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Thread: Why the rule that the dealer stands on a hard 17?

  1. #11


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    Quote Originally Posted by Freightman View Post
    The stock market is not that much different, though one doesn’t have that nasty little min bet to worry about, qthough I think it tends to be a zero sum game. One party must win, one party must lose, and the facilitators get paid regardless of outcome.
    Freightman, that’s what you get for thinking. You’re 100% wrong. Casinos and the stock market are very different. Don’t feel bad, because many APs make this mistake. Casinos are a zero sum game. There is a winner and loser and no value is created other than entertainment. Warren Buffet (you may have heard of him) points this out and explains why casinos and stock market are very different.

    The stock market is NOT a zero sum game. The stock market is a collection of companies that make our country run. It’s why we have one of the highest standard of livings in the world. Everybody can win in the stock market. The seller of the stock, the buyer of the stock, the people working for the underlying stock company, and the consumers buying the product from the stock company.

    Since you have a hard time following my points, I’m going to illustrate this very simplistically for you. Take Amazon. The people who initially invested in Amazon made money selling the stock, the people who bought the stock have made money over the years, the workers of Amazon have made money and the consumers have benifited from Amazon due to lower prices. Everybody won and is winning. It’s called one of those win, win, win, win situations. There are no losers. Yes, some companies (stocks) in our country have gone bankrupt but this is what happens in a free market system when that company is not meeting the market needs for whatever reason.

    The reason casinos were not legal in our country before 1931 is because they are a zero sum game. Nothing of value (other than entertainment) is created. In the past, governments didn’t legalize things that are zero sum games. They only wanted to generate revenue from things that drove our economy. This is also why chain letters and ponzie schemes are illegal. They are basically zero sum games.

    Why did our government legalize casinos, gambling and lotteries? To raise revenue without being voted out of office. Casinos are really our governments voluntary tax program. So next time you win money from a casino, what you’re basically doing is taking money away from our government.

    Hope this little lesson helped you understand the difference in casinos and the stock market. And guess what’s it was free. You don’t need to pay me $3K and go to some bootcamp to learn it. Lol. So next time you hear somebody say something like “the stock market is the worlds biggest casino”, you can tell that person how stupid he is.

  2. #12


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    Quote Originally Posted by Freightman View Post
    The stock market is not that much different, though one doesn’t have that nasty little min bet to worry about, qthough I think it tends to be a zero sum game. One party must win, one party must lose, and the facilitators get paid regardless of outcome.
    That's not quite true. The options and futures markets are zero-sum games, but the stock market isn't. Suppose company A goes public tomorrow and issues a million shares at $10 a share, which the public buys. Tomorrow, the stock goes up to $12 a share. The public just made $2 million. Who lost that money? Answer: no one. Wealth was created. Sometimes wealth is destroyed. But the stock market isn't a zero-sum game.

    Don

  3. #13


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    Quote Originally Posted by DSchles View Post
    That's not quite true. The options and futures markets are zero-sum games, but the stock market isn't. Suppose company A goes public tomorrow and issues a million shares at $10 a share, which the public buys. Tomorrow, the stock goes up to $12 a share. The public just made $2 million. Who lost that money? Answer: no one. Wealth was created. Sometimes wealth is destroyed. But the stock market isn't a zero-sum game.

    Don
    I thought someone might bring this up. Options and futures have a value and purpose. They are not a zero sum game the way casinos are. Part of their value is the time element of the option. The same is true for the futures market. Someone is paying for taking on the risk of this time on an option or futures. This brings value to the person at the other end of the trade. Think of a put option or the futures market for grain, which I’m somewhat involved in. It doesn’t bring value in the same way value occurs with the underlining stock or grain, but value has been created.

  4. #14


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    At first I though this topic is boring but after read all posts I have good understand of gambling (casino) and investing (stock market). Thanks all.

  5. #15


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    Quote Originally Posted by Dbs6582 View Post
    I thought someone might bring this up. Options and futures have a value and purpose. They are not a zero sum game the way casinos are. Part of their value is the time element of the option. The same is true for the futures market. Someone is paying for taking on the risk of this time on an option or futures. This brings value to the person at the other end of the trade. Think of a put option or the futures market for grain, which I’m somewhat involved in. It doesn’t bring value in the same way value occurs with the underlining stock or grain, but value has been created.
    You're bringing into the discussion something that wasn't being discussed (except by you). The statement was simply that, unlike the stock market, futures and options are zero sum. You can ascribe all the hedging motives you like to the futures and options markets, and rightly so. But that has nothing to do with the zero-sum nature of the game.

    Finally, you're somewhat naive if you don't think a very decent part of both of these markets is pure speculation.

    Don

  6. #16


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    Quote Originally Posted by cc12b View Post
    At first I though this topic is boring but after read all posts I have good understand of gambling (casino) and investing (stock market). Thanks all.
    Asked to explain the difference between gambling on a horse race and investing in the stock market, the American humorist Will Rogers famously replied: "In horse racing, you bet on a horse. If it wins, you make money; if it doesn't, you lose money. In the stock market, you buy a stock. If it goes up, you make money; if it doesn't, you lose money. See the difference??!!"

