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Market Update

Should You Worry About Bond-Market Liquidity?

Liquidity is a hot topic in today's bond market. John Waggoner explains why and whether it matters for investors.


Let's say you owned 100 shares of a stock--we'll call it Amalgamated Hat Blockers--because you thought hats were making a comeback, and that hat blocking would be a natural beneficiary of the trend.

Unfortunately, the hat business never took off, and you decided to sell your stock. You called your neighbor, Jim, and asked if he'd like to buy it. No deal. You called everyone else in the neighborhood. Nobody else wanted it, either. You were stuck with your stock--and what's more, because there's no price, you have no idea what it's worth.

John Waggoner does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.