The narrow lane..

One Bug in financial markets is that they offer liquidity only to the need of a random investors, driven them their idiosyncratic drives but never to the system itself. An investor can sell as long as its not driven by a consensus view of deteriorating market conditions or widening range of uncertainties. If there were to be systemic attempt to exit, the liquidity dries up fairly quickly, bid ask widen, Volatility zooms.

During stressful times, the exit door in markets is narrow and its opening is contingent upon policy actions. Unless authorities/Govt provide support, what is often called a policy put, the door has a tendency to get narrower. And narrower.

It’s not such a great insight on the face of it but becomes extremely important because many investors, rather most, enter financial markets with a faulty assumption of its infinite liquidity. That results in the classic problem of ALM, an asset liability mismatch - the evil that produces almost all financial crisis's or meltdowns.

Lets know this bug because most of us want to exit when market doesn't offer one. You have to exit AHEAD of 'everyone'! Community can not exit together!

Now a feature of the market. Sort of a paradox. Large institutions can process information better but are constrained by the sizes of their positions, whereas independent investor is in opposite camp, constrained by assimilation of info though his ability to exit is far superior. Institution is like a big truck on a narrow lane, it needs to be the "only one" driving to cross it.

So the lesson: If you are an independent investor, the market's liquidity constraints don't apply to you as stringently as it does to institutions and large investors. As long as you can assimilate the reversals somewhat ahead or perhaps even just in time, before the narrow lane gets too crowded, there is an opportunity to exploit markets better!

PS
Don't be too late though!