Re: Rolling 10 or 5 year market performance question

From: John Conover <>
Subject: Re: Rolling 10 or 5 year market performance question
Date: 31 Dec 2000 19:09:03 GMT

Empirically, equity values appear to be a zero-sum game.

Positive sum games require the value of the game to increase over time
for the players, forever.

The average company was listed on the US exchanges for 22 years in the
20'th century-only one, GE, made it through the entire century,
(implying that the increase in the value of the market indices was do
to the rate of companies added being larger than those subtracted-as
opposed to the companys' market capitalization increasing, forever.)

Its difficult to rationalize equity values being a positive-sum game
because of that failure rate statistic.


BTW, empirically, the distribution of the duration that companies were
listed on the exchanges seems to be about a 1 / sqrt (t)
probability-half last less than 22 years, half more-a characteristic
that is consistent with the EMH.

atramos us writes:
> In article <6Gx36.861$>,
>   "Aaron Schindler" <> wrote:
> >
> > Equities are not zero sum like derivatives, Jim.  When a stock rises there
> > is more money being made than lost.
> >
> Once stocks reach a speculative level (negligible dividend) it is
> VERY close to a zero-sum game, the only difference is that the
> winners and losers are spread in time (the "greater fool" system)
> instead of being sorted out at the end of every month (like in
> derivatives).


John Conover,,

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