"value investing is a positive sum game" in the long run - really??

[KopiKat]

To the old birds in the forum: do you see a reminiscence where more new members are interested in investing and ask fundamental questions on investing? hehe

The spirit and tradition of 传承 [chuán chéng]

Translation：
to pass on (knowledge/experience to future generations)

I have a different interpretation of mrEngineer's post. I think he may be referring to the period leading up to end-'07.... Seems so easy to make $$ from stock market... Many IPOs.... More and more newbies getting interested in Stocks Investing...

[CityFarmer]

To the old birds in the forum: do you see a reminiscence where more new members are interested in investing and ask fundamental questions on investing? hehe

The spirit and tradition of 传承 [chuán chéng]

Translation：
to pass on (knowledge/experience to future generations)

I have a different interpretation of mrEngineer's post. I think he may be referring to the period leading up to end-'07.... Seems so easy to make $$ from stock market... Many IPOs.... More and more newbies getting interested in Stocks Investing...

OK, probably i am not "old bird" enough to catch it.

I am looking at it with difference perspective. It is a good sign for newbies getting interested in stock investing, due to whatever motivations, coming to this VB site, instead of going to website full of "Cheong ah...", "Huat ah..."

[Temperament]

Hey! Even 'old bird" will learn something "new' from here. Who dares to say he knows everything has nothing more to learn in life. Then sorry, i think it's time and better for him to leave this world or else he will surely die of boredom anyway.

[Musicwhiz]

Investing, per se, without the necessity of the word "value", is +ve sum overall as companies increase profits and cash flows and pay out dividends, making the Company more valuable. Hence, the Company and investor both grow richer as a result. There's been quite a bit written on this so I will not dwell too much on it here.

As for more "newbies" coming in to learn, I take it as a +ve overall as it means younger folk are willing to increase their financial knowledge and literacy. But it may also mean the market is getting bubbly and people find making money a little too easy. There have been many blogs set up talking about yield investing, REIT investing and the like. Reading through them reminds me of how I started my own journey. Though none have embraced the value concept as rigorously, it's still interesting to see the learning process unfold and how they find out more about investing as they go along. Fascinating.

[tau281290]

I just read Seth Klarman's book, margin of safety

he stated that in the long run value investing becomes a positive sum game,

unlike short term trading which is alike to a poker game, a transfer of money between the players - a zero sum game

Can somebody explain to me howww??

I've read that book, but I forgot he said short term trading is a zero sum game. That is a very dangerous misconception since short term trading involves a lot of buying and selling, which means lots of brokerage costs and slippage. It is a negative sum game. If you end up break even in the very long term (by that I mean 30 or 40+ years, 10 years is not long enough), you are already a winner.

There is also long term trading/speculating which is far superior to short term speculating, IMHO.

Everyone knows value investing is a positive sum game because the company creates value, given that you picked a quality company. And the economy grows, given that you picked a lucky country.

When a company offers a good/service to its customers, it would gain value for each good/service sold, unless of course the company is idiotic that decreases its value each good/service sold. Over time these lemons will go bankrupt or reduce to insignificance. These lemons would be better off closing its factories or stores and return the capital to its shareholders now rather than destroying value.

But just being able to offer value creating goods/services is not enough for investors, since some dishonest insiders will take the value away from the investors to their own pockets. Therefore picking a good company is so important.

I think what I do is borderline of long term investing and long term speculating. Sometimes short term investing if lucky.

[Temperament]

I

I think what I do is borderline of long term investing and long term speculating. Sometimes short term investing if lucky.

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