I talk about investing a lot – big surprise.
And every time I have a conversation about some of the stocks I own, I get shocked looks, and someone always says something like, "oh, I could never own that. It's too small. It's illiquid."
The emphasis they put on the word illiquid is similar to that you might put on phrases like "bubonic plague" or "Internal Revenue Service."
Clearly, "illiquid" stocks are loathsome things to be feared and avoided. After all, one of the very best things about stocks is that you can get in and out of positions in seconds if you change your mind, right?
I mean, these days you can buy and sell whole markets in a fraction of a second. So you absolutely must regard liquidity as the Holy Grail, the end-all, be-all of equity investing, right?
If you can't buy and sell gigantic blocks of shares in milliseconds, a company's not worth owning… right?
Well, wrong. This is a myth, and one you've been sold by Wall Street. I'm going to prove it to you.
In fact, when you're done reading this, you'll never sweat a stock's "liquidity" again.
Heck, you may never sell a stock again, at least until you've made ten times your money back.
You certainly won't do it too soon, or for too little money, when you see what I've got to show you…
It's Confirmed: None of Us Is Goldman Sachs
It's great to have goals and ambitions, but let's be real. We may have a couple of bucks to invest in hopes that it'll become, well, a lot more bucks, but we're not exactly Fidelity Investments or George Soros.
That's when you need to worry about liquidity.
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You and I, we don't necessarily need to sweat it when considering an investment opportunity like, say, an unreasonably cheap community bank we'll want to own for the next five years.
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of "Max Wealth" and Heatseekers.