    Don

  7. #17


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    Quote Originally Posted by DSchles View Post
    You're bringing into the discussion something that wasn't being discussed (except by you). The statement was simply that, unlike the stock market, futures and options are zero sum. You can ascribe all the hedging motives you like to the futures and options markets, and rightly so. But that has nothing to do with the zero-sum nature of the game.

    Finally, you're somewhat naive if you don't think a very decent part of both of these markets is pure speculation.

    Don
    Of course, I understand that a certain part of all markets are speculation. And of course this adds no value, actually it hurts the markets since it can destabilize them. Speculation can occur in all asset classes, including tulips. In the stock market, it’s called day trading. In real estate, it’s called flipping. It’s the speculation that causes bubbles and ultimately crashes, which can take a lot of different asset classes down. We saw what happened to banks with the real estate bubble. They didn’t fair too well.

    But that’s what happens in a free market. I guess you could say it’s the dirty side of free markets. No system is perfect. No amount of government regulation can completely stop speculation.

    My point is options and futures add value. They are not a zero sum game like gambling. Gambling adds no value to society, other than through entertainment. I know you know this, but options and future are somewhat like insurance. I think most people would argue insurance has a value. It doesn’t generate anything but it adds value for the person buying it if the stock should fall and the person on the other side of the trade gets value by making money by taking on the risk. This is a simplistic view of how options and futures work. Again, this is not a zero sum game in the way betting on an outcome of dice or cards is.

    Look, I’m a low level AP and I actually like playing in a casino with an advantage. But that doesn’t mean I’m under any belief that I’m adding any value to society when I’m in the casino. In fact, I’m probably extracting value from society when I take money from a casino since this means the casino will pay less profit on their taxes...and at the basics of why casinos are legal is to raise revenue for our government, local, state and federal.

  8. #18


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    We're talking somewhat at cross-purposes. "Zero sum" has a very specific mathematical meaning. There's no ethical or moral component to the term. What value people do or don't derive from the exercise is separate from the notion that the stock market isn't zero sum and futures and options -- along with casinos -- are. You have a right to your opinion that gambling adds no value to society. But the millions of people who work in the gaming industry and feed their families from the salaries they derive therefrom might differ with you.

    The point is that all of this is tangential to the original discussion.

    Don

  9. #19


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    Quote Originally Posted by Dbs6582 View Post
    In fact, I’m probably extracting value from society when I take money from a casino since this means the casino will pay less profit on their taxes...and at the basics of why casinos are legal is to raise revenue for our government, local, state and federal.
    Don't you pay taxes on your gambling winnings? The IRS says gambling winnings are taxable. The government can't lose. If you lose, the casino pays the taxes, if you win then you pay the taxes. In fact with the new tax law many individual tax rates are higher than what corporations pay.

  10. #20


    0 out of 1 members found this post helpful. Did you find this post helpful? Yes | No
    Quote Originally Posted by DSchles View Post
    We're talking somewhat at cross-purposes. "Zero sum" has a very specific mathematical meaning. There's no ethical or moral component to the term. What value people do or don't derive from the exercise is separate from the notion that the stock market isn't zero sum and futures and options -- along with casinos -- are. You have a right to your opinion that gambling adds no value to society. But the millions of people who work in the gaming industry and feed their families from the salaries they derive therefrom might differ with you.

    The point is that all of this is tangential to the original discussion.

    Don
    Don, I get where you’re coming from, but I still would argue value occurs when an option or future trade occurs. This is the time element of the vehicle. I fully understand the options and futures markets are also used by speculators (some would call these people gamblers).

    From a mathematical standpoint, I understand value has probably not be created when an option or future trade occurs. It should be pointed out these trades are much more complicated than any mathematical model can predict since they include outside influences that are outside of math. This is not true with games in casinos, which can be modeled with math, and are not impacted by outside influences.

    As far casinos generating value, I have repeatedly stated gambling has value as entertainment, and I think this is a valid reason for it to exist. I have many friends who look at it like that. The gaming industry (casinos) are in the same space as pro-sports, movies, and other forms of entertainment. All these add value to people’s life. Some of my best experiences have occurred in a casino.

    I’m surprised you made your comments about what I said about the gaming industry. Have you read any of my posts? I’m probably the most pro-casino person on this site. I’m constantly defending the casino industry and explaining their business model to people. Again, I said in this thread casino adds value by providing entertainment. If it adds value in another way other than entertainment please let me know.

    I also understand why our government outlawed casinos and gambling in the past. There is a downside to gambling for society that many on this site constantly point out to me, as if I lived in a cave and didn’t know gambling could be harmful to a certain weaker element in our society. When gambling and casinos were illegal in our country, options and futures were legal. Why? Because options and future add value for our economy, which is driven by the stock market..

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