If you make a profit, someone else must have lost out; the idea seems clear. In reality, it is often false. This notion is based on a simplified vision of the market as a zero-sum game. However, the stock market does not function solely as a duel between investors.

Over long horizons, multiple stakeholders can profit from the same asset. It all depends on when they entered, their objectives and above all, companies' ability to create value over time.

The market is not a casino

For every transaction, there is a buyer and a seller. One believes the price will rise, while the other prefers to sell. Many see this as a face-off where one's gain is the other's loss. There is a tendency to liken markets to poker. However, this comparison is misleading. It reduces the stock market to a game, whereas it is primarily based on the valuation of real companies.

A share is not just a price; it is a stake in a business. And a business can create wealth by expanding, innovating, or generating profits. In practical terms, for shareholders this growth translates into a rising share price, dividends, or the reinvestment of earnings to accelerate development.

In other words, the aggregate value increases. The economic "cake" grows larger. This is what enables several investors to successively profit from the same stock. The first realizes a capital gain, then a second, then a third, as the company creates more wealth.

Over long periods, equity markets have historically offered positive returns because they reflect the growth of companies and the economy. Over the last 10 years, the S&P 500 has risen by over 224%. It has delivered an average return of approximately 12.48% per year, or 9.2% per year after inflation.

When multiple investors win

Let's take a simple case: investing in equities. You buy a share at 100 and sell it at 120. You make a gain of 20.

Does this mean the buyer at 120 has lost? No. If they sell later at 150, they also realize a capital gain. And so on. Multiple investors can therefore win successively on the same security.

Why? Because in the meantime, the company has evolved. It has grown, generated more profit, strengthened its market position, or paid out dividends. Its economic value has increased. The share price gradually reflects this wealth creation.

When winning means someone else loses

Be careful, however: not everyone is always a winner, and certain "communicating vessels" exist between winners and losers.

Derivatives

The logic changes when looking at short-term horizons or specific financial instruments. In markets such as options, futures, or short-term trading, the goal is not to support a company's growth. It is to anticipate price movements.

Here, one person's gain corresponds directly to another's loss. These products are based on symmetrical commitments where every winning position is offset by a losing position. This is a zero-sum logic.

Let's take another simple example. With a call option, an investor pays a premium for the right to buy a stock at a pre-set price. If the market rises, they pocket a gain. But this gain corresponds exactly to the loss of the option seller, who must sell the stock below the market price.

Ancillary costs

In practice, the situation is often even less favorable. Once transaction fees, spreads, or financing costs are taken into account, the game becomes negative-sum. Investors leave a portion of the value on the table.

De facto communicating vessels

To this illustration of direct technical links between winners and losers, we could add situations where circumstances dictate that one person's gains are another's losses.

This is the case during bubble phases: early investors can realize significant gains by selling at prices disconnected from economic reality. The last entrants often bear the brunt of the losses when valuations normalize.

Another emblematic situation is Initial Public Offerings (IPOs). This is a scenario where historical investors have an interest in selling at the highest possible price. If this price is too ambitious, new shareholders may find themselves buying too high and suffering subsequent losses. In this specific case, the stock market looks more like a transfer of wealth than value creation.

Selling does not mean losing

In every transaction, the two parties have different horizons, objectives, and situations. The seller is therefore not necessarily on the "wrong side" of the trade.

They may have already made a capital gain and wish to lock it in. They may need liquidity, want to reallocate capital to another investment, or simply reduce their risk exposure.

Thus, selling a stock that continues to rise is not necessarily a mistake. It may simply mean they have made a decision consistent with their strategy.

Investing or betting?

The stock market is therefore not a zero-sum game for the long-term investor, but it can become one with certain financial products or over the very short term.

It all depends on how it is used: investing for the long term or seeking to anticipate price movements.

Buying a share is not betting against someone. It is, above all, acquiring a stake in a company, with the idea that it can create more value over time.