Are markets Zero-Sum?

1 Like

There are two bits to the market

  1. The investing bit, where you buy into a stock and wait for the business to grow. As it does, value/wealth is created for all stock holders. So this bit is not a zero sum game. If you had bought Shares of Infosys in IPO, Rs 10,000 is today Rs 2crores +. This wealth was created for every shareholder.

  2. The speculative bit, Intraday trading and Derivatives (F&O) trading. This definitely is a zero sum game, for every Rupee made, there is a Rupee lost.

1 Like

You beat me to this question. I am a newbie here, but this question has been nagging me for a while.

For me to win, does someone else has to lose?

This is both a philosophical question ( You beliefs may not support the idea that some one else has to be pulped into poverty for you to be rich) and a practical question. If it is indeed a Zero Sum game, then the odds are heavily stacked against mortals like us and we don’t have much of a chance in eking a living out of trading.

Nithin, thanks for your reply, As a promoter of a Brokerage Firm, could you share the approximate ratio of Investment Trades to Speculative Trades? ( you can choose not to divulge, if this is company confidential).
If the Day Trader community form bulk of your business, how do you sustain this Business Model. I would presume, that for every 5% of the Traders who make it Big, there would be a big % of Traders who would go bust on a yearly basis, and brokerages like you will have to promote the lure of big money to bring in new traders on a yearly basis, to sustain your business. Or is there a fallacy in this thinking?