Most businesses are positive sum. E.g., the sandwich shop down the street buys ingredients at X, puts in labor valued at Y, and sells me a sandwich for Z > X+Y. They have created value. (As have the the people doing the labor, because they took time valued at zero and turned it into marketable labor.)
Money is a representation of the value created by humans. That's why the government must continually increase the money supply [1]: if money's value is to stay stable relative to goods, the supply has to increase as society creates more value.
Finance is sometimes value creating. E.g., the sandwich shop owner is willing to pay the bank for transferring money from my account to theirs. But it can also extract rents (e.g., arbitrary or hidden fees) and be parasitic (as when banks speculate with money insured by society, like during the S&L crisis).
I should possibly have qualified your original 'lost' phrasing, but my point stands.
Yes, value is created, but money isn't, by the actions you describe.
If I 'value add' the ingredients of a sandwich, and then sell it to you, you still have to surrender (or lose) money.
Any sale of goods or services ideally involves both parties determining that the transaction is favourable to their interests -- but it's impossible to avoid the fact that the buyer will have less money as a result.
This isn't a bad thing. Arguably a strong indicator of the health of an economy is the agility of money / wealth within it. But your original observation was:
> But what I didn't understand was that mostly we made money when other people lost it.
... and that's an ineluctable outcome of any financial transaction.
If I give somebody $10 for a sandwich, I didn't lose the money. I traded it for something more valuable. If I spend 8 hours at work and get paid a day's wage, I didn't lose the time; I traded it for something more valuable. Value was created.
When two parties make a bet, though, one of them loses and one of them wins. The losing side doesn't say, "That's great because I now have this cup of coffee I value more." They just write it off as a loss.
When I worked for prop trading firms, in every trade we did one side of a trade won and the other lost. In working for real businesses, both sides of a trade mostly walk away winners. Hopefully this difference is clear to you; it's that distinction I was pointing at.
If you're trying to make some sort of narrow point about my use of the colloquial phrases "made money" and "lost money", I grant that I was indeed being colloquial. Strictly speaking, we also didn't actually make money; I am told only the Federal Reserve gets to make new dollars.
I'm not trying to make 'some sort of narrow point' around any colloquial vernacular.
Merely pointing out that any transaction involves a transfer, and your claim that some transactions are worse because someone has less money at the end of it, is perhaps missing the point.
Unless the people you were dealing with both went into the deal knowing which one would lose money - then it's comparable to your 'placing a bet' analogy.
Sure, I'm not doubting that it was (probably) ethically dubious - and kudos for not participating in that industry any longer.
As to:
> If I give somebody $10 for a sandwich, I didn't lose the money. I traded it for something more valuable.
- that's clearly not true.
You have ten fewer dollars than you did before the transaction.
Whether it's more valuable to you is very much subjective, though if you asked someone if they'd prefer $10 or a sandwich, most people would say the $10.
Between $100 and ten sandwiches, I'd suggest all would choose the money.
Conflating 'winners' with who came out ahead in terms of self-assessed value proposition of a particular transaction is to also miss the point.
> We turned a profit by being smarter or faster or luckier than the people we traded with.
As far as I can tell, this is at best semantic nonsense, and at worst wilful misunderstanding. I never claimed that "some transactions are worse because someone has less money at the end of it". If you read it that way, that's your error. You seem to be hung up on a very particular reading of "lose". It is not the reading I intend, and it's clearly not the reading most people take from it.
"Whether it's more valuable to you is very much subjective, though if you asked someone if they'd prefer $10 or a sandwich, most people would say the $10."
I would say it depends on whether I'm hungry or not.
Most businesses are positive sum. E.g., the sandwich shop down the street buys ingredients at X, puts in labor valued at Y, and sells me a sandwich for Z > X+Y. They have created value. (As have the the people doing the labor, because they took time valued at zero and turned it into marketable labor.)
Money is a representation of the value created by humans. That's why the government must continually increase the money supply [1]: if money's value is to stay stable relative to goods, the supply has to increase as society creates more value.
Finance is sometimes value creating. E.g., the sandwich shop owner is willing to pay the bank for transferring money from my account to theirs. But it can also extract rents (e.g., arbitrary or hidden fees) and be parasitic (as when banks speculate with money insured by society, like during the S&L crisis).
[1] E.g., https://fred.stlouisfed.org/series/M2