Cash is a door you can open quickly; an unusual collectible may require a long search for a buyer.
01
Go deeper
Market liquidity concerns trading. Funding liquidity concerns access to money for payments. A profitable business can still struggle to pay today’s bills, and a valuable asset may be difficult to sell quickly.
02
Make it concrete
Hypothetical illustration. Hypothetically, selling an asset immediately brings $900, while waiting might find a buyer at $1,000. The cost of speed is $100.
03
When you read a headline
Liquidity and solvency are different. The ability to sell quickly does not establish that an investment is safe.