“Liquidity is only there when you don’t need it”

“Liquidity is only there when you don’t need it” is a Wall Street adage of unknown origin. “The time to get liquidity is when you don’t need it,” Citicorp’s former chief financial officer Donald Howard said in 1988. Benjamin Trotsky, of Pacific Investment Management Co., said in 1997:
 
“Liquidity is an ephemeral thing. It’s only there when you don’t really need it.”
 
American financier Michael Milken was credited in 2008 for having said:
 
“Liquidity is an illusion. It’s always there when you don’t need it, and rarely there when you do.”
 
Jason Zweig’s The Devil’s Financial Dictionary (2015) defined liquidity:
 
“A state of mind in which the owner of a financial asset believes he or she can convert it to cash at or near its market price; however, as one of Wall Street’s wisest proverbs has it, ‘Liquidity is only there when you don’t need it.’”
 
 
28 June 1988, American Banker, “Prepare Now for the Liquidity Crunch Ahead One of the major threats banks face is that few have experience in dealing with a liquidity crisis, says Donald Howard, a former chief financial officer at Citicorp who now holds that position at Salomon Inc. In an edited interview, Mr. Howard also discusses new bank capital regulations” by David Neustadt, pg. 2:
There are going to be some people who make some significant mistakes in the next liquidity crisis. If they don’t do it right, their institutions won’t survive. What should banks be doing to prepare? The time to get liquidity is when you don’t need it.
 
February 1997, Institutional Investor, “You gotta have leverage” by Riva Atlas, pp. 54-62:
“Liquidity is an ephemeral thing,” says Benjamin Trosky, who runs $4.5 billion in high-yield assets for Pacific Investment Management Co. “It’s only there when you don’t really need it.”
 
22 January 2001, Fortune, “Will the Janus way go astray?” by Jason Zweig, pg. 82:
Of Wall Street’s many Murphy’s laws, one of the most bitterly ironic is this: Liquidity is there only when you don’t need it.
 
2 October 2006, Derivatives Week, pg. 7, col. 2:
“Liquidity is there when you don’t need it.”—Miguel. Ramos, managing partner at Washington Square Investment. commenting on the downside of traditional CDO investments.
 
27 August 2007, Wall Street Journal (New York, NY), “Can the Financial Markets Make a Comeback?” by Ethan Penner, pg. A11:
Finally, it’s worth restating a maxim of Michael Milken, back when I was a mortgage-backed securities trader at Drexel Burnham Lambert. “Liquidity is an illusion,” I recall him saying. “It’s always there when you don’t need it, and rarely there when you do.”
     
New York (NY) Times
It’s Hard to Thaw a Frozen Market
Economic View
By TYLER COWEN MARCH 23, 2008
REAL estate bubbles have burst before, without bringing such trouble to the financial system. What is distinctive today is the drying up of market liquidity — the inability to buy and sell financial assets — caused by a lack of good information about asset values. The American economy is suffering from an old conundrum: that liquidity is there when you don’t need it, but missing when you do. The results have been a form of financial gridlock.
 
Twitter
冯超
‏@fengchao
liquidity is there when you don’t need it, but missing when you do.
6:26 AM - 24 Mar 2008
   
Google Groups: iktisattarihi2008
erol quantum
2/3/09
http://www.zyen.com/Knowledge/Articles/Liquidity_Diversity.htm
Erol Ortabag
 
Professor Michael Mainelli
[An edited version of this article first appeared as “Liquidity = Diversity”, Journal of Risk Finance, Volume 9, Number 2, pages 211-216, Emerald Group Publishing Limited (March 2008)]
(...)
Michael Milken said, “Liquidity is an illusion.  It’s always there when you don’t need it, and rarely there when you do.”
 
Twitter
TodayTrader
‏@TodayTrader
Market Making Algo liquidity is there when you don’t need it and its gone when you need it = air pockets
11:00 AM - 8 Dec 2011
 
30 April 2013, Oakland (CA) Tribune, “Symantec victim of ‘flash crash,’ stock plummets 10 percent in seconds” by Ryan Vlastelica:
“Liquidity is an illusion… it’s never truly there when it’s needed. It vaporizes in an instant, then quickly reappears to trap the suckers who just sold into the void,” said Sean McLaughlin, director of investor relations solutions at StockTwits in Boulder, Colo.
 
Google Books
The Devil’s Financial Dictionary
By Jason Zweig
New York, NY: PublicAffairs
2015
Pg. 126:
LIQUIDITY, n. A state of mind in which the owner of a financial asset believes he or she can convert it to cash at or near its market price; however, as one of Wall Street’s wisest proverbs has it, “Liquidity is only there when you don’t need it.”
 
The Wall Street Journal
The Promise (And Peril) of Going Big in the Stock Market
By JASON ZWEIG
May 11, 2016 9:23 am ET
(...)
Old-timers on Wall Street like to say, “Liquidity is only there when you don’t need it.” It’s easy to sell in a rising market, but if you suddenly need to get out, fair-weather buyers may disappear and selling at a decent price can become hard in a hurry.
 
Twitter
StockSafari Freeware
‏@forecastall
“Liquidity is only there when you don’t need it.”
Street just might orchestrate raids on Putnam’s holdings.
1:40 PM - 11 May 2016
 
Twitter
Jason Zweig
‏@jasonzweigwsj Jason Zweig Retweeted Barry Popik
I imagine the idea is centuries old, but I first heard it in the 1980s.Jason Zweig added,
Barry Popik @barrypopik
@jasonzweigwsj “Liquidity is only there when you don’t need it” (1997).
http://www.barrypopik.com/index.php/new_york_city/entry/liquidity_is_only_there_when_you_dont_need_it/ …
6:37 AM - 13 May 2016