Stock liquidity risk of

Equity investments have everyone know that there is a fall risk, but it does not have little is known about the liquidity risk. This is a little low ... Plainly speaking volume liquidity, says that the state buying and selling is not active.

Stock trading, you met for the first time to have the buyer and seller. And stock prices I is determined by the so-called "auction method". In other words, the stock price if the lot you are than those who want to sell a person that wants to buy the stock rises, stock prices in the case of those who want to sell on the contrary, many will fall.

Nevertheless, the low liquidity ... clogging trading volume of less stocks, people who want to sell some people want to buy the stock is also a state that does not have a very small number. If you are buying and selling this kind of brand, it is at the time of purchase is a relatively expensive price, also sold at the time prone to state that not only sell at a cheaper price. This way, or call the state but low liquidity are forced to deal with adverse price for the "premium is on", you or call the "spread" that the price of divergence.

There is no such as the need to really care TSE part of the brand, such as and emerging markets Mothers, Hercules, stocks listed on the local, such as the Nagoya Stock Exchange, Fukuoka Stock, because trading volume of the day is very low, liquidity risk will say it's high market.

In recent years, ETF that a series is listed in the Tokyo Stock Exchange and Osaka Securities Exchange (exchange traded funds) also, liquidity has been one after another is extremely low stocks. Etc. In particular, industry-specific ETF and commodity ETF, trading volume of the day there are some even tragic ETF of zero. ETF of this hand, but originally I products that can be invested with ease even in difficult grain prices and metal market it is to invest, too volume is too small, always order to be forced to buy or sell at premium rode price to, attractiveness as an investment has gone drastically reduced. Actually of that liquidity risk is not a story unique to strain. For example, real estate buying and selling is not only the price unit say that expensive, not find a buyer when you want to sell emergency, you might not forced to sell at bargain price. Theory that it is advantageous to rent than home ownership, because home ownership is not always possible to immediately sell, it is one of the reasons is to say because not accurate as an asset.

Also at this site, investment in government bonds for individuals does not recommend absolutely. This is also referred to as government bonds for individuals will not be redeemed 1-2 years after purchase, because they had a very poor "liquidity risk". To is not much different from the current interest in bank deposits, at any time since pulled out immediately as cash.

In this way, it is not limited to equity investment, on every asset management and financial instruments of choice, as well as cost and dividends, interest, "liquidity risk" and that at any time or premium can be immediately cashed without ride also should be taken into account in consideration.