if every stock transaction has a buyer & seller, does that mean 50% of the people will always be losing money?

Question

I just got into the stocks market. AFAIK every transaction must have someone selling and someone buying, both thinking that they will be making money. How can both be making money?

Does that mean at least half of everyone in the stocks market will have to be losers?

In: 97

Answer 1

Not just stock, all transactions are zero sum.

If someone sells you something and the value goes up, he’ll lose out on money and you get some. If price goes down, you’ll lose money and he’ll dodge a bullet.

Now the definition of gain and loss in accounting can be different from economics. If you buy something for $10 and sell to me for $15. If I sell it to someone else for $20, we both make $5 in accounting but economically, my $5 gain could have been yours if you have kept it and thus you miss/lose $5 by selling it to me