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[edit] Some recommendations

Good article, you might want to add that arbitrage is a counterforce for price discriminantion. It is often profitable for a company to price products differently in different markets. Arbitrage counteracts price discriminantion since the prices between the two markets tends to equalize as you buy more in the cheap area and sell in the expensive.

Also something about purchasing power theory might be good too since it is through arbritage that the relative purchasing power between countries is maintained.--ShaunMacPherson 11:06, 11 Mar 2004 (UTC)

This is an very good article. It might also benefit from a discussion of those who buy and sell companies, and make an arbitrage gain by moving assets from one company and putting them into another. For example, when you move assets from a private company into a publicly traded company, there is usually an immediate gain of 20% in the equity value. I did not want to edit this article to say that, as the author is clearly more of an expert than I am. --Kops2222 (talk) 13:37, 23 October 2009 (UTC)

[edit] Other types of arbitrage?

There's no doubt that people reading this article are looking for arbitrage primarily in stocks/currencies etc, but what about having a tiny section about other types of arbitrage, like in Internet Marketing? —Preceding unsigned comment added by 24.90.108.139 (talk) 20:56, 21 April 2009 (UTC)

[edit] Regarding the amount lost by Long Term Capital

$100 Billion is an exaggeration.

True. The right figure depends on the time frame you use. Christofurio 00:16, May 27, 2005 (UTC)

[edit] Statistical advantage for casinos

There are a few casino games in which the odds are even, and sometimes in the player's favor. The casino still makes money off these games because gamblers usually do not play optimally and also because of the risk of ruin. An example of an even odds bet would be backing up the pass line at craps[1]. Some video poker machines give the player a slight advantage[2]. JHG 12:36, 23 September 2005 (UTC)

Hi JHG. You'd agree though that the casino has the advantage in a craps game overall? That was more my point but I concede that if all bettors went for the bet you note, the house wouldn't make any money. Neither would the bettors, of course ;-). I couldn't totally follow the stats on the Deuces Wild page (stats isn't my strong point). Are they convincing? Would every casino have this particular game? I'm not disputing your edit, but do you think it might be more reasonable to put "nearly always" rather than "usually", because the latter implies "sometimes do, sometimes don't", which is not the import of your argument, but rather "don't in every last particular". James James 11:02, 8 November 2005 (UTC)

First, the original comment seems to confuse an "even money bet" with "even odds". The pass line in craps is an even money bet (i.e., the payback if you win is equal to what you bet), but the probability that you win is less than 50%, so the house edge is greater than zero. As far as I know, any standard bet in craps is in the house's favour.

Certain video poker games really do offer a house edge less than zero, if they are played with perfect strategy. As JHG says above, they get away with it because most people don't play with perfect strategy. Even if everyone did, the bet sizes are small enough that you would do well to make minimum wage. The same might be true for certain blackjack games if the player counts cards (and that is what makes for all the legendary professional gamblers who get banned from casinos).

In any case, the article used to say "A casino usually has a statistical arbitrage in every game of chance played, even though it could lose money on any single game." I am not sure what that is supposed to mean. The casino could lose money on every game, over any period of time; it's just vanishingly unlikely. I changed that to "A casino has a statistical arbitrage in almost every game of chance that it offers," which I believe is meaningful and true.

[edit] Sports betting

'Sports arbitrage' is probably an established term but it's inprecise: bookmakers also offer odds on political, pop-culture and other events, some even on financial market events. I would call it 'Betting arbitrage' - I added an article on related practice, arbitrage betting, however it's far from being perfect yet. BTW, how can I make 'betting investment' and 'arbs' point to the same article?Adolg 11:27 18 October 2005, GMT

[edit] Long-Term Capital Management

"For example, it would buy U.S. Treasury securities and sell Italian bond futures. The concept was that because Italian bond futures had a less liquid market, in the short term Italian bond futures would have a higher return than U.S. bonds, but in the long term, the prices would converge. Because the difference was small, a large amount of money had to be borrowed to make the buying and selling profitable."

I am having some trouble understanding the above, can you please elaborate?

From what I understand. Italian bond futures have a less liquid market, in the short term Italian bond futures would have a higher return than U.S. bonds : Because Italian bond futures are cheaper they give higher returns than U.S. bonds. but in the long term, the prices would converge : Should you not be buying Italian bond futures instead? I'm sure I'm missing something. Can you please explain in some detail?

yes the example given does not make sense. nor does the categorization of the negotiated bail-out as "global macro arbitrage" ... that term has a specific meaning which is very different

[edit] Statistical Arbitrage

I've never heard this term before so I don't want to change it, but the definition that "statistical arbitrage is an imbalance in expected values" doesn't seem to be enough. Going long a risky asset and short a safe asset should not be labeled any kind of arbitrage just because of an imbalance in expected value. What seems important about the casino example is that risks are independent so the risk becomes 0 as the number of bets approach infinity (along with a positive expected value). Kyle J Moore 01:36, 15 May 2007 (UTC)

[edit] Controlled Substances section

I removed this section because I don't think it's really arbitrage; it's simply that 2 customers pay different prices for a product. It also reads like original research and is unsourced. Simishag 04:29, 14 June 2007 (UTC)

[edit] Removing linkspam

I have removed all but one external link. As far as I can tell they are all link spam for various reasons: clear advertising sites; informational sites that link to paid sites and read like business promotions; and a blog with an insubstantial discussion of something odd that may or may not have something to do with arbitrage. If anyone wants to add them back I would ask them to state clearly why their external link is relevant and not spam. I am not sure on Wikipedia's policy about linking to about.com articles and that article is reasonably helpful so I left that one in. Wikidemo 09:37, 23 June 2007 (UTC)

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