Simultaneously Buying and Selling

We are all familiar with buying and selling. We buy all sorts of things. We sell all sorts of things. And it’s generally understood that in every transaction one side is the buyer and the other side is the seller. But this is incorrect thinking. Buying and selling aren’t mutually exclusive, but rather in every transaction both buyer and seller are simultaneously a buyer and a seller. Let me explain.

For a transaction to occur, the parties involved, commonly referred to as the buyer and seller, have to come to an agreed upon exchange of value. Party B has something Party A wants and Party A has something Party B wants, and those two parties agree that the things each other wants are at least of equal value otherwise they would never agree to an exchange. But there is more to it than that.

Let’s assume Party A has $1 and Party B has a pack of chewing gum. Party A wants the chewing gum and Party B wants the $1. Party A thinks the chewing gum is worth $1 and Party B thinks the $1 is worth the chewing gum. Wait, what? The $1 is worth the chewing gum? Yes, the $1 is worth the chewing gum. In other words, just as Party A is willing to give the $1 in exchange for the pack of gum, Party B is willing to give the pack of gum in exchange for the $1. Do you see what is going on here?┬áIn this example, Party A is “buying” a pack of gum FROM Party B. Simultaneously, Party A is “selling” $1 TO Party B. Conversely, Party B is “selling” a pack of gum TO Party A and simultaneously “buying” $1 FROM Party A. Both buyer and seller are simultaneously a buyer and a seller.

But we never think about transactions in this way, do we? We think if we have the money we are the buyer. The person with the good or service is the seller. How odd would it be to walk into a store and say to the store owner, “I’ll sell you this dollar if you’ll sell me that pack of gum”? This is technically correct, but we’re not taught to think this way, to our detriment.

“Oh, it’s just semantics”, you say. Well, perhaps. But failing to understand the concept, that we’re always simultaneously a buyer and a seller, oftentimes leads to poor buying and selling decisions. We are usually pretty knowledgeable about what we are buying, but much less so about what we are selling, which is typically money.

I’ll cover money and its value in my next post, but, for the time being, the next time you purchase something with money think about both sides of the transaction. Spend just as much time thinking about the value of the money you are selling versus the value of the good or service you are buying.