Posts Tagged ‘bargain’

The Option Value of Cash

Friday, December 14th, 2007

Equity investors often feel obligated to remain fully invested, because equities have a much higher average rate of return, at least historically.

But you can think of cash as an option, conferring the right, but not the obligation, to pick up assets cheaply during panics. Unlike other forms of option, this one pays you a premium, and never expires.

This option is only useful if you can tell the difference between a cheap and an expensive equity.

Market Inefficiency in Sea Kayaks

Wednesday, May 2nd, 2007

You can exploit inefficiency in non-equity markets, of course. Here is a way to get screaming bargains on used kayaks from craigslist.

I wrote this Ruby port of Jeremy Zawodny’s similar Perl script. It runs every 20 minutes, notifying me by email of new postings likely to interest me.

The result is effective, but potentially creepy: you post an item on Craigslist, and your phone rings 5 minutes later with my offer to buy. This freaks a few people out.

Using this method, I bought a nearly new $1500 sea kayak for $600, and a well-maintained $1200 Stairmaster for $200. Beneficial deflation in action.

(You could do this with an RSS reader, as craigslist can publish your search as a feed. But I always forget to check RSS. By contrast, nothing shakes you by the lapels like an incoming email saying, “bargain here.”)