Digested Security

When the T-Rex eats the security guards in Jurassic Park.

Eh, okay. Digested security is kinda like that...except the T-Rex is an investor and the security guards are an investment. A digested security is an investment that an investor holds onto for a long time. Which means that investment is kind of taken “out of circulation” of the stock market for a good chunk of time.

What happens when all the dinosaurs escape from Jurassic Park and eat everyone? Well, when a bunch of investors are all “digesting” the same security foreva-and-eva, that security becomes “illiquid,” since it’s hard for anyone else to buy those securities.

Yeah, we just went there. Take some time to digest that.

If people buy and never intend to sell, it shrinks the volume of what’s tradable. It’d be like if everyone was hoarding cash and no new cash was being pumped into the market, making cash very scarce.