The stock's value began to rise.
"Buy! Buy! Buy!"
The stock's value began to fall.
"Sell! Sell! Sell!"
What's happening here? Stock investors are gathering assets as they grow in value and getting rid of assets as they lose value. Selling assets with high value is a logical way to make profits, but the sweetest deals also require knowing when assets are at their lowest value.
Take for example dumpster divers selling on ebay. For every item listed, someone decided that the item was no longer worth keeping in their store or home. For every item sold, the profit is sales price minus transaction costs and the opportunity cost time spent in a dumpster.
In 1946, Bill Zeckendorf bought up properties near slaughterhouses along the East River in New York City at $5 per square foot. The slaughterhouses made the area generally unpleasant, but Zeckendorf knew he could resell the land after he demolished these eyesores. Later, he would get his asking price of $17 per square foot as the planned site of the United Nations buildings.
Bill Gates made a major deal when he purchased an operating system from Seattle Computer Products and later sold it to IBM for $50k, with the provision that Microsoft would keep the copyright. When hardware manufacturers began cloning the IBM system and using the MS-DOS operating system, he collected enough to build Microsoft towards the size it would eventually reach.
In 2005, Kyle MacDonald traded a red paperclip for a fish pen, and later the fish pen for a doorknob. He successively traded items upwardly in value, eventually trading a movie role for a house.
- The Real Estate Game, William J. Poorvu, Jeffrey L. Cruikshank.