His friend has a watch that sells new everywhere for $100, and he told my son he needs some money and wants $10 for it.
“Mom, I know we can flip this on eBay or Amazon and make a decent profit!”
We can learn a lot from kids.
Let’s break this down to a teenage sales funnel
First, the “seller” probably has no idea that he could easily register on eBay or Amazon and score at least a quick $50 for his watch. Most people don’t, including adults. That’s why those who start early with lifelong learning are tomorrow’s millionaires.
Second, arbitrage exists in the most informal social circles, not just on commodity exchanges. The watch is misspriced because the local market (da kids) don’t have $50 for a watch, but they might have $10 and someone always needs $10.
Third, there will always be a place for the broker. The middleman. The risk-taker. The enabler. This is what we who trade on eBay and Amazon do. We are liquidators, bankers, and problem solvers.
Fourth, and maybe the most important, successful traders always have their eyes open for gold nuggets on the floor. That’s often where you’ll find them, and most people walk right over them, assuming trading opportunities are seldom this obvious.
They’re almost always obvious when you learn how using peripheral vision in your daily life can bring you a steady stream of income with very little effort.