Letters to my kids – arbitrage

Third in the series letters to my kids

Hey kids,

I saw this article and couldn’t help but to pass it along. After reading it, I immediately thought of Macklemore’s Thrift Shop being all the rage – here is a woman who is literally taking the ideas in Thrift Shop and turning them into Rich Shop! This woman is taking her unique knowledge – what are the brands/styles that people will pay for – and monetizing that knowledge with the discrepancy between her local thrift shop marketplace and the national marketplace. This is what is called arbitrage – where she is simply making the profits (nearly guaranteed) from buying at a normal price in one market and selling at a normal price in another market. These don’t crop up all the time, but being willing to pursue these opportunities is the difference between the people that will make the money and the people that will just read about it.

Think about your world – what are people you know or observe spending their money on and can you participate in that market? Are your friends buying a particular type of candy or clothing that you can buy at a lower price from thrift stores or in bulk? Are there fashion or accessory fads that you can take advantage of? These types of opportunities are really no different than opportunities at a larger scale (with real estate, new software products, or stocks/bonds), except for one thing – these types of opportunities are usually easier for young people to get into.

I am not saying that arbitrage opportunities will always exist or that they will always provide easy money. I am saying that they are a near guarantee on the amount of money you can make if you are willing to put the work in to make it happen.



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