Stocks
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Do stocks have liquidity?
In theory, stocks are highly liquid, in that you can buy or sell your shares whenever you want. However, in
reality, many different factors can limit the liquidity of specific stocks:
- In a falling market, when many people are trying to sell stocks at the same time, you may not be able to
get the price you want. You may sometimes have to sell at a significant loss.
- In a rising market, you may have trouble buying the stocks you want at a price you like because
competition is driving prices up. Of course, this works in your favor if you have stock to sell.
- Some stocks of small, lightly traded companies may be hard to sell simply because there aren't a lot of
people who want to buy them.