Liquidity is vitally important as it can contribute towards a higher or lower share price. In very simplistic terms, a hypothetical company in an attractive industry sector with a track record of delivering good results and with a well-diversified share register and reasonable levels of buying and selling in its shares, should maintain a consistentl fair share price – in part because it has a consiste approach to investor relations, spending time and effort courting institutional and private investor interest to the extent the latter will want to buy and/or hold the shares. Contrast this with an equally hypothetical compan that has an inconsistent.
