Traders arguably add value by adding liquidity and assisting with price discovery. Arbitrageurs do the latter by definition.

Though, these are fairly complex financial concepts, so it's easy for people to jump to the conclusion that large swaths of the financial industry are worthless. (Of course, some are, but many are not)

Is there some reason domain squatters don't help in price discovery? Seems like there are some analogies between the two cases. Or is that what you're actually saying?

It'll be about the same level as respect for ticket scalping, and with about as much value added.

Traders add value by bringing the good to the customer. That is the justification behind their margins.

What value does a domain squatter add?

Arbitrage is often a little sketchy.

Yes, my level of respect for traders is exactly zero. There's a difference between investing and trying to make a profit off short-term trades, arbitrage, and other forms of financial practices that offer dubious value to anyone other than the trader.

When you buy stock as an investor who do you think you're buying it from? A trader.

The respectable case is traders who transfer good between supplier and buyer because there is no smooth transfer path or when there is significant risk in communicating directly with the selling, such as stocks, grocery stores, and realtors. The non-respectable case is when the trader exists purely to hold onto then profit on the product. This includes domain squatters, ticket scalpers, and those people who buy things from one thrift store to sell back to another thrift store at a higher price. It's the same reason why patent trolls are so disliked.

Without ticket scalpers I couldn't decide to go to a sold out show or ballgame at the last minute. They provide a valuable service to me.

The standard answer is liquidity, which is a really abstract concept, and one I still struggle to conceptualize (how hft supposedly creates liquidity is still too abstract for me, for instance).

Here is one recent example that was eye-opening to me: http://www.bloombergview.com/articles/2015-07-07/can-you-rea....

Domain hoarding is different from 'buying anything cheap and then sell it later at a higher price'.