: Is making alpha zero sum? I know that the stock market isn't zero sum but I was wondering if alpha is. If I beat the market by 0 in returns doesn't that mean that someone lagged the market by 0 in returns? Suppose the

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You mentioned beating the market by 0 in returns. If you cash out then that 0 gain comes from someone else (or whatever your profit is based on your cost basis).
OTOH, if you have a paper gain in account value, that's not actual money. For example, a stock IPOs at . When it opens for trading, the first trade is . No one makes of real money until they sell their stock, at which time there's that pesky transfer of money again. This is no different than one realtor telling you that you house is worth 0k and another telling you that it's worth 0k. It's only really worth what someone pays you for it.
Alpha measures the amount that an investment has returned when compared to a benchmark. AFAIC, this has nothing to do with zero sum. You asked:

If I beat the market by 0 in returns doesn't that mean that someone lagged the market by 0 in returns?

That would be true only if someone else was short exactly what you were long.

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It depends on how you define alpha. Because benchmarks generally take some time to include newly issued securities, it is theoretically possible for active managers in aggregate to beat their benchmarks. papers.ssrn.com/sol3/papers.cfm?abstract_id=2849071 However, you are correct that for every an investor is overweight a security relative to a float weighted portfolio, other investor(s) are underweight . This argument was made by Sharpe. web.stanford.edu/~wfsharpe/art/active/active.htm