If you own a stock, you own a fractional share of a corporation. If that corporation makes a profit, you own a share of that profit. This manifests, in the simplest case, as a dividend.
Oh, you're right. Basically all stocks pay dividends, and stocks which pay dividends aren't discounted in value by the value of the dividend. It's not like the spot price of a stock rises subtly as it approaches dividend ex date and then drops suddenly after the ex date.
And of course that money comes out of nowhere. It's not injected into the SECURITIES MARKET from other sources like company earnings. The company is doing well, and money just magically manifests due to the Jewon particles colliding with the energy of excitement of a well-performing company with high earnings, and money manifests in the securities market and precipitates out to share holders. It's not like it stats in the company coffers as earnings and is transferred to shareholders.
Exactly. An example of non-zero sum.
Wrong. You own a block of shit you paid $30,000 for. Your $30,000 is now someone else's cash holding. Your $30,000 has gone into the market; you just lost your ability to extract that $30,000 back out. Your $30,000 doesn't evaporate.
The warehouse now burns down, and all its contents. (It is not insured). The value of the corporation (and its stock) is now zero. The value changed from non-zero to zero. Clearly, this is an example of a negative-sum situation. (A negative sum is, of course, not a zero sum).
Why?
You started with some money ($10,000). You paid $10,000 for 100 shares of Hardwood Corp. James now has $10,000, you now have $0. Your shares of Hardwood Corp. become worth $0, but James still has $10,000 and goes on to buy Java Corp shares from Marcus. There's still $10,000 floating around.
Meanwhile James' Java Corp shares become worth twice as much. He sells them to Marcus for $20,000. Marcus... can't buy them. He only has $10,000.
Marcus goes to his bank account, and deposits -$10,000 into the bank (withdraws $10,000). He comes back to the Exchange and deposits $10,000 into the exchange. He then buys your $20,000 of Java Corp. Marcus' external assets are changed -$10,000, while the balance of cash in the market is now +$10,000, totaling $0. As the balance of cash was $10,000 from the money you put into the market earlier, the sum total of money in the market is $20,000.
At this point, $20,000 has gone into the market, and the market has $20,000. Java Corp pays a dividend of $500, making Java Corp's corporate bank accounts -$500 and making the market now hold $20,500. Total $20,500 has gone into the market, and it now holds $20,500.
If we keep looking at the money flowing in and the money flowing out--Marcus sells half his shares, James pays him $10,000, Marcus puts $10,500 into the bank, the market now has $10,000 in play--we see that James has $10,000 from you, Marcus has $10,000 from James which is now in the bank, and Marcus also has $500 from Java Corp dividends which were SUBTRACTED from Java Corp's corporate bank accounts and ADDED to the market.
That's zero-sum.
Contrast this to general economic advancement. In the economy, I may spend $10,000 on labor to make 500 shirts, costing $20 of labor per shirt. Now, I may expend $50,000 of research and development and $20,000 of manufacture to build sewing machines. For that $70,000, I can now expend $980 of labor and $20 of machine cost and maintenance (amortized over the machine's lifetime) to make $500 shirts. The $50,000 doesn't recur (unless I develop a new machine), and the $20,000 is part of the cost and maintenance over lifetime. So now it costs me $2 per shirt rather than $20 for the labor of creating a shirt.
In this scenario, I've created $18 per shirt of wealth. Once I have manufactured 2,778 shirts to meet demand for 2,778 shirts, I've broken even. Beyond that, society has more goods with less use of resources (labor, in this case). That's a positive sum: society has expended some mass of resources and produced an outcome which provides the same output but with a reduced expenditure of resource.
A person can make a shirt in 20 minutes instead of 6 hours., therefor there are 5 hours 40 minutes of additional human time available per shirt made now than before. As the demand for shirts increases and shirts are sold, the gains increase.
Contrast this to the stock market: If you have a mass sell-off and ever-growing demand by hoarders, the hoarders will run out of money. Then your liquidity ends, and the share price plummets. The absolute limit of wealth in the market is the precise cash amount which people are currently willing to spend in the market, no more and no less. That means all of the money which has ever been placed in the market minus all of the money which has ever been withdrawn from the market is the exact real value of the market. The stocks available are only what has been issued, and there is no decrease of resource utilization by an increase in investor value.
Do you know what it's called when a complete set of actions neither creates no destroys anything, but simply exchanges one thing for another thing, and which must devalue things to add more of those things?