Take a look at any capitalist endeavour and you can be pretty damn sure something is being arbitraged.

Time, competence, incompetence, skills, labour, taxation variances, speed of manufacturing, cost of manufacturing, speed of distribution, cost of distribution, distance, ease of business. The list is as endless as Charlie Sheen’s reasons for not staying sober.

Francois in Lille selling rhododendrons that end up on the boardroom desks in swanky London based investment banks on a Monday morning is arbitraging the fact that British Rail will absolutely undoubtedly and repeatedly cock up the delivery because the wrong shaped snow landed on the track… or some leaves on the track will cause delays, and now it’ll take 14 hours to get form Surrey to London Bridge.

And so instead lucky Francois can send them via the Channel and, together with these guys…

Bicycle couriers in London

…it’ll definitely get there — and on time.

I know all this because a buddy of mine runs a courier business in London doing just this — all with a smartphone and laptop while sitting at a beach house in New Zealand. Who doesn’t love technology?

Even at an arbitrary level it’s happening.

When I bought my last smartphone I didn’t trot down to the local electronics store to do so. No siree. Onto the interwebs I went and sourced the same product direct from a Hong Kong supplier for 35% cheaper than my local mall down the road.

And that’s delivered to my door, which means that my blood pressure is much better since I don’t have to deal with the dunderhead teenagers at the mall on minimum wage sporting an attitude and who don’t want to be bothered with talking to customers anyway. Win-win!

Of course, those same electronics stores aren’t doing much more than I did. They’re just arbitraging (buying and selling across geographies) and capturing the spread.

Warren Buffett, something arbitrages impatience and we should all take out our little notepads and scribble this down in double bold and triple underlined so that we repeat it to ourselves each night before bed: If you buy deep value and give yourself enough time, it is very difficult to muck it all up.

Arbitrage of some description is happening all the time all over the world — domestically, internationally, and in literally anything you can think of.

Another example…

Take a look at the US 10-year yield (orange) and the German bund 10-year (purple) below. Right now you’re earning more on the US than the German while historically that’s not the case. Hmmm…

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