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Don't try this at home. How credit card arbitrage funded my first company.

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Re: Don't try this at home. How credit card arbitrage funded my first company.

#101

Post by [deleted] »

nirvana wrote: post #96
feral wrote: post #85

Earlier quoted context omitted.

I'm afraid you don't understand the point of arbitrage, at all. As others have said, by definition, an arbitrage is risk free (or, in practice, nearly risk free). Buying extremely risky Greek Bonds, with borrowed USD, is just making a leveraged investment. Considering the transaction costs you'll pay, as a small time buyer, and the various worked in charges, you will certainly be losing out, when the risk etc is fact…

The problem is you do not understand risk at all. You compare things with many orders of magnitude different risks as if they were equally risky. In fact, in my original post, I addressed the issue of risk, and mentioned hedging that risk using put options. Yet, you think that because you're not sophisticated enough, or didn't bother to actually read my post, you think you can spout off and accuse of saying things I…

[deleted]

Re: Don't try this at home. How credit card arbitrage funded my first company.

#102

Post by Retric »

nirvana wrote: post #93
Retric wrote: post #83

Earlier quoted context omitted.

The problem is you assumed it even if you did not say it. The are basically two ways to do arbitrage one is to execute the trades fast enough that the prices are fixed. Or do a closed transaction where the underling commodity price is irrelevant and you make money even if the price spikes or drops. AKA buy a directive of a stock and short that same stock. You can still be bitten if one of the counter-party does not f…

No, in point of fact, I said the opposite. It is a shame that HN has become a place where people don't bother to understand the point someone is making, lie about them, and then the person gets down voted to negative territory when they try to defend themselves. Not a single response to my comment has been on the actual topic of this submission. Most of them have been frankly, dishonest, and the only thing I'm conclu…

"Dollars spent to pay off a loan are worth less than dollars you get at the beginning of the loan. This means, the asset you put your money into, needs to return not only enough to cover the interests & fees on the credit cards over the time period, but the monetary inflation rate over the time period."

Sorry, but on top of confusing leverage and arbitration (AKA arbitration works even if your not taking out a loan but you can use a loan's leverage to increase your return). Your also making the mistake that inflation is bad when you hold another asset. If you buy 1000$ worth of wood and you get significant inflation that wood is going to be worth more dollars not fewer dollars when you sell it. When you get a loan inflation is good and deflation is bad, when you give someone a loan inflation is bad and deflation is good.

PS: When you get a loan you are required to pay back X% more than than you borrowed but that percentage is normally independent of the inflation rate for some period of time. It's true that with CC they will adjust their rates based on inflation, but the only reason this could work is the rate is fixed for some period of time even if inflation changes.

Re: Don't try this at home. How credit card arbitrage funded my first company.

#103

Post by nirvana »

Retric wrote: post #102
nirvana wrote: post #93

Earlier quoted context omitted.

No, in point of fact, I said the opposite. It is a shame that HN has become a place where people don't bother to understand the point someone is making, lie about them, and then the person gets down voted to negative territory when they try to defend themselves. Not a single response to my comment has been on the actual topic of this submission. Most of them have been frankly, dishonest, and the only thing I'm conclu…

"Dollars spent to pay off a loan are worth less than dollars you get at the beginning of the loan. This means, the asset you put your money into, needs to return not only enough to cover the interests & fees on the credit cards over the time period, but the monetary inflation rate over the time period." Sorry, but on top of confusing leverage and arbitration (AKA arbitration works even if your not taking out a loan b…

You quote me saying the correct thing about inflation, then you provide an example that is consistent with what I said, and then you claim that I am ignorant.

All in a thread where I responded to someone who lied about what I said, and pointed out that I didn't say that at all, and in fact, I said the opposite.

But what I actually said does not matter to you, or others commenting here. You're dishonest, and a perfect example of why HN sucks for trying to have a worthwhile discussion.

Re: Don't try this at home. How credit card arbitrage funded my first company.

#104

Post by nirvana »

dasil003 wrote: post #100
nirvana wrote: post #96

Earlier quoted context omitted.

The problem is you do not understand risk at all. You compare things with many orders of magnitude different risks as if they were equally risky. In fact, in my original post, I addressed the issue of risk, and mentioned hedging that risk using put options. Yet, you think that because you're not sophisticated enough, or didn't bother to actually read my post, you think you can spout off and accuse of saying things I…

You're claiming gold is not risky? You're like the cheap little ads plastered all over the back of magazines trying to sell you gold. If gold is such a sure bet, why are so many people so desperate to sell it to you?

You put words in my mouth and then you characterize me. This makes you consistent with the rest of the commentators. This is why you can't have good discussion on HN.

Re: Don't try this at home. How credit card arbitrage funded my first company.

#105

Post by dasil003 »

nirvana wrote: post #104
dasil003 wrote: post #100

Earlier quoted context omitted.

You're claiming gold is not risky? You're like the cheap little ads plastered all over the back of magazines trying to sell you gold. If gold is such a sure bet, why are so many people so desperate to sell it to you?

You put words in my mouth and then you characterize me. This makes you consistent with the rest of the commentators. This is why you can't have good discussion on HN.

Maybe you're not as clear a communicator as you think.

Re: Don't try this at home. How credit card arbitrage funded my first company.

#106

Post by Retric »

nirvana wrote: post #103
Retric wrote: post #102

Earlier quoted context omitted.

"Dollars spent to pay off a loan are worth less than dollars you get at the beginning of the loan. This means, the asset you put your money into, needs to return not only enough to cover the interests & fees on the credit cards over the time period, but the monetary inflation rate over the time period." Sorry, but on top of confusing leverage and arbitration (AKA arbitration works even if your not taking out a loan b…

You quote me saying the correct thing about inflation, then you provide an example that is consistent with what I said, and then you claim that I am ignorant. All in a thread where I responded to someone who lied about what I said, and pointed out that I didn't say that at all, and in fact, I said the opposite. But what I actually said does not matter to you, or others commenting here. You're dishonest, and a perfect…

I don't think we are communicating vary well.

"Dollars spent to pay off a loan are worth less than dollars you get at the beginning of the loan." (This is Correct)

"This means, the asset you put your money into, needs to return not only enough to cover the interests & fees on the credit cards over the time period, but" (up to here everything is fine) "the monetary inflation rate over the time period." (This is literally true, but misses the point while inflation makes this easier not harder if inflation is meaningful your not doing arbitration.)

The point I am trying to make is if you have a 0 interest loan for 1 year and you buy a 1 year bond that pays 1% interest then great you have arbitrage. But, if you have that same loan buy a 2 year bond with a that pays 2% it's become speculation because the value of a 2 year bond in at 1 years is dependent on inflation and you either need to sell that bond at market rates or get a new loan. So, if inflation is important your not doing arbitration.

Re: Don't try this at home. How credit card arbitrage funded my first company.

#107

Post by foxit »

chris_gogreen wrote: post #66
kevinpet wrote: post #53

1. This isn't arbitrage. Arbitrage has a specific meaning (profiting from price disparities in the same item in different markets). This could be described as a carry trade, but it's mostly just an inconvenient way to get a business loan. 2. This isn't even correct. It claims that you can get your credit score for free, which is incorrect. When I notice one error, I suspect there are other errors.

I get a free score from all 3 bureaus for free once a year.

No, you get a free credit report from all 3 bureaus once a year. Getting your score costs.
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