Monday, February 13, 2017

liquidity


  • can u sell it quickly?
  • number of buyers has been dramatically shrinking --- bad
  • the biggest risk in owning real estate or low volume trading stocks or bonds is liquidity
  • when people can't sell their houses for 4 to 5 years, at any price --bad
  • check how broad the spectrum of buyers are for each type of asset (u are considering to buy)
  • check how easy does the asset trade in various up and down markets
  • check how well each fund manager does in short-term difficult markets when liquidity has dried up---this can be an indicator of how much liquidity risk is inherent in fund in the event of a severe, long-term downturn

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