Arbitrage, in the broadest sense, means picking up free money—money that is free because of other people’s preferences
except, finding exploitable inconsistencies in other peoples preferences that haven’t yet been destroyed by some other arbitrageur actually requires a fair bit of work and/or risk.
My husband’s law professor described arbitrage as grabbing at nickels from in front of a bulldozer… The point being that you really need to know what your doing as an arbitrageur to make any money at all, and if you don’t, you stand to lose quite a bit.
except, finding exploitable inconsistencies in other peoples preferences that haven’t yet been destroyed by some other arbitrageur actually requires a fair bit of work and/or risk.
My husband’s law professor described arbitrage as grabbing at nickels from in front of a bulldozer… The point being that you really need to know what your doing as an arbitrageur to make any money at all, and if you don’t, you stand to lose quite a bit.
From the point of view of the person being arbitraged, this makes no difference...