67
votes
Are treasury bonds more liquid than USD?
Liquidity is about how easily something can be converted to cash not how much of it is circulating. So dollars (or other plausible currencies) are by definition the most liquid possible asset.
There ...
- 26.5k
35
votes
Accepted
What is the relationship between taxes and annual liquidation of the markets?
Most "billionaires" have their wealth in companies that they grew into multi-billion dollar entities that they own a significant portion of. If the government then says "you own too much - you must ...
- 130k
29
votes
How much money should I lock up in my savings account?
Firstly well done on building a really sold base of savings.
An emergency fund needs to have two key characteristics:
Be enough to get you through a typical emergency event (often seen as approx. ~6 ...
- 5,768
9
votes
How much money should I lock up in my savings account?
One issue which I don't see addressed in the answers so far is how to structure bank accounts to get the highest return possible. What you're describing sounds like a certificate of deposit (CD):
'...
- 4,452
6
votes
What would happen to the price of a high-demand, no-supply asset once liquidity reaches 0?
You are misunderstanding how pricing works on a stock.
The price you see quoted as the stock price is the last transaction that actually took place. That is, a buyer and a seller agreed on that price. ...
- 115k
6
votes
Accepted
What is "trading for liquidity reasons"?
It means that the insiders are selling because they want cash.
This paragraph on page 1 makes the reasoning clearer:
Another unique aspect of insiders is that they often receive a large proportion ...
- 16.9k
5
votes
Accepted
Calculate liquid net worth
The "net" in "net worth" is your worth after subtracting off all debt.
So, no, you can't count available unused credit in your net worth — liquid or otherwise.
- 31.7k
4
votes
Are companies like EquityZen legitimate and useful?
Stuff I wish I had known, based on having done the following:
Obtained employment at a startup that grants Incentive Stock Options (ISOs);
Early-exercised a portion of my options when fair market ...
- 199
4
votes
Accepted
What is a good measure of liquidity for a stock?
Well that would be relative to what you are looking to trade.
If you were looking to trade say 1000 share of a company and the average daily volume was 50000, you might consider this stock is liquid ...
- 21k
4
votes
Accepted
Can you sell your REIT stock at any time?
In an exchange traded REIT, the only requirement to sell your shares is that someone else stands ready to buy your shares. One of the ways you can guage the available buyers and sellers is to check ...
- 1,647
4
votes
Accepted
Too much cash: pay off mortgage, invest in market, or all of the above?
It seems reasonable just to pay off the mortage now --- have I missed
anything?
In your situation, paying off the mortgage now seems like a fine idea, it's not going to save you much in interest ...
- 69.1k
4
votes
What would happen to the price of a high-demand, no-supply asset once liquidity reaches 0?
If there was an asset with a fixed supply and ever increasing demand, what would happen to its price once all holders of said asset refused to sell? Obviously this is practically impossible, but just ...
- 3,417
3
votes
Accepted
Are treasury bonds more liquid than USD?
This is complementary to @Justin Cave answer to explain why US Treasury bonds are bought by many countries.
Cash is a convenient medium of trade for the local economy, but it is a bad trade medium ...
- 4,173
3
votes
Accepted
What is "the liquidity illusion"
The "illusion" is the assumption that these vicious cycles can't happen, that liquidity is guaranteed by the large number and sophistication of market participants. They are warning people who focus ...
- 29.4k
3
votes
Who provides liquidity if there's no market-maker?
Market itself. Every market participant makes ask or bid offer with all of its trades (even with MKT order - it is dissolvable to LMTs for best price levels).
If you have enough participants you don'...
- 202
3
votes
Who's on the other side of very illiquid option contract trades?
The market maker has the responsibility of making a market in the security. That means that he must provide a quote that is subject to maximum width limitations as well as be willing to trade a ...
- 75.7k
2
votes
How liquid is options market?
The liquidity primarily depends on the specific equity type / position you are looking at. You want to look for stocks or ETFs that have significant volume themselves before trying to jump into an ...
- 204
2
votes
How liquid is options market?
The liquidity is quite bad. I have seen open Intrest drop from thousands to zero.
Theta and the lack of liquidity are strong reasons not to buy options. Instead, consider selling them.
They say ...
- 2,418
2
votes
How does liquidity affect currency price while trading
Liquidity works very similarly in currencies to how it works for equities. A large sudden order will move the price of the product and correspondingly its derivatives. In this case the value of the ...
- 6,588
2
votes
Accepted
Where is the liquidity on European derivatives exchanges
EUREX is the main exchange for German and Swiss Equity Options.
Euronext (Amsterdam & Paris) are the main exchanges for options on Dutch and French names
ICE is the main exchange for options on UK ...
- 5,083
2
votes
The most appropriate ways to keep money ready for emergencies?
Is a recurring deposit really the best way to have small amounts of money for emergencies?
Would the small monthly amounts be better invested in fixed deposits which can be liquidated during an ...
- 57k
2
votes
Why would a CD Rate be higher than a Corporate Bond rate?
The investor might choose the bond if it is more liquid (easier/cheaper/quicker to sell) or if the amount they wish to invest is more than the FDIC limit.
- 2,781
2
votes
How much money should I lock up in my savings account?
No, don't bother. You need to decide what you are saving for, and how much risk you are prepared to take.
It would make sense if you wanted the money only in x years, and couldn't afford to lose say ...
- 21
2
votes
What are the auctions redirecting some retail option orders that the WSJ is referring to and why is it disadvantageous to market makers?
Something like 85%, of option volume now occurs in 10 securities, 7 of which are ETFs. As a result, there is less liquidity in all other options. Lower liquidity has caused wider B/A spreads ...
- 75.7k
2
votes
Why certain ETFs are popular( liquid) but Options on very same ETF are not
The OCC and Vanguard have nothing to do with the liquidity of an ETF's options. Like the stocks, option trading is an auction maket and liquidity is a function of supply and demand.
Vanguard's target ...
- 75.7k
2
votes
Accepted
Consequences with liquidity issues for an index fund or ETF?
Burry's point of view is that passive investing has eliminated price discovery as ETFs must buy all of the stocks in the underlying index. As massive amounts of money flows into ETFs, it also flows ...
- 75.7k
2
votes
What is "negative liquid assets" called?
On my personal net worth statement, that pre-spent money is Sinking Fund Offsets, and in my monthly budget, the money set aside for those items is Deferred Spending.
In this case, I'm using more or ...
- 50.6k
2
votes
What is "negative liquid assets" called?
You're projected future expenses - have you projected future income to cover those expenses? You may actually never be "in debt" at all.
If you know that you're going to have certain ...
- 130k
2
votes
If I have two assets that both have the same returns, but one is liquid and the other is not, how do I calculate the difference in value between them?
That music track [for example] [which makes $1000 a year] wouldn't be quite worth $20,000, since it's not very liquid, right?
That's wrong.
It's really hard to price assets like that. It tends to ...
- 13.8k
2
votes
If I have two assets that both have the same returns, but one is liquid and the other is not, how do I calculate the difference in value between them?
This article has a discussion of illiquidity discounts:
These studies generally flag up large discounts (25-50 percent) for
illiquid assets – with 35 percent being given as a common median data
point ...
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