Ceri Shepherd

12/8/2021 1 min read

One of the major reasons why we only invest in the S&P 500 is because of its immense liquidity, as of today it has a market capitalization that is close to $42 trillion. This means that in times of market turbulence, we can always get out of, or into a position at the price quoted on the screen, this is of vital importance as it means no slippage.

With individual shares, and particularly smaller issues, with a limited float this slippage can be substantial, and also markets can lock up, so that issues go without a quote.

For investment this is hopeless, and for us not acceptable. We need a quote at all times, and we need execution at the quote price. To allow this within all market conditions, you need a very large and a very liquid index. The S&P 500 provides this for us.

Web believe that liquidity is very important. No good making a large paper profit, or profit tied up in property to see the market dry up, or turn down dramatically and your position becomes illiquid, as you are locked into this losing position.

For us, we need to invest in line with our system signals and know, that the position can always be sold or bought at the quoted price.
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