2. Liquidity is elusive when traders need it most, even when it comes to the deepest of all markets.

Much of the jerky and extreme price movement can be attributed to the lack of market liquidity. Gone are the days when broker-dealers would limit disruptive volatility by keeping unwanted but fundamentally sound positions on their balance sheets, rather than joining others in dumping them. Today, markets have little countercyclical ability to absorb these risks. Too large a segment of the investment community is in crowded trades that provide excessive collective solace when the going is good but act like roach motels when the tide turns.