Wednesday, 26 November 2008

Keynes quote of the day

"Of all the maxims of orthodox finance none, surely, is more anti-social than the fetish of liquidity, the doctrine that it is a positive virtue on the part of the investment institutions to concentrate their resources upon the holding of "liquid" securities."


Nick Drew said...

man's an eejit

Tom P said...

hehe, I didn't think you would like that Nick!

it's from just before the famous section about stockmarket trading being like the beautiful baby competitions in papers.

Nick Drew said...

actually, of course, he isn't decrying liquidity per se, and just as well

as an investor myself, I usually have a proportion of my £££ in highly illiquid assets, the criteria are simple - they have to be something (a) I know a great deal about, personally, with the ability to form accurate first-hand judgements; (b) I can have a hand in controlling them directly - ideally where I can add value by my participation, I am fairly hands-on

anything else (the greater %) needs to be 100% liquid with transparent pricing

if an institution chose to follow that approach I would not criticise