To understand 'whose money you earned', it is essential to clarify that the essence of the financial market is a combination of 'wealth transfer' and 'value creation', which can be specifically divided into two scenarios: short-term trading and long-term investment.
I. Short-term trading: 'earning the money of other traders' (a local manifestation of a zero-sum game)
The core logic of short-term trading (such as day trading and short-term speculation) is 'buy low and sell high', earning from other traders' 'mispricing' or 'emotional fluctuations' that bring about price differences.
For example:
When you buy a stock at 100 yuan, the seller might be a retail investor who bought it at a lower price (for example, he bought it at 95 yuan and sold it at 100 yuan, making a profit of 5 yuan);
Later you sell it at 150 yuan, and the buyer might be a speculator chasing the rise (he expects the stock price to continue to rise and is willing to take over at a high price).
At this moment, your profit comes from the 'impulsive buying' of the buyer, while the buyer's loss becomes your gain.
In this case, the market is more like a 'voting machine' — short-term prices are driven by emotions, news, and capital flows, rather than the company's real value. The money earned is essentially other traders' 'cognitive biases' or 'information gaps' (for example, you know insider information while others do not).
II. Long-term investment: 'earning the money from company growth' (value creation that is not zero-sum)
The core logic of long-term investment (like Buffett-style value investing) is 'sharing the company's value growth', earning from the company's profit expansion and the 'cake getting bigger' from industry track dividends.
For example:
When you buy Tencent, it is in the internet dividend period, with performance growing 30% annually, and the stock price rises accordingly (for example, from 100 yuan to 1000 yuan);
At this point, your profit comes from Tencent's 'value creation' — it earns real money through businesses like gaming, social networking, and cloud computing, and these profits are ultimately reflected in the stock price.
In this case, the market is more like a 'weighing machine' — long-term prices are driven by the company's fundamentals (revenue, profit, cash flow), and the money earned is the 'new value' created by the company, rather than the losses of other investors.
III. Who are the 'losers'? Who are the 'winners'?
Losers in short-term trading:
Mainly those with information lag (like small investors who haven't kept up with hot spots), emotional traders (like those who chase highs and get stuck), and leveraged liquidators (like those who borrow money to invest and are forced to close positions when hitting stop-loss lines).
Winners of long-term investment:
Mainly patient holders (like Buffett holding Coca-Cola for decades) and deeply researched fundamental investors (like those who discover the logic of company growth in advance).
IV. Supplement: 'Intermediaries' in the market
In addition to ordinary traders, there are two other roles that will 'earn the price difference':
Market makers: earn 'buy-sell spreads' through 'buy-sell quotes' (for example, when you buy at 100 yuan and sell at 99.98 yuan, the 0.02 yuan difference is the income of the market maker);
Investment banks/brokerages: earn fees through underwriting new stocks, collecting commissions, etc. (for example, when a company goes public, the investment bank helps sell its stocks and earns underwriting fees).
Summary
Short-term trading: profits come from other traders' 'cognitive biases' or 'emotional fluctuations' (like the money of the buyer);
Long-term investment: earns from the company's 'value creation' dividends (like the profits Tencent earns);
The core difference: short-term is 'wealth transfer', long-term is 'value sharing'.
As Buffett said: 'If you don't plan to hold a stock for ten years, you shouldn't even hold it for ten minutes.' Short-term profits rely on 'gaming', while long-term profits depend on 'accompanying excellent companies in their growth'.