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seadan83

2 years ago |

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Outside money flows into the market, this allows it to be positive sum.

For the DnD analogy, it is as if you had a cleric.

Eg: IPO sells at $2, next seller buys at $4, next at $6, etc. Everyond makes money in that scenario. Eventually there can be losses, do all the losses counter balance these profits? No, because on net everything went up. If there were always trades that had losses to balance the gains, only then it would be zero sum.

What's more, people convert types of holdings all the time, and it is the big players that move things. When a mutual fund allocates 1% more to stocks, or 1% less and putd that to bonds, those are very big net new or net negative money flows. So, it's not just paychecks being added in, there are lots of sources of dynamism to make the stock market system anything but closed. There is net new money flowing into it all the time.