Exit

Like Vivian, you may also find it difficult to understand why I only consider stocks with a large sum of daily trading.

The principal reason of mine is simple: I have to make sure, in case my valuation is wrong (for example, there is a sudden change in the condition of the company), or if I need the money for urgent reasons, I have a secure way out and could cash back at least part of my money.

My opinion is simple: Before we could prepare for a victory, we should first consider what to do when our luck is tough. Contrary to the teaching of Xiang Yu (項羽) and Han Xin (韓信), we won't be more likely to win by shutting up the emergency exit.

Well, there is another reason why I prefer stocks with a high volume of trading: If you practice traditional value investment, what you are actually doing is to put money on a company that is under-valued by the market, and you expect the market would soon discover the true value of this company. The sobering truth is, an undervalued company could remained unnoticed for years and sometimes decades. On average, however, a high trading volume usually means that the true value of the company is more likely to be realized in the near future.