There a very few risk-free, fool-proof ways to make money. You can try investing in the stock market or flip homes or start a business, but you have to hope that when it's time to cash out you are on the winning side of the equation. The really smart money only invests in sure things, conditions where there is no risk, just reward. But those situations are few and far between.
One of the only proven methods of that is arbitrage. It means finding an asset where the price is different in two different places at the same time. You buy in one market on the cheap, and then sell on the other for the premium. Assuming the transaction costs are less than that spread, you've locked in a profit. Usually that differential is small, and so you have to replicate the transaction in large quantities to make any substantial gains. But the big boys and girls do just that, buying gold or grain or shares in Asia, and then selling them in Europe for a fraction of a fraction of a cent higher. Multiply that action over and over, and you can be talking serious change.
To make that work you need several things: capital, access to multiple markets, plus accurate information that shows that price imbalance. And because markets are generally efficient, and sees those gaps and eliminates them, you have to be able to act quickly before the hole closes. All of that means that arbitrage is generally practiced only by professionals.
Until now. While we will have to start small, the rest of us might now have a shot at joining that club, thanks to a change by the US Mint. In November, in a move designed to save costs, the government stopped producing pennies. Quaint and historic as they are, each one cent was costing three or four to produce. And since fewer than one in five payments are made in cash, most of those coins sit in jars in closets. They are still legal tender, just not in widespread use.
That means that many stores struggle to keep them in stock, among them the grocery store chain ShopRite. And so they announced a new policy. If you pay with cash, they will round up or round down the amount to the nearest nickel. So if the total ends in 1 or 2 cents they will round it to 0. If it's 6 or 7, they will round it to 5. Going the other way, if it's 3 or 4, or 8 or 9, they will round up. So you get a discount at bottom and are charged a premium at the top. In theory, over time it will all average out.
But here's the opportunity. Looking at this week's sale circular, Polly-O Mozzarella is going for $5.77. Buy it for cash, and they charge you $5.75. That means you can now sell it to another lasagna-making customer paying with a credit card at the store price of $5.77, and you've made 2 cents. Same for a Built Cookie Dough Chunk Protein Bar at $1.67. The store will charge you cash price of $1.65, and you can flip it to the next snacker swiping their card for 2 cents profit.
Note that there is nothing illegal here. No price gouging. No market cornering. No bait and switch. You are offering the same product at the published price. This is just like what Blackstone or Merrill Lynch or Citibank does. They just do it with millions of dollars in worldwide markets with state-of-the-art computer trading systems and floors full of skilled professionals to make it happen. You likely have slightly less resources at hand.
Whether your reference is a New York State lottery ad campaign or the J Cole song, all you need is a dollar (actually $1.65) and a dream and off you go. True, you'll need to turn a lot of cheese to make a go at it: flipping 1000 bags of mozzarella will net you $20. But it's legal, there's no minimum to get started, and it's a sure thing. To paraphrase the line attributed to Senator Everett Dirksen, a penny here, a penny there, and soon you're talking real money. Just remember, for every "buy" there has to be a "sell." If not, all the cheese is yours. What time should we be over for dinner?
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Marc Wollin of Bedford has a jar of pennies in his dresser just waiting to be spent. His column appears weekly via email and online on Substack and Blogspot as well as Facebook, LinkedIn and X.
