Selling Into Strength

  

You want to sell the 8 million shares you've owned since $17. The stock is now at $83. Your ownership of the stock is big: there are only 70 million shares outstanding, and only about 5 million trade a day on average. So when you sell, if you just offer 8 million shares for sale, the stock's gonna drop. Like...fast. Maybe it kisses $80 on the first bid...or worse. So you'd be selling against yourself, more or less; as you sell more, you'll drive it down further. You really want to not sell more than 10 or 20 percent of the day's total volume, or you'll move the market against ya.

And yes, it's hard enough to make money in the markets without stacking the deck contra.

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Finance: What is a Liquid Market?17 Views

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Finance allah shmoop What is liquid market Well it's one

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that trades Ah lot High volume Lots of buyers Lots

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of sellers Liquid lots of cash sloshing this way In

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that way Go this way and that Did you ever

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see a liquid market go this way and that That

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little song Did you ever see a lassie Never mind

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All right Weir Liquid markets Good Well because they implied

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there's Lots of cash ready willing and able to be

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put to work And that's usually a sign of a

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healthy risk seeking active market versus risk averse one which

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is you know hiding Ah liquid market means that investors

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want to put their cash toe work that they have

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actually saved cash along the way and or that they

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have relatively easy access to credit And you can think

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about it from the perspective of your kindly loving realtor

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who wants a world where lots of people are buying

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homes But in orderto have that happen you have to

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have lots of people who are also selling homes at

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the same time Otherwise prices just go higher and higher

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with no supply to meet demand And at the end

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of the day in real estate and it's in the

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stock market while the most important thing yes that the

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brokers get pays So that's a liquid market one that

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trades a lot like it's Wet trading back and for

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sloshing around not ice Where everything's you know all jammed 00:01:22.109 --> [endTime] up No needs heat or an animal or something

Up Next

Finance: What is Liquidity?
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What is liquidity? Think: water. It's liquid. It can be squeezed into little, tiny spaces and infused into large spaces. A defining trait of liquid...

Find other enlightening terms in Shmoop Finance Genius Bar(f)