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0 pointskbenson1y ago0 comments

Different people value resources differently overall and also differently over time. Trading a resource you don't value as much to someone who does value it for something you value leads you both to be better off.

In a very simple form, if you're a fisherman you may have a surplus of fish, much more than you can eat before they go bad. Fish is not worth much to you, but maybe you need cloth for sails, the someone in the village collects and mends and sews cloth. They have a lot, but need food. Trading fish for cloth benefits you both.

Money is just an abstraction to smooth trades between people for resources they need. Scale to whatever level you want.

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wat100001y ago

But we're talking about stocks, not fish. You can do four things with stocks: exert control over the company, collect dividends, lend it, and sell it. Funds generally aren't buying so they can create wealth by exerting control. Lending and selling are both zero-sum.

kbensonOP1y ago

> Lending and selling are both zero-sum

Why? Lending is just giving people money they value more now than you do, so much so they agree to pay back more later. The utility at the current time of that money is better than the utility later for the lendee, and the opposite is true for the lender (they will happily forego some money available now for more money available later).

If I take a loan out to buy a car which lets me find a better job because I can travel for efficiently, and I get a better job that pays more which allows me to much more money and paying back that loan is itself even easier, is that transaction zero-sum when examined over time?

Paul-Craft1y ago

TL;DR:

> Everything is worth what its purchaser will pay for it.

- The Moral Sayings of Publius Syrus, maxim 847.

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