We need everything

I always think that trade and investment are two very different concepts in the financial market. In the past, I thought that the financial sector should focus more on investment. I had my reasons. Firstly, investment is mutually beneficial. Investors and investees both benefit from the investment that investees can get enough funds for their future growth and investors can share the profits the growth of the investees. Moreover, when more money is invested, the economy is more likely to expand faster; therefore, investment can generate faster economic growth. In addition, investment can efficiently relocate the cash in the economy. And the competition whiling making investments is usually healthy that it tests the ability of looking for profitable opportunities and making good investment decisions.

Before I disliked trading because it could be seen as a zero sum game. If it is a zero sum game, then the total gain in the market is always zero. Although maybe the market could expand due to frequent trading activities, the accumulated gain is equal to the accumulated loss. In addition, the competition in trading could be vicious and create market instability. However, trading has its most important function in the economy that it creates liquidity. Investment is a long term activity, but sometimes we could face unexpected liquidity issues that make us unable to continue our current investment program. When we have opportunities, we can exchange our investment opportunities for liquidity, then the liquidity issues could be solved.

Therefore, I still consist that investment could be the primary action in the financial markets, but I think trading will be seen as a tool to relocate the investment opportunities.