In the event of a market downturn like 2008, could I liquidate them whenever I wanted to at good price on a retail stock broker?
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2Note that selling during a downturn is a Bad Idea.– RonJohnJul 12, 2021 at 2:58
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@RonJohn what if the selling of bonds is to free up capital take advantage of even lower equity prices?– Sean TaylorJul 12, 2021 at 18:00
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1 Answer
Are U.S government bonds completely liquid?
A liquid asset is anything that can be sold quickly. US Government Bonds are very liquid.
In the event of a market downturn like 2008, could I liquidate them whenever I wanted to
Yes.
at good price
Probably not Maybe. After all, price is a function of supply
and demand.
During the 2008 meltdown, "everyone" was selling stocks, so there was a large supply, and low demand. Thus, prices fell.
The bond market was affected because some traders needed cash quickly to satisfy loans, and so had to sell their bonds to raise that cash. That increased supply meant... lower prices.
Thus, the answer to "at good price?" is not really maybe.
on a retail stock broker?
Yes, as long as they are the custodians.
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2"In the event of a market downturn like 2008", T-Bond prices were "really good", like 15-25% capital gains.– base64Jul 12, 2021 at 3:59
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@base64 was that during the collapse, or afterward? (I know the Fed dropped interest rates afterwards to stimulate liquidity.)– RonJohnJul 12, 2021 at 4:18
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2@RonJohn Look at a TLT chart. There was no unusual downward volatility in Treasury bonds during 2008. There was, however, unusual upward volatility in Nov and Dec.– nanomanJul 12, 2021 at 7:42
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Interesting. This makes sense but this makes most publicly traded stocks liquid as well. I hadn't thought of it that way.– minouJul 12, 2021 at 12:58
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