क्या Stock Market में सब पैसे खोते हैं? Myth or Reality? - YouTube

People say that share market is zero some games some people lose and some people gain

So there are only 2 people on net some people will lose and some people will gain

This is a very small thought and it's not like that. Share market is not completely a zero Sum game

and through this video I will explain why we cannot consider this as a zero Sum game

share market is a place where the worth of the companies for the worth of stocks as shown as a price to you

a place where the stock prices are displayed and the mechanism to calculate the prices are through buyers and sellers

the buyers enter because they feel that the stock might go up and they buy

sellers feel that the stocks might go down and they sell. This entire mechanism is set in such a way that

if anyone wants to money in a company's stock or want to take out their money then they can use this mechanism very well

but some people say that the rich people money through this mechanism and people with less money lose money

it's not about rich or poor it's about who ever is more smart earn money, and those who do not put in a lot of effort lose money

zero Sum game means that someone will lose and someone will gain so it's all the same

if we distribute the share market in two parts. Then one is cash market, where the work on delivery

it means that you actually own the share and that share is in your Demat account

the other is the speculative market, which is known as the derivative market

these are two very different markets and we need to see these in different context for zero Sum game

let's talk about the cash market where we actually take delivery of shares and is added to your Demat account

What is the share and why do the prices increase?

Whenever a company is into a business then they make a profit through that business

till now profit was one of the biggest objective but after the Zomato IPU even that is not a requirement anymore

but ultimately the profit that the company generates is the biggest objective of the company

that profit is either distributed as dividend to the shareholders, are the owners of the company

or it is retained by the company to be used as future growth prospect. This is known as retained earning

either it is used as dividend or retained earning at the company.

This retained earning that is generally used as companies future expansion plan

you can see the impact on of the retained earning in the stock prices. Logically, each growing companies stock price should also go up

as the retained earnings of this growing companies also increasing

and its stock price should also increase as the stock price is a reflection of the retained earning

this is a technical logic, but does the market work this way? No, for market 1 + 1 is not always 2

it can also be 11 as market always tries to project the future earning

and tries to value the company today, that is related to the Future earning

so let's come back to the main question that is the stock market is zero Sum game?

zero Sum game means that if I have invested money and someone else has taken out the money

then the person who has put in the money might have earned, and person was taken out the money might lose the money

if we talk about delivery based trade then there's no logic behind it

someone who has put in the money might have put in at a lower rate or at an upper rate and want to take out the money now

so it's not required that this is a zero Sum game as if we talk about equity markets the delivery based companies

the profitability of the company which is used as retained earning, it grows as it grows along with the country and the economy

and the ultimate reflection is on the stock price. The logic of zero Sum game is not applicable in cash market

but if we talk about the speculative market that is the derivative market. It can other options or futures

anyone who buys this contract, has to be sold by someone. If the price increases then the buyer profits

and if the price decreases then the seller profits and vice versa.

Here clearly there is a contract between the buyers and the sellers of the contract

which is deciding the action in the underlying.

So it is clear cut no value addition as per the earnings of the company in the derivative market

there are both buyers and sellers in the derivative market and that is what defines the price

there is a zero Sum game in derivative. There is a concept of open interest in derivative market

it states that there is a buyer and seller in a position.

If there are both parties in the same contract then either the buyer will win or the seller will win

the fact that there are open interest, and position in derivatives where there are counter trades

ultimately it is a zero Sum game. But there is no zero Sum game in cash market

everyone might on as the company is growing along with the earnings and retained earning

so everyone can own through this process. I hope this concept is clear to you

casually using the word zero Sum game is not ok for a market. There a lot of opportunities available in the market

if you are investing, and participating in the business then definitely it is not a zero Sum game

if you are entering the correct business at the correct time. But if you are trading in derivatives then it is a zero Sum game

you are taking calculated risk and you know that you might include loss, which is ok

you can take risk if you want. It is your calculated risk. But a business drives the value in the cash market

under stock price drives the Movement in derivative. I hope you have understood the concept

and if someone tell you the same thing then do explain it to them that there is no zero Sum game in cash market

only derivatives is a zero sum game and the participants know it. This video voice a small clarification

I hope you liked it and if you are liking the work that I am doing then do share my work with your friends and subscribe to my channel

I will keep creating more such videos and try to pursue my passion to make you a knowledgeable stock market participant

Bye friends. Take care