--- title: "Meaning & Key Takeaway of: The relative illiquidity of small-company…" description: "\"The relative illiquidity of small-company shares - which often contributes to their being undervalued - also increases their volatility.\" — Whitney Tilson" image: "https://sms4smile.com/quotes/i/4c0/whitney-tilson-9949_being_the-relative-illiquidity-of-small-compan_2348589.jpg" --- # The relative illiquidity of small-company shares - which… ![“The relative illiquidity of small-company shares - which often contributes to their being undervalued - also increases their volatility.” quote by Whitney Tilson](https://sms4smile.com/quotes/i/4c0/whitney-tilson-9949_being_the-relative-illiquidity-of-small-compan_2348589.jpg) [Download](https://sms4smile.com/quotes/i/4c0/whitney-tilson-9949_being_the-relative-illiquidity-of-small-compan_2348589.jpg) [Open image](https://sms4smile.com/quotes/i/4c0/whitney-tilson-9949_being_the-relative-illiquidity-of-small-compan_2348589.jpg) > “The relative illiquidity of small-company shares - which often contributes to their being undervalued - also increases their volatility.” [Whitney Tilson](https://sms4smile.com/quotes/author/whitney-tilson/) ## About This Quote This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation. Small‑company stocks are often undervalued due to low liquidity, which also makes them more volatile. **In simple terms:** Low liquidity leads to undervaluation and volatility. Key Takeaway Consider liquidity risk when evaluating small caps. Themes finance investment liquidity volatility valuation Mood analytical cautious Type financial educational When to use this quote - stock selection - risk management - investment strategy - market analysis Key Concepts market efficiency risk assessment portfolio diversification Questions to Reflect On - How do you balance potential returns with liquidity risk? - What diversification methods reduce volatility exposure? A Different Perspective Liquidity constraints can limit ability to exit positions quickly. ★ ★ ★ ★ ★ No ratings yet [Being](https://sms4smile.com/quotes/about/being/) [Contributes Undervalued](https://sms4smile.com/quotes/about/contributes-undervalued-5710116/) [Customer](https://sms4smile.com/quotes/about/customer/) [Illiquidity Small](https://sms4smile.com/quotes/about/illiquidity-small-5710117/) [Increases Volatility](https://sms4smile.com/quotes/about/increases-volatility-5710115/) [Undervalued](https://sms4smile.com/quotes/about/undervalued/) [Undervalued Increases](https://sms4smile.com/quotes/about/undervalued-increases-5710114/) [Volatility](https://sms4smile.com/quotes/about/volatility/) [Which](https://sms4smile.com/quotes/about/which/) ## Related quotes > [My portfolio consists of many companies I find fundamentally undervalued in which I expect activism to play a role in the value being realised.](https://sms4smile.com/quotes/whitney-tilson/my-portfolio-consists-of-many-companies-i-find-fundamentally/) [Whitney Tilson](https://sms4smile.com/quotes/author/whitney-tilson/) > [In the long run all love is paid by love, Though undervalued by the hosts of earth; The great eternal Government above Keeps strict…](https://sms4smile.com/quotes/ella-wheeler-wilcox/in-the-long-run-all-love-is-paid-by-love-though-undervalued-by-the/) [Ella Wheeler Wilcox](https://sms4smile.com/quotes/author/ella-wheeler-wilcox/) > [We tend to value military heroes and Schwarzenegger types who are physically courageous. 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