Transaction costs make speculation even worse than a fair game

Evidence

The market, “that invisible, mysterious adversary,” had effectively infinite resources. Thus, even if “chances were strictly equal” those who indulged in frequent short-term speculation faced “an absolute certainty of ruin.” Furthermore, brokers’ commissions and other transaction costs meant that in practice the game was less than fair. — Donald MacKenzie, An Engine, Not a Camera, 260

Categorization

• XREF: connects to: Competitive speculation wipes out predictable price moves — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 279; Transaction costs comprise negotiation, adaptation, and enforcement expenses that models ignore

Broader Connections

• Competitive speculation wipes out predictable price moves #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 279
• Transaction costs comprise negotiation, adaptation, and enforcement expenses that models ignore #expands (0.70)