logic and liquidity in markets

Shankar Sharma: First of all what is liquidity, I am not able to define. There is no real measure of liquidity. When somebody comes and buys stock and he puts in let us say million dollars, we say a million dollars came in, but, for that million dollars to have got in invested somebody sold a million dollars, so net liquidity in the market is always zero. So, I do not understand when people say that money came and hence markets went up or money went out hence markets came down. I always say there is somebody who bought and somebody who sold on the other side of the trade and net liquidity was always zero. So the problem
with all of us in markets is that we want to explain every market phenomenon based on some rationale and some logic, but, not at all times are markets supposed to behave logically. But, the human mind cannot accept that sometimes strange things happen.

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