Okay, I accept that I could be entirely wrong. I had forgotten about the role of dividends in determining the value of a company, and that companies definitely do appreciate in real value on average. (I should also have clarified I was thinking only about a closed secondary market, as opposed to the primary market where funds flow into companies.)
What I'd like to understand is this: if the total real value of companies is expanding in the long term, then isn't the stock-trading/investment game about who manages to pick the fastest-growing stocks and capture the most price appreciation? The net gain in value would exist as long as people had invested in the first place, but its distribution is zero-sum in that the net gain in value is captured by someone or other. I guess this is what I was thinking of when I talked in earlier posts about "closing out" all trades - if all trades are closed out at one point in time, then all value in the market is captured by one player or another, and the result is zero-sum.
If the total gains in real company value are influenced by the trading game in the secondary market (e.g. total gains depend on the volume of trading in the secondary market, perhaps through new stock issues), then the question does seem a little more complicated.
Glad to have had this discussion. I guess I need to read up on economics more, although googling didn't turn up a lot of actual literature on stock markets and value-creation right away.
What I'd like to understand is this: if the total real value of companies is expanding in the long term, then isn't the stock-trading/investment game about who manages to pick the fastest-growing stocks and capture the most price appreciation? The net gain in value would exist as long as people had invested in the first place, but its distribution is zero-sum in that the net gain in value is captured by someone or other. I guess this is what I was thinking of when I talked in earlier posts about "closing out" all trades - if all trades are closed out at one point in time, then all value in the market is captured by one player or another, and the result is zero-sum.
If the total gains in real company value are influenced by the trading game in the secondary market (e.g. total gains depend on the volume of trading in the secondary market, perhaps through new stock issues), then the question does seem a little more complicated.
Glad to have had this discussion. I guess I need to read up on economics more, although googling didn't turn up a lot of actual literature on stock markets and value-creation right away.