#210 Why fair markets require uncertainty for both the buyer and the seller, and why sellers don't need to disclose everything they know to the buyer. More information, including show notes, can be found here. Thanks to Wunder Capital for sponsoring this week's episode.Episode SummaryA recent listener of the Money For the Rest of Us podcast posed the question, “Are there always winners and losers when trading?” This question is the focus of this episode of the podcast. David explains an age-old thought experiment created by Cicero and how it relates to modern financial decision making. The key differences between concealing and simply not revealing information are discussed and how trading decisions can be ethical for all involved. David also explains how high-frequency trading bots exist outside the parameters of conscious decision making and how they can impact market volatility. It’s an episode full of great insights and should not be missed, so be sure to listen.There’s a key difference between concealing and not revealing informationIn Cicero’s thought experiment, there is a grain seller that has imported foreign goods during a period of domestic hardship. Is the seller required to disclose information of additional shipments coming into the market soon? Or is he able to sell his stores at a higher price, without telling the buyers what he knows? David explains that technically it would be an ethical sale since there’s not a defect in the grain he’s selling. The seller isn’t concealing critical information, he’s simply using the current market conditions to his benefit. To hear David’s full summary of this scenario, be sure to listen to this episode.The outcome of a transaction should be unknown for all parties involved in order to be ethicalSimply put, the outcome for any transaction must be equally unknown to all parties involved in order to be considered ethical. David explains by saying, “If they (buyers and sellers) go in not knowing exactly what's going to happen, and there isn't a defect that is being concealed, then that's just how markets work.”These schools of thought differ between normal commerce and financial marketsIn normal commerce, where a buyer purchases a product from a seller at a specific price point, there is an exchange of currency and value. The buyer loses money but gains function and value from the product. The seller reaps financial benefits from the transaction. Even if the seller then drops the price, it’s ethical because there wasn’t a defect in the product at the original price point. For financial markets, there generally will be a winner and loser because the price WILL change. The key is both buyers and sellers go into the transaction with a level of uncertainty.How could high-frequency trading bots influence market volatility?In this episode of Money For the Rest of Us, David also explains how high-frequency trading bots can increase market volatility, or the level of risk involved in transactions. Human traders have a point of view, a position, and a set of moral ethics. Bots based on algorithms do not. That’s why when “shocks of unknown origin” crop up in the market, most bots will simply sell or back out entirely. This can result in a negative feedback loop leading to even less liquidity from high-frequency traders and multiple flash crashes. David says that “There is a risk of higher volatility because here markets have changed. Most trading in stocks is no longer an investor with a fundamental view. It's an algorithm, and we could have more downside when the next bear market comes along.”Episode Chronology[0:44] Discussing the idea of “winners and losers” in investing and financial markets[4:45] Is full market disclosure recommended? Is keeping some information private immoral?[10:35] The difference between concealing and not revealing information[13:17] This is why laws come and go, but ethics stay[16:04] The outcome of a transaction should be unknown for all parties involved in or