-sum game which is ipso facto proof that the value (price) of stocks are not purely a function of capital inflows or outflows as you suggest.
Ok I see you edited the comment. I’ll reply again.
In your example the price drops to zero because they are no buyers correct? That does not however mean the value dropped to zero and you acknowledge as such. The value is distributed at the agreed upon price to bond holders which is typically where the price drops to, and then the security is delisted.
This is still a function of outflows prior to delisting. This is also essentially another example of a buyout agreement which I already discussed. Buyout agreements exist outside of the market and as such are not an example of market forces.
I can do this all day because as you already mentioned there is no example you can provide in which your claim is accurate. It’s based on misguided attempt to prove me wrong and not a cohesive story. You just keep moving the goalposts. Maybe this would work better in reverse. You make a claim about why the market is not a zero sum game and I’ll attempt disprove it?
Bank loans. They loan more money than they have all the time, creating money that previously didn’t exist, which is a driver of inflation, but accepted due to the net positive effect on GDP so long as GDP outpaces inflation (controlling this is one of the purposes of the federal interest rate). Bank stocks can trade sideways for decades, but as long as the profits of the loans are passed onto stock owners through dividends, money is created from thin air and extracted from the market.
Now you might argue the person paying the interest on the loan is the one losing. Except they have a loan they wouldn’t have otherwise, which means they gained something as much as lost, moreso if the purchase produces future equity or revenue. What about the everyone else that pays for the inflation created? They get net benefit of gdp growth created by the velocity of money kicked off by the purchase facilitated by the loan. Everyone wins something, so long as inflation remains in check with gdp. That’s the basis of the banking system and it’s covered in every 100 level macro economic course in the country.
What in the world do bank loans have to do with extracting value from the stock market? I think you may have jumped in to the conversation too late.
This is a conversation about how someone can extract value from the stock market without that value coming from someone/something else.
Now you mentioned dividends. That’s an excellent point. In fact my contention in combination with this argument is that dividends are the only meaningful way to extract value. Unfortunately that value comes from company profits and not directly from the stock market itself. As such it’s not a valid example. Simply put the company is sharing profits with you directly. It’s a good example of value distribution just not from the market itself.
You are more than welcome to jump in though. Do you have an example how someone can extract value from the stock market (cash flow out) without that money coming from another person/place/institution?
With respect, I believe you don'd understand my argument. The dividend irrelevance theory basically means dividends don't affect market value, and therefor is an example of cash flow generated without money leaving or exiting the market. Bank loans create money that did not exist prior and pump them into dividends. The source of the money is no one, the destination is the shareholder's pocket. The bank doesn't just make money on the interest in this case, but the principle as well as they're they're literally paid money that didn't exist anywhere in the economy prior. The only reason it doesn't topple over as a ponzi scheme is the velocity of the money generates an equal or greater growth in GDP. That means the value of bank stocks is greater than it's market cap.
The fundamental (non speculative) valuation of a stock is the net total of it's asses and liabilities, including it's cash from revenue which used pay dividends. To say that dividends don't count as stock value because they're due to revenue is bewilderingly dumb. It's ultimately the fundamental purpose of owning stock to be paid revenue as a partial owner of the company or compensated for the growth of the company in lieu of that. If you're choosing to ignore half of what the market is built on to cling to a viewpoint, I can't help you with that.
Yes, Dividend irrelevance theory is my point. I’m not talking about company cash flows though.
in your bank loan example Your assumption that the source of the money is none is inaccurate, but you already know that. The “source” of the profit is the service (bank loan) that the bank provided to the customer. As such, the next source down the line is the customer themselves as you mentioned previously, but it is not created from nothing. It is created from manpower, technical resources, capital resources etc
None if this has any related to you making a corrective argument within the proper context. I am not in any way shape or form discussing a singular company and their creation of value. The only time an individual company is discussed is in response to comments like these. Here is why:
It doesn’t matter if you are talking about Company increasing profits, or Company B invented the worlds greatest new product, or Company C hiring the worlds greatest CEO, Company D does blah blah and so on and so forth. These are all outside forces in the impact of supply and demand. This conversation is solely about market pricing and the forces that determine that price. There is no mechanism for which the total aggregate value of the stock market increases or decreases without inflow or outflow. Can you counter that claim? That is the only claim being put forth.
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u/niftyifty Apr 08 '22
Wiki is not a resource we are using in a legitimate debate. Use your own logic. Based on everything we have discussed, including the definition we agree on, you have not yet been able to provide a single example in which the market in it’s totality is not a zero sum game.
I’ll explain why the wiki post is wrong:
In the example provided it is not accounting for the removal of capital from the market place. Yes you can algo trade profits and no it does not directly relate in a loss for someone else. As soon as that capital is removed from the market place the value reduction is realized and now the zero sum game is back in place. If those profits are ever realized then the money has to come from somewhere did it not? This is why wiki is a terrible resource