Soft Market
Categories: Trading
A market where it's hard to sell. Basically, a buyer's market.
You bought a sculpture by a famous artist a few years ago. It cost you $2 million. Since then, news has come out that the artist was part of a cannibalistic blood cult. Now he's living as a fugitive in some out-of-the-way country and no one wants to admit they have his art in their homes or in their museums. Meanwhile, you have to sell. You need to bring in some cash quickly, due to your own legal troubles (not related to a cannibalistic blood cult, but still).
You try to sell the sculpture, but can't find anyone willing to buy. Soft market. You're not likely to get anything like your $2 million back.
One of the most famous soft markets in history came up after the financial crisis of 2007-2008, when real estate prices in many areas collapsed, seemingly overnight. People ended up with homes that they couldn't sell for anything near what they paid for them.
Bubbles like that offer extreme examples. But soft markets appear any time supply outstrips demand. It becomes difficult for sellers to get a decent price for the asset they're trying to unload.
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Finance allah shmoop What is liquid market Well it's one
that trades Ah lot High volume Lots of buyers Lots
of sellers Liquid lots of cash sloshing this way In
that way Go this way and that Did you ever
see a liquid market go this way and that That
little song Did you ever see a lassie Never mind
All right Weir Liquid markets Good Well because they implied
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put to work And that's usually a sign of a
healthy risk seeking active market versus risk averse one which
is you know hiding Ah liquid market means that investors
want to put their cash toe work that they have
actually saved cash along the way and or that they
have relatively easy access to credit And you can think
about it from the perspective of your kindly loving realtor
who wants a world where lots of people are buying
homes But in orderto have that happen you have to
have lots of people who are also selling homes at
the same time Otherwise prices just go higher and higher
with no supply to meet demand And at the end
of the day in real estate and it's in the
stock market while the most important thing yes that the
brokers get pays So that's a liquid market one that
trades a lot like it's Wet trading back and for
sloshing around not ice Where everything's you know all jammed 00:01:22.109 --> [endTime] up No needs heat or an animal or something