Is stock market mechanism a zero sum game? Why?

Answer 1

No, it's not.
Stocks increase in value, as the companies they represent make profits. In a growing economy this is creation of value and obviously not a zero-sum game.

However, the derivative market (options, warrants and what more) is a zero sum market. No economic value is created, and if some speculator wins a dollar, another looses it.

Answer 2

Very good answer by cordefr, but I would argue that the derivatives market is actually a negative sum game, after subtracting commissions, order slippage, and other expenses.

Also, the stock market is only a value creator in the long run. If you intend to trade stocks, with a holding period of several weeks or less, you may very well be in the realm of a negative sum game.

Answer 3

Stock Market is not zero sum game. A game where somones loss is someone elses gain is called a zero sum game. Here there is opportunity for the buyer and the seller to make profit, so not zero sum.