wealth evaporates because of the illusion of value in a non-zero sum game like the stock market. During the meteoric rise of stocks wealth was created because anyone who owned them made $$ when they sold. The subsequent buyer also made $ when he sold at yet higher levels, etc. etc. The reverse (evaporation) occured when the bubble of irrational exhuberance burst in 2000. In a market like futures, by contrast, every long position is offset with a corresponding short position so it is a zero-sum game.The guy that makes $1 million off a long position in orange juice is the flip side to the guy that lost $1million with a short position in orange juice Wealth only gets redistributed not created/destroyed among winners and losers in this scenario - the zero sum game.
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wealth evaporates because of the illusion of value in a non-zero sum game like the stock market. During the meteoric rise of stocks wealth was created because anyone who owned them made $$ when they sold. The subsequent buyer also made $ when he sold at yet higher levels, etc. etc. The reverse (evaporation) occured when the bubble of irrational exhuberance burst in 2000. In a market like futures, by contrast, every long position is offset with a corresponding short position so it is a zero-sum game.The guy that makes $1 million off a long position in orange juice is the flip side to the guy that lost $1million with a short position in orange juice Wealth only gets redistributed not created/destroyed among winners and losers in this scenario - the zero sum game.