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"Liquid" is a spectrum, not an absolute. Stockholdings of highly capitalized, highly traded stocks on major stock exchanges (NYSE, Nasdaq, FTSE, a few others)

by nl 4y ago

"Liquid" is a spectrum, not an absolute. Stockholdings of highly capitalized, highly traded stocks on major stock exchanges (NYSE, Nasdaq, FTSE, a few others) are one of the more liquid assets there are. If you are a multi-billionare it's reasonable to think you can convert maybe $500M - $1B of stock holdings to cash and have it in your bank accounts in 24 hours. See https://www.investopedia.com/ask/answers/032715/what-items-are-considered-liquid-assets.asp https://www.investopedia.com/ask/answers/032715/what-items-a... > Cash equivalents are typically investments that have short-term maturities of less than 90 days and are considered liquid assets because they can be readily converted to cash.

zokier 4y ago
Exactly, holding $1B of TSLA vs S&P500 have very different degrees of liquidity I imagine. So an interesting metric would have all the assets categorized and multiplied by some sort of liquidity factor. Of course in practice that is pretty much impossible to actually accomplish.
- cypress66 4y ago
  I don't think they would be that different. Dumping 1B of TSLA isn't too hard probably. But with other smaller stocks sure.
- nl 4y ago
  Part of the selection criteria for inclusion in the S&P500 is "Minimum monthly trading volume of 250,000 shares in each of the six months leading up to the evaluation date" If you tried to move $1B in shares in the smallest company in the S&P500 then yes you will move the market for sure. But if you have $1B invested across the S&P500 then it will barely be noticed. > So an interesting metric would have all the assets categorized and multiplied by some sort of liquidity factor. Of course in practice that is pretty much impossible to actually accomplish. Not at all. Average trading volume times price is almost exactly that.
  - zokier 4y ago
    > Not at all. Average trading volume times price is almost exactly that. For stocks, yes. But there are plenty of other modes of wealth too which can be much harder to estimate. Like for example what is the liquidity of Bezos' half billion dollar yacht or Putins billion dollar palace?

by nl 4y ago

zokier 4y ago

Exactly, holding $1B of TSLA vs S&P500 have very different degrees of liquidity I imagine. So an interesting metric would have all the assets categorized and multiplied by some sort of liquidity factor. Of course in practice that is pretty much impossible to actually accomplish.

cypress66 4y ago
I don't think they would be that different. Dumping 1B of TSLA isn't too hard probably. But with other smaller stocks sure.
nl 4y ago
Part of the selection criteria for inclusion in the S&P500 is "Minimum monthly trading volume of 250,000 shares in each of the six months leading up to the evaluation date" If you tried to move $1B in shares in the smallest company in the S&P500 then yes you will move the market for sure. But if you have $1B invested across the S&P500 then it will barely be noticed. > So an interesting metric would have all the assets categorized and multiplied by some sort of liquidity factor. Of course in practice that is pretty much impossible to actually accomplish. Not at all. Average trading volume times price is almost exactly that.
- zokier 4y ago
  > Not at all. Average trading volume times price is almost exactly that. For stocks, yes. But there are plenty of other modes of wealth too which can be much harder to estimate. Like for example what is the liquidity of Bezos' half billion dollar yacht or Putins billion dollar palace?