Lets say Mr Wizard Trader buys a small cap at 5c . It goes to...

Lets say Mr Wizard Trader buys a small cap at 5c . It goes to $1. Falls back to 90c . Mr Wizard Trader executes his stop loss and locks in his nice little profit, job well done. But who buys his stock? Mr BuyTheDip Trader has bought it. Price goes down to 60c. Another stop loss executed and now Mr BargainHunter is holding the stock. Stock continues falling, falling, all the way back to 5c. So the net wealth created is a big fat zero. Meanwhile Mr LongTermer has watched his stock go all the way up and all the way back down.

Let's replace the stock with the XSO , the small cap index. What has it done this calendar year? Hmm negative 1.41 percent. 2 years ? negative 23.6%. So while there are winners in this market, there's plenty of losers too, and overall we are worse off in the past 2 years , if we use the small caps as a measure.