Comments on: Must All Trades Be Zero-Sum?

By: Canadian Capitalist

Canadian Capitalist — Mon, 18 Jun 2007 18:13:53 +0000

I am not sure “the market is perpetually stuck in a moody state”. While the markets may not be always efficient, most of the times highly liquid stocks are efficiently priced.
Your theory assumes that the opposite end of your trade is another average person who might sell for any number of valid reasons. More likely though the other end of the trade is a huge institution that is buying or selling. This always scares me because giant institutions have resources average investors cannot even dream of.

By: Financial Jungle Guy

Financial Jungle Guy — Mon, 18 Jun 2007 18:29:02 +0000

What’s efficient for the market or the giant institutions may not be efficient for me, because the stock can still be worth more in my hand depending on my individual objectives and holding structure.

Huge institutions also have to manage time horizons, risks and tax obligations just like everyone else.

By: moneygardener (AKA investor99)

moneygardener (AKA investor99) — Mon, 18 Jun 2007 19:25:55 +0000

“while non-registered shareholders must report the distributions as regular income for the year. ”

Is this true for 100% of distributions?

By: Financial Jungle Guy

Financial Jungle Guy — Mon, 18 Jun 2007 20:19:00 +0000

Well, minus the Return of Capital and dividend components. But, I was primary writing in the context of trusts that distribute a high percentage of interest income.

By: Average Joe

Average Joe — Tue, 19 Jun 2007 16:31:35 +0000

I would have to say that the market is not a zero sum game. Why is that? Because we have seen that the market has been historically rewarding long term investors with roughly a 10% gain per year.

Now, if you buy a stock that was grossly overpriced (like Nortel at $120). Then there were definitely some big winners and some big losers on those trades.

By: Is The Market Efficient? « Financial Security Quest

Is The Market Efficient? « Financial Security Quest — Mon, 25 Jun 2007 20:24:01 +0000

[…] Jungle wrote a very insightful post called “Must All Trades Be Zero-Sum” where he argues that because investors have different circumstances, how could the market […]

By: Is The Stock Market Efficient?

Is The Stock Market Efficient? — Thu, 27 Mar 2008 02:37:50 +0000

[…] Jungle wrote a very insightful post called “Must All Trades Be Zero-Sum” where he argues that because investors have different circumstances, how could the market […]

By: Hunter Harris

Hunter Harris — Wed, 12 Nov 2008 23:22:53 +0000

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