The search for value often draws investors into illiquid markets, and to some, this can be a daunting prospect. However, research suggests that illiquid stocks outperform their liquid counterparts over the long-term. Illiquidity-anomaly In what has been called an illiquidity-anomaly, several studies published over the past few decades have shown that the market rewards illiquid stocks, although it’s unclear exactly why. One of the earliest studies on the topic was conducted by researchers Amihud and Mendelson who used bid–ask spreads to explain stock returns between 1961 and 1980. Published in 1986, ‘Asset Pricing And The Bid-Ask Spread’ raised some interesting…
Illiquid Stocks Consistently Outperform The Market
Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for ValueWalk