![]() | |
![]() | |
![]() |
Investing Information |
|
![]() |
Just what is Arbitrage Investment?
In the simplest of terms, Arbitrage means to exploit price differential. Usually it meant looking at differing sources of an investment, and if there was a price difference between Source A and Source B - then the investor / dealer / broker / manager would buy from the lower priced source, and sell on the higher priced source. Example:-The price of Stock ABC was $20 per share on Exchange XYZThe price of the same Stock ABC on another Exchange 123 - was $15 The dealer would buy the stock from Exchange 123 for $15 - then sell on Exchange XYZ for $20 - making $5 per share profit (minus costs). Typically the price differential was very small - and trading had to be extremely quick and liquid - otherwise the markets could go against you in a very short time. Ten years ago Arbitrage was more commonplace than it is today - for a number of reasons. Nowadays, Arbitrage still exists, but either in limited formats and availability as direct arbitrage, or more commonly in Hedge Funds. Hedge Funds can have Arbitrage as one of their investment methodologies / strategies - and you will find that many of the past Arbitrage Managers have switched across to Hedge Funds. Even after the LTCM (Long Term Capital Management) scandal / fiasco a few years ago - Hedge Funds continue to grow, and today are the biggest and fastest growing investment style in the World. This doesn't mean that Arbitrage is dead - as it can be part of Hedge Funds. There are still some direct / explicit Arbitrage Funds available in the World. Most of these concentrate on M&A Arbitrage (Mergers and Acquisitions) - or more usually Mergers. The manager will actively seek companies which have been targeted as potentials for takeover, and buy into that company, in the hope the M&A activity will drive up the price. This method is often enhanced by the use of leveraging (gearing up / borrowing) (remember LTCM?) - and sometimes using Derivative Structures such as Options - or hedging methods such as selling short. Depending on the structure, methodology, management style, leveraging etc., the potential rewards can be substantial, but so can the risks. Not all Arbitrage investments are the same - just like any other asset class, I would strongly suggest that anyone considering this should perform their own Due Diligence and seek professional advice. One very common place where Arbitrage happens every day - by people just like you and me..... is eBay! Sellers are locating items for sale from sources which may sell them very cheaply (flee-markets, garage sales etc.) and then selling them online for a tidy little profit. These people are exploiting the price differential - arbitrage - and there's nothing wrong with that!! It's all about 'Supply and Demand' - but that's another story! (the information contained herein is for information purposes only and should NOT be considered as advice or recommendation relating to the purchase or sale of any investment). An article by Gary Durkin Gary has more than a decade of offline international business success behind him - each day controlling millions of dollars of investments world-wide, and has been doing business online for 6 years. © Copyright 2005 - All Rights Reserved worldwide. You are free to distribute this article, providing it remains unchanged and with the resource / bio box attached.
MORE RESOURCES: Real Estate Investing Tax Strategies For 2023 Yahoo Finance Mom reveals she taught herself how to invest and is set to retire with MILLIONS in the bank Daily Mail How Much Income Can You Make Investing $10,000 in Warren Buffett's Top 5 Dividend Stocks? The Motley Fool Mission Critical REIT Investing Seeking Alpha Stocks vs. ETFs: Which should you invest in? Yahoo Finance ESG Investing Statistics 2023 Bankrate.com Why Are People Investing in Cobalt? Should I? Yahoo Finance Where Investing and Progressive Politics Mix ThinkAdvisor Sustainable and impact investing continues growing – Cambridge ... Pensions & Investments CI Direct Investing Boosts Commitment to Straightforward Saving and Investing with Educational Collaboration Yahoo Finance Conversation on 2023 Sustainable Investing Landscape and ... Episcopal News Service Will the U.S. Stock Market's Bull Run Continue? Investing.com 10 areas where CFOs are investing more, less healthcare dollars Becker's Hospital Review When DIY Investing Goes Wrong ThinkAdvisor Former fast-food employee who began investing at 19 says she will be a millionaire before she’s 40 Yahoo News A view from the C-suite: Green optimism and investing in solutions FM | Financial Management Investing in Method Andreessen Horowitz Investing When Your Time Horizon Is Short The New York Times VIDEO — EB Tucker: Gold, Silver Price Levels to Watch, 2023 Investing Strategies Investing News Network The Best Stocks to Invest $1,000 In Right Now The Motley Fool Want to Invest in Web3? Look No Further Than This Cryptocurrency The Motley Fool What the Smartest Investors Know About Roku Stock The Motley Fool GM investing $650M to develop Nevada lithium mine Supply Chain Dive Why You Should Invest: Top 10 Reasons AllBusiness.com Investing in Voldex Andreessen Horowitz 3 healthcare companies Silicon Valley Bank is investing in Becker's Hospital Review Here's what investors should know for tax season Yahoo Finance The 10 golden rules of investing Yahoo Finance 'Bull Traps' Threaten Nasdaq and Russell 2000 Investing.com Alibaba Set to Gain as China Unfreezes Economy Investing.com Ultimate Guide on Investing for Beginners Entrepreneur Five Ways to Diversify Your Portfolio During a Recession Kiplinger's Personal Finance Should Cannabis Investors Be Starting to Sweat? The Motley Fool Recession Forecasts at Odds With Bullish Formations Investing.com 5 Investing Alternatives for Conservative Investors Kiplinger's Personal Finance Want to Invest in a Retail Stock? Ask This Question First. The Motley Fool 3 Things About Microsoft That Smart Investors Know The Motley Fool Investing in 2023: A Year to Be Patient and Selective Morgan Stanley 35% of Cathie Wood's Flagship ETF Is Invested in Just 5 Stocks The Motley Fool Growth Potential of China ETFs Investing.com EUR/JPY Consolidates in Tight Range Investing.com Are Consumer Stocks Sending Chills to Broader Market? Investing.com Investing in Cygnvs Andreessen Horowitz Why Generac Stock Fired Up Investors on Tuesday The Motley Fool |
