Liquidity Is Completely Relative
- Posted by Frank Zorrilla
- on August 11th, 2014
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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Frank Zorrilla is the founder and chief investment officer of Zor Capital LLC.He began his Wall Street career 10 days after his 20th birthday when he became a Series 7 licensed stock broker. More »
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