I study a financial market in which active investors choose among in% vestment strategies that exploit information about different fundamentals. The presence of other active investors generates illiquidity. However, active investors pursuing suffi ciently different strategies serve as noise traders for each other, and hence also supply each other with liquidity. The strategies can therefore be substitutes or complements. These liquidity externalities have implications for trade volume, price comovement, liquidity common% alities, herding behavior and the informational role of prices. I also study how these externalities affect markets for information. A monopolistic infor% mation vendor deliberately induces investor herding, whereas competition fosters information diversity. Finally, I propose a benign rationale for why some financial institutions both sell information and engage in proprietary trading.