![]() |
![]() |
![]() |
RELATED ARTICLES
Value Investing By definition, value investing is the process of selecting stocks that trade for less than their intrinsic value. A value investor typically selects stocks with lower than average price-to-book or price-to-earning ratios. Buying Florida Investment Properties and Where Its Hot Relaxing in Style: Florida Investment PropertiesIn Florida, relaxing in the sun and sand is a way of life. There's no better way to experience a slice of Florida living than buying your own space. How to Use Annual Report There are many steps in calculating the fair value of a company. However, before we even do that, it is imperative to know how a company earns its profit. Investing 101: Risk Terminology - BETA About thirty years ago, statisticians armed with all of theirstatistical theories began to confront the financial markets. Ahandful of useful tools emerged that the average investor shouldbe familiar with when they look to purchase stocks. Numismatics are for Collectors, Not Investors As a precious metals investor, you may heard much about numismatic and "semi-numismatic" coins, particularly the St. Gaudens $20 double eagle gold coin. Commodities - The Next Big Wave of Fortune Building Have you often wished you could have got in on a tremendous money making opportunity before it took off? How would you feel if you had bought Microsoft stock when it first went public and your investment doubled 5 times? Imagine how rich you would be right now?I'm not saying you should be in Microsoft stock at this time. In fact Microsoft's stock has stayed in the $25 range for years now. Is Starting A Business For Me? What To Consider Before Starting A Business Do you have the right temperament?Starting a small business is one of the most serious decisions that a person can take in life. Positively, it often results in higher income levels than one could achieve as an employee together with the unique buzz of being your own boss but conversely it also can be stressful, will demand longer working hours and will probably reduce your ability to take long holidays. Beta Factors: How They Can Be Used In The Current Situation Ever since the turn of the century, world stock markets have been very volatile. In other words there have been significant movements (up or down) in share prices. Expand Your Pool of Investors for Your Company If you own a company that sells complicated products and you want more investors, consider having topics on your web site that discuss the background needed to understand your products and your company. For example, if your company specializes in producing and researching monoclonal antibodies, post articles discussing exactly what monoclonal antibodies are, how they are produced and what research your company is engaged in. Art Investing for a Financial Future When we think of investing we probably conjure images in our minds of the New York Stock Exchange, suited stock brokers making deals, bonds and treasury bills, and all manner of financial matters. The last thing we probably think about is art. POOF goes your RRIF ! Some time ago I attended a seminar where participants were told to burn some money; a reasonably-sized amount of money. You should have heard the gnawing and gnashing of teeth in that room! Step right up, folks, and light it on fire. An Investment Real Estate Strategy Unknown To Most Is A Negative Amortization Loan If you want to make the most of your personal or investment real estate, you should consider a negative amortization loan. Mortgage amortization is basically mortgage balance reduction. Annuity Investment Guide While there is not a lack of information on annuities, there certainly is a lack of good information. In an age full of information, we are constantly bombarded with irrelevant data. Retirement Plan Considerations Cheat Sheet for Small Business RETIREMENT PLAN CONSIDERATIONS are something every small business person needs to be thinking about. Do you have a strategic plan? Don't expect to have social security save you. Investing Psychology Today Requires All Traders to Awaken Their Speculator Minds Stock trading strategies are as rampant today, as they were during the Great Bull Market. Yet, can you truly master the stock market like so many investing books propose?Consider this: When you can't even trust the financial reports of analysts, and the company bean counters that feed them with data, how can you? What's needed are robust, stock trading strategies; the type that enables you to think above the crowd, but not apart from them! The kind of strategies in touch with your speculator mind response!Witness the Enron fiasco. Basic Options Terms Options are good investing and speculative instruments. But options terminology may confuse even experienced investors. Selecting Rules for Investing and Trading There are three important differences between investing and trading. Overlooking them can lead to confusion. Trading Tips No 4: Technical Analysis The Holy Grail Syndrome Everyone knows that the Holy Grail of investing and trading is a myth. Finding a good technical analysis tool that will give you a trading system that wins all the time is called the holy grail of trading. Press Release Scams and Successes: Reading Between the Lines Press releases are a means through which companies can keep the public up to date regarding their recent affairs. It is the duty of every public company to keep its investors and indirectly potential investors aware of what is going on in the company. To Retire Rich, Save and Invest Early If you want to retire rich, start saving investing early. The most powerful tool when it comes to retiring rich, is compounding your returns on money saved when you are young. ![]() |
home | site map |
© 2006 |