"**Proper compensation should be required for an illiquid investment**. An illiquid investment is one where there is a significant cost attached to closing the position. Liquidity allows us to change our minds and sell when we no longer think of the investment in the same way. Buying an illiquid asset doesn’t offer the opportunity to sell. Therefore, the longer the expected illiquid period is, the higher the compensation for illiquidity should be because the more time there is, the more things can go wrong with an investment, i.e. the risk is higher. For example, venture capital investors are faced with an illiquid period of uncertain duration and with an uncertain outcome for the venture." ([Location 4081](https://readwise.io/to_kindle?action=open&asin=B07CNFFJ9J&location=4081)) --- **Tags** -- [[quotes]] , [[valuations]], [[financial-liquidity]], [[changing-your-mind]], [[value-investing]] **Source** -- [[202506221723 - LN - Modern Value Investing]]