Position And Investment “Liquidity”
As referred to at various stages in the book, one of the key concepts related to investing is liquidity and this is significantly influenced by the number of participants in a particular market.
The concept is similar in poker with respect to the number of players in a particular Texas Hold’em game. Larger numbers of players in the game mean it is easier to play with certain types of hands that have lower values as starting hands.
In investment markets investing in a more liquid stock will allow you more flexibility regarding your investment strategy because you can be more certain that if the investment outcome begins to differ compared with your expectations it will be easier to exit the investment quickly even if the investment quality is below average.
Comments on this entry are closed.