Re: Is the stock market +EV?
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The book, A Random Walk Down Wall Street, will explain why the stock market is not zero sum. Investors in stocks are compensated by what's referred to as the "equity risk premium" which is the increased rate of return over bonds for taking more risk. What the ex ante percentage of this risk premium acutally amounts to is a subject of much debate in the investment world. For a thorough explanation of the equity risk premium and the theory behind it the book, The Equity Risk Premium by Dr. Bradford Cornell, is good. Basically what another poster stated is true, over time the valuation of the stock market as a whole increases. Somewhat of an oversimplification, the compounded rate of return over risk free bonds is the value of the equity risk premium.
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good book.
-blake
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