Further to the ' Zero Sum ' game thesis. The sooner you can release yourself from this way of old school thinking , the sooner you can move on with confidence and less emotions to what you are doing in this Business. Be aware of this saying sure. But don't put it up their as some Golden Rule that has to be adhered or acknowledged as some higher priority. Because it's not all about that in this business and more about managing your overall situation , averages including deployment of stop losses , hedging , use of options , warrants etc.....utilizing ones tax losses whenever most appropriate and not just in the last month of the year. ALL of those and more. Feel free to add to the list if you want.
But let me offer up an illustration for you with an example which most on CRO would no doubt be able to relate to.
A Guy / Girl .... Investor sells ALL heir CRO at 6.6 ( pre run up) when their entry was only 1.0 cents to start to another Guy / Girl who bought off them at 6.6 cents and went onto sell all theirs at 15 cents. They both still win right.
It's only the opportunity cost which the first Guy / Girls misses out on. He / She doesn't lose , they just experience the loss of gaining more right. And now that the SP has fallen back , the Gap has now narrowed on this so called ' Opportunity Lost ' , and if he / she just sat on their proceeds and did absolutely nothing. But maybe they wanted a new lounge suite , car , or Fridge. What does it matter how they used their gain so long as they are content and get utility out of their gains. They might have tax losses to offset so then get the full utility of these particular proceeds. Whatever .....you get what I mean.
But what if if he / she bought another 5 times as much of another stock at 1.3 cents and when it went to 3.0 cents , they sold. In this situation , they would effectively have lost nothing from the previous sell out of on the last trade at 6.6 cents , and gained almost 50% back on the opportunity lost by being able to buy back into CRO at 7.8 cents .......and with even more firepower than they had before.
Even the last person who bought his / her stock of the second trade may also be experiencing a positive rise in his or her position from 3.0 cents. But even in that scenario if the GUY / Girls second trade which was to BUY the other stock at 1.3 cent and it goes to 3.0 , that's 230% gain right. So if that stock and the person Buying it gives up a third and drops back to 2.0 cents , he / she is only losing 33.3 % on their trade. Even if it falls all the way back to 1.3 cents , it's still only a 56.7% loss to the Buy who was in that particular trade and exchange. So I fail to see where the ' zero sum ' scenario plays out in most instances.
So generally in a rising market , this doesn't necessarily result in every trade being a zero sum game.... nor does it necessarily mean that every trade is a ' zero sum loss ' in a falling market.
O.K so the THIRD Investor who bought CRO at 15.0 they are the ones that we need to be mindful of. Namely because they are definitely the ones who paid a higher price. But it is not a ' Zero Summed ' , netted , or quantified sum total of the other 2 or 3 transactions across the total of 4 Investors because they are doing and executing completely separate strategies. And so the Investor paying 15.0 has only paid too much until the SP starts rising again and growing into its valuation and or reacting to positive news flow.
They too have not lost anything yet, because they are the ones who own a stake in the company and which are now reflecting a tighter and tighter supply of available potential supply for other future investors. And they are also the ones who some other investor will have to BUY off of in order to ultimately claim their own stake in the company as the stock price moves higher.
This whole ' Zero Sum ' thesis has been debunked by many and is merely now more of a Myth than anything else implicitly defined.
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