Maximum position size based on liquidity?

[bz1516]

I use one day's trading volume, based on the median volume over a 90 period.  Beginning to think I'm being too restrictive?  How do others deal with this issue?

[Hielko]

How much liquidity you need is something personal. I have low liquidity needs. If it's cheap enough I only care whether or not I can buy it. Selling it is a problem for another day.

[yadayada]

depends on conviction. If it is a great idea that is cheap for alot of reasons that have little to do with actual value, i wouldnt worry too much about it.

[Packer16]

This may be a mistake as I have observed value stocks have lower volume when they are at there low points and if the price rises then the volume increases also.  I would argue if you are concerned about liquidity (for a purchase lets say) maybe this money should not be invested in stocks but something with a more stable value.

 

Packer

[SpecOps]

I think it also depends on whether it is a cigar butt type business where you want to exit quickly when full value is realised, or if its a buy and hold forever.

 

The latter obviously means you don't need as much liquidity because not being able to exit the investment at a specific time isn't the end of the world.

[bz1516]

Thanks the different viewpoints.  One difference implicit between my view of liquidity and the responses is I'm looking for a quick exit if things don't go according to plan. 

[yadayada]

Thanks the different viewpoints.  One difference implicit between my view of liquidity and the responses is I'm looking for a quick exit if things don't go according to plan.

If that is a big enough concern, id move on to the next idea. Also look for ideas with more upside, if it doesn't work out its not as bad, because upside was several 100% anyway.