Moving from NYC to SFO

8/15. The Technology of Arbitrage

We arrived at SJC. Excited. Now do some trades, lunch, then four appointments for housing. No training today. Never train after a 6 hours flight.

How do I feel about the housing question. I am nervous, curious and excited. This is really important. The whole experience now depends on us landing a great place.

Landing great deals is key to a hedge fund manager’s performance. What do I mean with great deal? It’s value at a good price. Good price usually means some sort of arbitrage. Arbitrage is a funny concept. In essence it means finding something for a good price because the market is not recognizing the value. Either the market is scared of something or just not seeing the value.

Typically, markets miss price securities because of herd mentality. Most people are afraid of doing something without first checking if others do the same. Rarely people go all by themselves. This creates herd mentality. Herd mentality leads to miss pricing. Arbitrage occurs, when somebody steps in and takes advantage of this type of miss pricing.

Housing is similar. You go for properties that for some reason others don’t value as much as you do. This is the only way to find value. We’re on it.