Arbitrage

When people talk about arbitrage they usually are referring to high price, low margin transactions which frequently use very complex technology to execute.

There are many other types of arbitrage which can be done by regular people without great amounts of money or technology.

A simple example would be people who buy items at yard sales and estate sales and then immediately resell those same items online on eBay or other auction web sites.

A much larger industry example are the web sites such as hotwire.com which sells hotel rooms (and other travel needs) for one price while buying them at a significantly lower price.

Any type of a middleman frequently is practicing some type of arbitrage by selling at retail and buying at retail.

The key to most arbitrage is to know the real value of the items, know the carrying costs (and doing everything you can to minimize them) and sell quickly for the right price.

If you look carefully at many industries there are arbitrage opportunities but it’s important to realize if you think you can go into an industry you don’t know well and then will look to take advantage of someone, most likely the only person who will be taken advantage of will be you.

Have a great day!

Lawrence

Leave a Reply

Your email address will not be published. Required fields are marked *