[quote:c4de067deb="alfredsokol"]Hi Chahine, Arbitrage is also known as "workouts" by some people. This was one of the biggest techniques used by the Great Warren Buffet while amassing his huge fortune. These opportunities arise from: corporate re-organizations, sellouts, spin-offs, merges and hostile takeovers. They are also sometimes known as "special situations". The basic idea is this: a company announces it is has been bought for a certain price, let's say $100 per share. The stock prior to the announcement was selling at $80 per share on the open market. If you could quickly purchase the stock, you would realize the $20 per share profit on completion of the merger. The risk your run is that the company doesn't get bought out and the deal falls through. Make sure to use a stop loss order. Also, there are a ton of professional arbitrageurs, so the chance of earning $20 per share would be very unlikley. Usually the gains will be more in the 2 - 6% range.[/quote:c4de067deb] ic makes sense to me but i guess my capital is too small to enter this market right now. i think for 2 to 6% on a short time could be good but i don't feel confident on it yet. for sure i will keep this in mind for future reference. thnx for the enlightment :idea: Chahine
Yes, truth be told it is usually just used for part of a portfolio. Since you're trying to increase your stake, you want to try for maximum appreciation. You need the most growth you can find.
[quote:4a3065c30f="alfredsokol"]Yes, truth be told it is usually just used for part of a portfolio. Since you're trying to increase your stake, you want to try for maximum appreciation. You need the most growth you can find.[/quote:4a3065c30f] i agree. thnx for the advice. Chahine