need simple explanation on this.“stock market is a zero sum game”
1 Like
A zero sum game is where one person’s loss = another person’s gain. In a zero sum game net change in all the participant’s wealth is zero. Wealth just get’s transferred from one person to another.
Thus theoretically stock market is a zero sum game - while a group of people make money, there is another group that loses equivalent money. Wealth moves from losers to winners.
But in reality stock market is not a zero sum game since both the parties have to pay brokerage and other charges.
5 Likes