Liquidity Is a Strategic Decision

Liquidity is easy to undervalue precisely because it doesn't show up as a return. A dollar held in reserve doesn't compound, doesn't generate a headline number, and is easy to frame as capital sitting idle.

That framing misses what liquidity is actually for: the ability to act — or avoid being forced to act — on someone else's timeline rather than your own.

The cost of being forced to sell

The real cost of illiquidity rarely shows up in normal markets. It shows up in the specific moment a portfolio needs cash and the only assets available to raise it are the ones that have fallen the most — turning a paper loss into a realized one, at the worst possible time.

Sizing liquidity correctly isn't about maximizing it. It's about matching it to obligations and time horizon closely enough that a market downturn is an inconvenience rather than a forced decision.