Well, if I go out and buy some stock in a publicly traded company post IPO the company won't see any of my money it will simply go to someone who purchase it from its current owner.
If there was no secondary market, the company would receive far less money at the IPO.
Liquidity is very valuable. Compare the more and less liquid shares in Chipotle - the only difference between CMG and CMG.B is that CMG.B has more voting rights, but less liquidity.
Sorry - I was really thinking about the definition of "gambling" and "investing" above. So perhaps using that terminology the original investors at an IPO are willing to do so expecting liquidity based on the willingness of others to gamble on the stock.
Liquidity is very valuable. Compare the more and less liquid shares in Chipotle - the only difference between CMG and CMG.B is that CMG.B has more voting rights, but less liquidity.
http://www.google.com/finance?chdnp=1&chdd=1&chds=1&...