Liquidity

The extent to which a security can be readily exchanged. Securities with high marketability are said to be liquid and vice versa.

It is important to note that liquidity is usually high in bull markets and shrinks up in bear markets or turbulent times. In extreme situations(like the Great Depression), stocks that were liquid could have no buyers in a few days, though this is unlikely to recur in modern times with market makers. For the individual investor, liquidity does not present an extremely large problem, but for large investors, liquidity may be a much more important issue.

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