How much cash have you got on you? The economic concept of liquidity preference is a tricky one. Household demand for liquid assets is a function of interest rates – the lower the yield is on other investments, the happier you are being cashed up. But liquidity is also sought in times of panic, say, and it comes in pretty handy for making transactions.

Such transactions might include buying equities or bonds. That is why an understanding of the liquidity preference of households can be important for investors. In the US, according to Federal Reserve data analysed by Smithers & Co, the ratio of liquid assets to total assets stands at 12 per cent, having troughed at 8 per cent at the height of the tech boom as everyone piled into stocks. Still, today’s level is bang on the average since 1952.