How Much is that Asset in the Window? (II) Asset Q: So what is an asset worth? Q: Yes, but we never really got through it. Suppose on a nonvolatile day I want to sell $100 in shares of an open end mutual fund. Now suppose I want to sell 5% of the total shares of the same fund. What are my mutual fund shares worth? A: This problem isn't any different than that for an individual stock. Liquidity carries a price. If you want to buy or sell a lot at any given time, and you are the one demanding the trade be done, you will have to pay up for that privilege. People who are less motivated than you will have to receive compensation for taking the other side of the trade. Q: But on a mutual fund, why should the price move on a big trade? Shouldn't everything be tradable at the closing NAV? A: Can you sell the whole world at the close? To whom? Where will you get all of the cash? Q: Huh? A: Only a tiny fraction of all the assets in the world trade on any given day. There isn't a lot of reason for most assets to trade — in the long run, we make money when we hold , not when we trade. Trading itself is a small net economic loss, with money paid to brokers. This is why there are primary markets, secondary markets, and within secondary markets, block trades... More