Replies to post #10582 on Short Term Trading Member Forum

[TL Trader]

Appreciation - If I buy a house for $300,000 and sell it 5 years later for $400,000 where did the $100,00 come from?

Nobody "lost" it.

[4Godnwv]

re ZS:

Mr. Cash, yes and toppcats dilutional factor, although a great point, doesn't change the fact that splitting a stock does not change the zero-sum.

A stock is only worth what I can sell it for. If abc splits 3 for 1 the new shares are worth 1/3of the old ones...doesn't matter who holds them. Bottom line someone has to SELL them before we can determine their worth and that means someone has to BUY them.

Zero-Sum does change however over time due to the injection of liquidity into world systems. For example: the creation of funds by the FED. The trade off is they must SELL debt to finance the liquidity.

Hypothesis #2 Asia IS money heaven.

[pegwatcher]

re: zero-sum. my long held belief is that any "wealth effect" from equity trading/appreciation over and above it's true intrinsic value is zero-sum, because I truly believe the old axiom that in the short term the market is a voting machine, in the long term it is a weighing machine.

Therefore, if MSFT proves out to be truly worth exactly $20 a share at the time of your sale, your $20,000 ultimately will come from the poor sucker left holding the bag.

If the stock later proves to have been worth $24 then the $20k comes from MSFT's operations and it is not zero-sum but true wealth creation.