LIQUIDITY

"There is no such thing as liquidity of investment for the community as a whole." Adam Smith, The Money Game

"As the old saying goes: Liquidity is a coward, it disappears at the first sign of trouble." Barton Biggs

"When making an investment, it is important to understand how easy it might be to sell later, a feature known as liquidity. The lack of liquidity in hedge funds and in real estate would prove costly for investors in the 2008-09 recession." Ed Thorp

“When over leveraged markets begin to decline, the preference for liquidity becomes all-consuming, like the life-or-death struggle for a single life preserver thrown to non-swimmers when a boat capsizes. In an instant, all civility is suspended and everything is for sale at almost any price. Once uncorrelated assets begin to share a common fate – they sink together.” Frank Martin

“In truth liquidity is closely correlated with investment fashion. During a market panic the liquidity that seemed miles wide in the course of an upswing may turn out to have only been inches deep.” Seth Klarman

“All market look liquid during the bubble, but it’s the liquidity after the bubble ends that matters.” Colm O’Shea

“We’re very thoughtful of liquidity.” Lee Ainslie

“Liquidity is one of those things that never matters until it does (every 10 years it seems).” Paul Tudor Jones

“We seek adequate liquidity in order to be able to get in, to get out and to properly size positions during the holding period.” Alex Roepers

"We are always in the most liquid securities. If we get it wrong, we get out immediately." Martin Taylor

"As many people have found out, whether it was the Hunt Brothers buying silver or whatever it might be, it's a lot easier to buy things sometimes, than it is to sell them." Warren Buffett

“Our position sizing was always a function of several input variables. One was liquidity. We never wanted to be so large in a security that we couldn't get out without disturbing the market price in a significant way.” Leon Cooperman

“The liquidity of an asset often depends on which way you want to go … and which way everyone else wants to go.” Howard Marks

“Focus on liquidity, so that you can get out if you’re wrong. Because there’s nothing more scary knowing that you’re wrong and you can’t get out.” James Dinan

“You can have all of the assets in the world you want, but if you have no liquidity it doesn’t matter. Liquidity equals value. At no time in my career has it ever been more clearly brought home to me than in the 2008-09 period. If you had liquidity, you had value. … Everything comes down to liquidity, everything comes down to exit strategies, everything comes down to knowing when you get in how you are going to get out.” Sam Zell

“Liquidity is really worth the premium that I think investors attach to it.” James Dinan

“In general I think people tend to undervalue liquidity.” Tom Purcell

“Liquidity is definitely a now-you-see-it-now-you-don’t phenomenon. It is a lack of liquidity that turns a decline in asset prices into a panic.” Paul Singer

“Liquidity is a moving animal. Things can be very liquid and three weeks later there can be no liquidity whatsoever.” Stanley Druckenmiller

“Liquidity can be illusory. As Louis Lowenstein has stated, ‘In the stock market, there is liquidity for the individual but not for the whole community.’” Seth Klarman

“You don’t know the value of liquidity until you need it and don’t have it.” Dennis Bryan

“Liquidity is ephemeral: it can come and go.” Howard Marks

“It's like a 5-lane highway going in and goat trail coming out.” Kyle Bass [on equities liquidity]

"Trying to sell an illiquid stock in a down market brings to mind the galley slaves in Ben-Hur, chained to their bench while the ship sinks.” Ralph Wanger

"The worst part of bear markets is not necessarily the cascade of paper for sale at declining prices; rather, it is that liquidity disappears for both buyers and sellers, making it even more difficult to enter or exit a position at the apparent market price." Paul Singer

"We are very concerned about liquidity." Mark Kingdon

“Leverage, concentration and illiquidity are the three things that can kill you.” Steve Cohen

"A factor often overlooked in reducing stock-picking risk is liquidity. Despite some portfolio managers' belief to the contrary, all investors are human, and, therefore will make mistakes. The ability to recognise these errors and recover from such mistakes is a critical factor in performance. The liquidity of each underlying position drives the ability to quickly reverse course and mitigate the cost of errors." Lee Ainslee

"Illiquid assets and the possibility of capital flight: there are few surer recipes for investment disaster." Howard Marks

"Managing liquidity risk is one of the most important jobs of a fund manager." Marathon Asset Management

“It is critical to understand the foundational consequences of another dimension of liquidity — mismatching the liquidity of the underlying assets to that of the investment vehicle holding those assets. Providing daily liquidity has been a positive trend in the investment industry, offering investors the reassurance of ready access to their invested funds as needed. Providing daily liquidity for an investment product whose growing asset pool does not trade on a daily basis, however, can be a bit problematic.” Rajiv Jain

"Liquidity helps protect us from permanent losses. We do make mistakes, and when we make a mistake, we sometimes wish to exit the mistake quickly." Ed Wachenheim

"When you are managing risk in a portfolio, you always have to remember that there is a possibility of a catastrophic outcome. Markets are prone to extremes, both up and down. In good times, we all operate under the assumption that liquidity is a constant, and that if a position is wrong, you can expeditiously exit it with only minimal damage. I learned the hard way that in a market meltdown, not only does liquidity evaporate, but prices can fall so steeply that all decisions have the potential for serious adverse consequences." Barton Biggs

"To limit the consequences of crowded exits, we pay attention to the liquidity of the stocks we trade and take large positions only in the most liquid stocks in the world." Andreas Halvorsen

“Understanding the importance of liquidity, in all times, is key to portfolio management.” Rajiv Jain

“The best hedge against the unknown unknowns is structural prudence in the use of liquidity and leverage. Liquidity and leverage are the two grim reapers of the financial markets. They drive the forced selling which turns a crisis into a rout, whether that can be through liquidity mismatches, margin calls or leverage withdrawals. And they bring down the curtain on poor investment managers.” Paul Marshall