Let us create a 3d Digital eBook for you! DigyCat.com
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.
Investing - Google News
This RSS feed URL is deprecated, please update. New URLs can be found in the footers at https://news.google.com/news
Angels Investors and Their Networks
What is an Angel Investor?An Angel is usually a private person who invests in small businesses. The Angel is generally a successful businessperson or entrepreneur who looks to invest in a business that has potential for growing their investment in the future.
When It Comes To Investing, Asking The Right Questions Can Help You Make The Right Decisions
Are you ready to open your pathway to financial independence?Well you should be. The sooner the better.
Top Ten Investment Mistakes
1. Lacking an investment plan a/k/a/ "Don't take a trip without packing the map".
The Demise of Buy & Hold
Based on consistent results I think Buy & Hold should be renamed Buy, Hold & Bye-Bye. It sounded great for a while, especially for the huge majority of investors who don't have the time or interest in really doing due diligence on investments.
A Gadfly On A Dinosaurs Butt, Or The Hood-winking Of The American Investor
Have you ever noticed how some words in the English language are so perfectly named for what they describe? And how some words seem to be, I guess you could say, backwards? For instance, the word sunflower! How wonderfully aptly named is the sunflower, that beautiful yellow flower that follows the sun from sunrise to sunset.And then there are those words in the English language where there meaning appears to be backward, so to speak - like parkway and driveway.
The Perfect Economy?
Wit and Wisdom on Money, Wall Street and Success - Part #1
I love to collect quotes as they concisely promote a philosophy which is readily understandable.In my 25+ years of investing I have collected hundreds of quotes related to Wisdom, Wall Street and Success.
A trading system consists of a set of rules for viewing markets and making trades. The advantages of trading systems can be hidden when they become associated with trading platforms involving trade order submission and processing.
Buy: Hold: Sell: Jump
I'm sitting here at my computer desk with a cup of coffee at my elbow. The coffee rest in a mug, the mug garnished with the words Buy, Hold, Sell, Jump, vertically along its sides.
Retirement - Its Sooner Than You Think!! (Honestly)
Many people hear "retirement" and think- what? 401K? Roth vs. Traditional IRA? Stocks, bonds, mutual funds? Do they?Or do many people put money away according to the suggested amount and then simply hope that when retirement comes all will work out?One report I read estimated that 66 million Americans have put away a Whopping $0 towards retirement.
College Savings Plans - Are They The Best Choice For My Child?
College Savings Plans - are they the best choice for my child?College Savings Plans, also called Section 529 plans, are one of the best ways to save for college because they offer:- Tax advantages- A variety of investment options- Flexible contribution options- Parental control- Little impact on eligibility for need-based financial aidTax advantagesInvestments in 529 plans are usually exempt from federal taxes. Earnings are tax-deferred and are not subject to capital gains taxes.
The stock market fell sharply Thu and Fri before and after the employment reports Fri morning. The Nonfarm Payrolls report showed 207,000 net jobs were added in July, which were 27,000 more than the market expected.
Can Using Sales Leaseback Method of Investment Property Acquisition Reduce Risk?
Sales Leaseback compared to traditional property investmentCan a Sales Leaseback arrangement make investing in Orlando investmentproperties more safe and reliable?Yes. Providing a guaranteed rental amount each month is the safest andmost reliable way to realize a return on your investment.
Trading Baskets Part I
Q. What is a basket?A basket is a group of up to 50 stocks that you can trade, manage and track as one entity.
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.
Missleading Fund Names Wreak Havoc On Investor Returns!
Mutual fund managers use fake fund names to part you from your money such that you cannot judge what a fund does by its name. Many funds have names that are outright misleading or even deceptive.
Direcway & Wildblue Set to Square Off this Fall?
There is a cat fight brewing between Direcway LLC, Starband and Wildblue Communications for the large number of people in the U.S.
Mutual Fund Returns May Not Be As They Seem!
Arthur Levitt, during his tenure at the SEC, experienced many cases where the non-indexed mutual fund manager bought shares for their own accounts before the fund bought the shares. The fund's purchases drove up the price of the stocks and the fund manager's made a killing on the deal.
Eight Questions to Ask Your Financial Advisor
You may like your financial advisor, but is he really looking out for you? All advisors are not created equal, and you have a right to know what makes them different! You also have a right to ask yours if he compares!(1) Do you use a holistic approach to financial planning by determining my values and goals?(2) Do you work on a fee-only basis, a commission basis, or both, and why?(3) Do you have company-established insurance requirements, or do you recommend insurance only when it is needed by your clients?(4) Do you attempt to 'beat' the market through timing and selection, or do you believe that attempts to do so are not worth the additional level of fees and risk? Are you aware that a vast majority of my returns will be based on asset allocation, rather than timing and selection?(5) Are you a Registered Investment Advisor, and therefore a fiduciary? In other words, must you legally and ethically put my interests above your own?(6) Do you meet with your clients at least three times a year to refine their portfolio and find out how events in their lives may have changed their financial goals?(7) Do you return phone calls the same day you receive them, and are you available to answer questions as they arise?(8) When you wake up each morning, do you ask yourself how you can best be of help to your clients that day?Adjust these questions as you see fit, and depending upon what your own objectives and needs are from an advisor. The best advice is to never be afraid to ask!© 2004 Matthew S.
The Conflict of Interest Game
Disgruntled investors are going after Wall Street once again, this time accusing one of investment bank Morgan-Stanley's high-tech mutual funds of making biased stock picks.Recent lawsuits allege the Morgan Stanley Technology fund was influenced to buy and hold stocks of companies that delivered huge investment banking fees - or could potentially bring big business - to the investment bank.
MyIdeal Domain Is For Sale - $8,000 For Enquiries eMail Us
© www.MyIdeal.biz - 2012