Liquidity is king; it attracts more capital and subsequently leads to bigger gains. This is why CCC (Cash Conversion Cycles) are a sign of high value—they represent liquidity. Consider a person with an idea who is able to rapidly convert that idea into cash in quick succession. He is effectively closing the gap between time and execution risk, which makes him high value.
Now, consider if you were deployed into a new market with nothing. Would you pursue assets or income? Income or revenue, which is more liquid, should always be the preferred choice. For various reasons, more people have assets than the ability to generate high income or revenue.
Consider that the idea for fast CCC from a homeowner is to say that, due to the stagnant job market, they periodically (daily, monthly, or bi-annually) obtain property cap rates from rentals or Airbnb. It’s the asset that generates all the income, yet there are limitations that even the asset owner has yet to exceed.
This is very different from a new Apple product launch that garners pre-sales from ideas, which provide infinitely more scale at the potential risk that the product launch may be unsuccessful.
Both approaches represent execution risk, much higher than the antics I’m up to in the capital markets. Why? Because my CCC is faster and therefore implies I always have liquidity and the “dry powder” to insert myself into liquidity, which in turn leads to higher returns.
This is why U.S. equities can never be matched.
This is also why, as an individual, you can see yourself as high value—you are able to spot opportunities with your mind’s eye and instantly monetize them.
Where the game is easy enough—low barrier to entry—but also hard enough—high barrier to entry—to ensure more liquidity.