In article <[EMAIL PROTECTED]>,
Rich Ulrich <[EMAIL PROTECTED]> wrote:
>One thing that remains true about stock investment schemes: There may
>be some overall growth, somewhere, but in a specific, narrow
>perspective, the whole market makes up a zero-sum game. If someone
>wins, someone else has to lose.
The above is internally contradictory, but the final statement is
clearly false.
Consider a pharmaceutical company with a research program. Suppose
the general, well-founded opinion is that this program is not likely
to produce much. The company's stock is low. But it turns that they
get lucky, and discover a marvelous drug, that will save millions of
lives, and make them lots of money. The company's stock goes up. The
owners of the stock win. And it may be that nobody else loses. (It
could be that owners of stock in a competing company lose, but if the
drug is much better than previous drugs, they'll tend to lose less
than the winners win. And perhaps there was NO drug for the disease
before, in which case there were no competitors.)
Aside from wins due to such surpises, there is indeed a general
positive rate of return, stemming from the fact that capital actually
is a useful factor in production, and there is also the possibility of
an overall gain or loss as a result of a shift in the general degree
of preference for consumption now over consumption later (expressed in
terms of interest rates).
Of course, short-term "day trading" is largely a zero-sum game, as the
return to be expected over such a short time period is very small.
Radford Neal
===========================================================================
This list is open to everyone. Occasionally, less thoughtful
people send inappropriate messages. Please DO NOT COMPLAIN TO
THE POSTMASTER about these messages because the postmaster has no
way of controlling them, and excessive complaints will result in
termination of the list.
For information about this list, including information about the
problem of inappropriate messages and information about how to
unsubscribe, please see the web page at
http://jse.stat.ncsu.edu/
===========================================================================
