swyck wrote: Matthias wrote:
swyck wrote:A major difference between fantasy sports and the market is that you dont actually have to beat any one. There is no Super Bowl where one team is champ and everybody else is a loser. This is not Texas Hold'em where one guy walks away with the pot. The fact is that in the market everybody can make money which is not the same as winning. Not everybody does, but that's a different thing
Agree with the rest of what you said, but it is a fundamental truth that every transaction be it a stock or option involves both a buyer and a seller. For every winner there has to be a loser. Markets won't clear otherwise.
You buy Primo Widgets (PWG) at $10.
It goes up to $15.
You decide get out of Widgets, maybe to take profits, maybe because you think its run is over, maybe it starts looking risky, or maybe baby just needs shoes. You sell it to me at $15.
Widgets then keeps going up to $20 where I sell.
Both of us made $5 a share so we both won. Isn't this great?
Sure from some glasses half empty point of view, you lost an additional unrealized $5 by not holding on, but that's not a real loss. We both posted a profit.
So no there doesnt have to be both a winner and a loser to every transaction. In business deals both sides can win. In fact they should with any good deal. It doesnt always work that way, but this is not a zero sum game. The value of the market increases over the long run meaning there should be more winners then losers, and plenty to go around for everybody.
Buyer and seller <> winner and loser.
Thats sorta true. If person A sells the stock at $15.00, the stock will go down bc the value of a stock decreases when someone sells the stock. The stock will only go up if theres more buyers (more bids at above the market price than bids below the market price) for the stock to break through a certain resistance point and reach $20.00.
In the stock market, there are too many actors to make a statement such as everyone can profit.
As for playing stocks, its a much riskier endeavor and require more financial assets. For each trade in stocks, there is generally a transaction cost of $0.01 or $0.02 x the number of shares of $6-8 per trade. This requires you to not simply make a profit, but to make a profit that offsets the transaction cost through the broker.
Furthermore, for non-penny stocks, most shares are fairly expensive (ranging between $10-$400), which requires you to have enough capital to start off. I dont think most fantasy sports player or 20 year olds have the money to do that.
Stocks also have much higher volatility and risk than fantasy. If you join a fantasy baseball league for $20 entry fee, $20 is the most you can lose. But if you sell short a stock with an account balance of 10k, the downside is infinite rather than the 10k you put in. And for high volatility stocks like GOOG, you need to be online checking hte stock between 9to4, or else you will lose money. So stock market is actually more time consuming.