S2 Muses the Stock Debacle : A Zero Sum Game has no winners...

A lot has been made about the recent Dow Jones crash in the last 30-45 days. I as like millions of others has observed and come with  their own theories of this debacle (wasteful spending on wars, poor credit market, sub prime mortgage mess. But instead of thinking and justifying the events in retrospective, I  thought and  tried to analyze the crystal ball from a different perspective. It stuck me!  Stock market is a zero sum game.  By making that statement, I am challenging the premise that does stock market really create value? Because behind every transaction (profit or loss) there are two parties that offset each other ( one who sells more than the intrinsic value of the stock wins and the one who buys it is a looser).  So technically there is no real value being created but a steady amount of movement of cash in different hands  and hence giving a perception of wealth creation. The reason this is difficult to recognize this basic phenomenon, is the macro representation of the economy that there is  potential growth involved and hence the potential upside movement of the stock. I am sure the converse is true in the bear market.  I think the sooner we realize that stock market was created as a a mechanism for ensuring easy and cheap credit and not a value/money creation manufacturing plant the better of we all will be. Yes there are economist pundits that will belly this whole theory and tell me that this is a typical myth of the common man but I thought i wanted to challenge the so called  day trader champions (you will make millions of dollar by following the technical analysis) who imply there is someone out there who is on the receiving end of this strategy. Also in the midst of all these transactions, the financial service companies eat their brokerage fees. Wow, on top of not creating value, we have just reduced the pie every time. In my mind the only thing that counters this zero sum equation  is that future holds more potential than the current or let me say future is not the same as present and hence the potential of change. What is the time horizon? Where is the present ending and future beginning is a debate in itself  but for now the next time you think you cracked the stock market movement and hence made a buck or two (thousands and millions for the big league) remember there is someone sitting on the other side of the world or coast loosing the same amount.

The Million Dollar Baby: Are you parenting one?

In this Wall Street Journal (WSJ) there was a report on how much money is being spend on raising kids from age 0-17. Well though the Government numbers were respectable at $16,000 per year, WSJ identified the numbers in the range of 800K to 1.6 million dollars for the period of 17 years. And to top it all, these numbers do not include college education. Initially I was just 'WOW' but then things started to settle in. The example of $800 stroller ( my wife and I discussed buying one, good we just discussed), a $1000 birthday party with a mermaid theme ( attended one that very weekend where the birthday for a 4 year old had a princess theme with a dressed up princess, customized 30 goodie bags and a clown too), $ 3000 annual family vacation trips, $4000 braces treatment and the numbers start to make sense. These kids are surely pampered and I am indeed jealous. The reason this article grabbed my attention was that I have been blessed with an angel girl recently and just reading these articles and numbers blew me away. But on the positive side I said, if I can not be a millionaire, at least I will have the satisfaction of raising one :).