A good rule of thumb when looking at your stock portfolio is to ask yourself, would you buy this stock (that you currently own) at the current market price?

If not, why are you holding it?

Many investors rationalize why they are holding a stock, often dependent on their own buy price, which to the market is completely irrelevant.  If you wouldn’t buy it again today, sell it!

A zero-sum game is a concept based on game theory.

Basically a zero-sum game is one in which a participant's gains or losses are directly balanced out by another participant's gains or losses. In other words, for every "win" there is an equivalent "loss."

One of the things I really like about entreprenurship is that entrepreneurs create value out of nothing. This is the opposite of of a zero-sum game, and one of the reasons I hold the belief that entrepreneurs are the drivers of a society.

A zero-sum game is all about probability. And in any game worth playing, you can find an edge, or learn more to produce greater results. That's what education is.

I've been taking the stock market more seriously over the last couple of months. I opened an account with Questrade.  Questrade is for Canadians only, and one of the cool things is that you keep USD and physical gold in your self-directed RSP.  It's been quite a learning experience. I've had some silly losses and some good gains. And I have no doubt that I'll master how to make money in the markets. But in some of the books I've read, it's clear that the feeling of zero-sum is there in the marketplace. That's why people panic and sell at the wrong time, and rationalize their bad decisions to themselves. And as I've been buying and selling, it's become more clear that there are buyers and sellers who profit or lose based on how they react to the market.

Now investing isn't a zero-sum game exactly. It would be if there were not innovations in business. For example, in the very short-term, it is almost a zero-sum game. And in flat markets, it is also essentially a zero-sum game. In bull markets it is not. I've read that the stock market grows an average of 10% per year. (Now that does not count for inflation, nor does it suggest that those gains are steady year in year out.) But over time it tends to grow.

The key to the stock market is just to increase your probability of a winning trade. (And of course to understand risk management.) But that's about all. If you can do that, you can win BIG even in a zero-sum game.

This is different from the FOREX market, which as far as can tell, really is a zero-sum game. Because currencies are priced in relation to one another (or the USD), there is not innovation that really makes this market any better odds than a zero-sum game.

And lastly, I thought about lottery tickets. Personally, I think lottery tickets are a voluntary tax. But they are WORSE than a zero-sum game. If every dollar that went in got paid out it would be an even zero-sum game based wholly on chance. (And there is no way to increase your probability, so in some ways it's worse than gambling.) But it's NOT. It's a huge money-maker for the government at the state or federal level. And nobody complains about paying too much tax in lottery tickets.

So, how do you feel about investing? The lottery? Zero-Sum Games? Feel free to disagree.