Author Topic: Anyone using stoozing\arbitrage methods in the U.S. ??  (Read 3074 times)

Memphis Mustache

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Anyone using stoozing\arbitrage methods in the U.S. ??
« on: July 10, 2017, 03:44:49 PM »
Hey, I have been researching stoozing (sometimes referred to as arbitrage) methods and I will state that I am very interested in trying to take advantage of them. One thing that I have noticed in doing research online is that our British friends seem to have a leg up on us, as they have access to credit cards that allow money transfers, which we apparently don't have here in the U.S. It seems like the only real stoozing method in the U.S. is to take find and take advantage of credit cards with long 0% introductory rates.

Is anyone here using stoozing\arbitrage methods in the U.S.? Would you be willing to explain what method(s) you are using and how that is working for you?

ketchup

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #1 on: July 10, 2017, 03:58:00 PM »
Is anyone here using stoozing\arbitrage methods in the U.S.? Would you be willing to explain what method(s) you are using and how that is working for you?
I don't stooze, but I'd imagine you could use the same sort of tricks the manufactured spending crowd uses, like buying $500 Visa gift cards with the 0% card at a grocery store, and then liquidating them to money orders at Walmart that you can then deposit into a checking account and do what you will with them.  I've also had a few 0% balance transfer offers that had a deposit directly into a checking account as an option (BoA and Discover).

secondcor521

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #2 on: July 10, 2017, 07:27:26 PM »
I used to stooze back in the day when 0% no-fee BT's were readily available and so were 5% savings accounts.  Now it's not really worth it as pointed out above.

There are people who basically move money in a circle very fast at high volume and find ways to make 2-6% as they do so.  This usually involves getting gift cards from gift card websites.  Too little margin and too much organization and too much risk for my blood.

Manufactured spending for credit card bonuses and piggybacking are the two best things around in the US today that I know of, and I do both of those.  You can google and learn more.

Good luck!

ChpBstrd

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #3 on: July 11, 2017, 11:58:00 AM »
As pointed out above, the yield per hour is currently higher for harvesting credit card bonuses than traditional stoozing with a "high yield" savings account. The problem is that CC bonus hacking is not scalable. Eventually, you've seized all the opportunities out there, made a couple grand, and then you're virtually done for 18 mos or so until the same card issuers will give you another round of bonuses.

If I was to get into stoozing, I might put the money into PFF, a preferred stock fund yielding 5.6%, rather than a 1.5% savings account or CD. PFF has low volatility, so you can currently hedge against a drop in value of more than 2.5% for half a year if you pay 1% of the value to buy put options. So 5.6% annual yield minus 2% annual hedging costs = 3.6% ROI under normal circumstances.

The worst case scenario occurs if PFF declines by 2.5% or more. Then your put option protects against additional loss of principal while you still collect enough dividends to earn your way out of that 2.5% hole and then some.

Some REITs may also be good candidates for this strategy.

The reason you might pursue this approach would be if you thought you could build credit to the point you could have, say, $100k borrowed at 0% and earning 3.6%. Then you'd have a side business earning more per year than many rent houses but with a lot less work, less risk, and none of your own capital tied up!

josh4trunks

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #4 on: July 11, 2017, 01:42:48 PM »
I have taken advantage of no fee, 0 APR, promotional balance transfers before. Used that money to pay towards high interest (>7%) student loans.
There are some opportunities for mistakes, like not setting up minimum balance autopay or not budgeting your income to so you can pay off the balance when it is due.

But, if executed correctly you can save a few hundred in interest by moving debt around.

JohnWC

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #5 on: July 11, 2017, 08:00:45 PM »
Sounds labor intensive. How much money are people really banking on this vs. time invested?

There are arbitrage opportunities regarding paying off mortgage early vs. using that money elsewhere but I expect to be shouted down if I go into that without all my links and figures in order.

Radagast

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #6 on: July 11, 2017, 08:34:00 PM »
I might put the money into PFF, a preferred stock fund yielding 5.6%, rather than a 1.5% savings account or CD. PFF has low volatility,
I investigated PFF (#2, red line). In good times it behaves like a 60% intermediate treasury fund, 40% stock market fund (#1, blue line) and has lowish returns. In bad times it behaves like 100% small cap value fund (VBR, #3, yellow line) and has huge losses. It is like the worst of both worlds. 4.4% annualized returns with 18.9% annualized standard deviation of returns and a loss greater than 56% ... if that is low volatility what do you define as high volatility? Maybe I am missing something about the strategy? I do not know much about puts, would they help? This is probably off topic...

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ChpBstrd

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Re: Anyone using stoozing\arbitrage methods in the U.S. ??
« Reply #7 on: July 12, 2017, 09:59:22 AM »
I might put the money into PFF, a preferred stock fund yielding 5.6%, rather than a 1.5% savings account or CD. PFF has low volatility,
I investigated PFF (#2, red line). In good times it behaves like a 60% intermediate treasury fund, 40% stock market fund (#1, blue line) and has lowish returns. In bad times it behaves like 100% small cap value fund (VBR, #3, yellow line) and has huge losses. It is like the worst of both worlds. 4.4% annualized returns with 18.9% annualized standard deviation of returns and a loss greater than 56% ... if that is low volatility what do you define as high volatility? Maybe I am missing something about the strategy? I do not know much about puts, would they help? This is probably off topic...

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It's definitely a stinker for a buy and hold strategy. For this specific application, however, the OP needs a way to earn 2-3% without the risk of any significant losses. Risk is a big deal when you have five or six digits of credit card debts as leverage. As you can see, PFF plummeted during the banking crisis because it consists of financial preferred stocks. However, the cheap put options for these shares can completely protect the OP from a similar meltdown. For 1% of his/her investment, the OP could purchase the right, but not the obligation, to sell at 2.5% below today's price anytime in the next 6 mos. Thus, even if PFF drops to $15, the OP would be able to sell at $30, for example. In this meltdown scenario their loss on the shares would be just 2.5% plus the 1% they paid for the option. Meanwhile, the fund is paying dividends of 5.6% to make up for those losses. In a true crisis, the strategy might yield near zero, but barring that you'd earn 2-3%, which is the risk profile appropriate for a stoozing strategy.

If a bear market struck, you wouldn't want to be down 10- 20% or so when your credit card interest rate is about to go from 0% to 25%! Only put options can put a floor on one's potential losses. PFF is more attractive for this strategy than other dividend stocks because the cost of protection is so low for this chronically flatlined investment.