Liquidity Is Completely Relative

Liquidity is completely relative to the size of your portfolio.  I know that most people have this arbitrary number to say what is or what is  not “liquid”.  Some people say at a minimum a stock has to trade 1 million shares or 500k shares, but the fact is, a stock that trades 1 million shares per day might be liquid for many but maybe not for a 25 billion dollar portfolio manager.  And vice versa, a stock that trades 100k shares daily might be plenty liquid for a trader that only has a $30k dollar portfolio.  So forget the arbitrary numbers and define liquidity based on your portfolio size.  If you are not a mutual fund then don’t try to trade like one or use their or anyone else’s definition of “liquid”.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.


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