The Arbitrageur System

The Arbitrage Technicals

by Irving Rivera on September 27, 2015

There are many arbitrage technicals analysis tools out there. However, I am only going to discuss the ones that concern us in order to apply the Arbitrage Investing System.

Stocks charts in different lapses of time: the year to date (YTD), the 1-year and 3, 5, 10-years. Check if the prices are up or down for those periods of time. Look at the dividend events and determine whether they are increasing or decreasing.

Look at the 150-day moving average. It will give you a sense of the stock trend (and whether prices are moving up or down). The 150-day is also known as the smoothing mechanism, a test to see if the trend is up, “bullish.”

A down trend, “bearish,” is a negative indicator; think twice before buying that security.Also, look at the price action relative to the volume.

Volume is a confirmation mechanism, is a lie detector…

High volume and prices up is a good signal that the market is bullish.

High volume and prices down is a bad signal that the market is bearish.

Very high volume can also indicate capitulation, which means the end of a trend.

Low volume and prices up is generally a bad to neutral signal that the market is bearish.

Low volume and prices down is a bad to neutral signal that the market is bearish.

These are only but a few market technical indicators. There are many others that are mostly used for day trading, and speculation and as you know the arbitrage community don’t invest for speculation.

Now, let me introduce to you the Arbitrageur’s proprietary equation.

((present price – past price) + accumulated distributions) / past price 

Present Price: current market price.

Past Price:  price from the initial public offering – IPO.

The key result metric for this equation is a positive ratio of 0.314 or higher.

I prefer a strong 0.618 ratio value!

arbitrage ratio

In order to download this formula already programmed on an excel spreadsheet, please consider investing in the Arbitrageur Investing System.

Equation Disclosure:

The Arbitrageur equation is not suitable or desirable to analyze all securities.

The Arbitrageur Ratio is based on the past performance of the security, and past performances do not guarantee future results.

It is important to understand that you could lose money by investing in any kind of security, even if it passes the Arbitrageur Test.




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November ReportOn August 2015, I took advantage of the market volatility and added to my long open positions in Apple and Disney.

As you already known I share my results with you mainly for three reasons:

  • The Benefit of Full Disclosure
  • Share the Knowledge
  • Track Performance

 Because “no one should talk about investing if they are not willing to show their actual holdings and performance.”

[Read More…]

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First thing first @Wealthfront and @Betterment are amazing services at market price. However, @blakeross (Intuit’s @turbotax flat-pricing business module (we are going to use a $25/month subscription for this example) could offer the same amazing services at an outstanding price.

“I’m not asking why Wealthfront helps itself to such margins, which is obvious and perfectly normal, but rather why the market bears it.” — @blakeross

Image Credit:,,,


Second, the unique value position of robot investing services like these is that you pay for convenience — the advantage of having them do everything for you automatically. Assuming it would take you one hour a month to implement this strategy yourself, you would be saving money as long as your hourly wage was higher than $75.27. Well, I know — $7.25 is the federal minimum wage, and we are assuming you have the $100K to invest (according to a 2012 report by @PitneyBowes, the average savings account balance in the United States in 2011 was $5,923) so you can get that direct indexing discount, and have the actual skills of knowing what you are doing.



We should not forget that they also claim they can beat the market by more than a few basis points. This is thanks to the added value of strategies such as tax-loss harvesting, which could make you break even or better by covering the cost of those monthly exponential fees. So they claim. But right now we can only assume we could achieve these results in the long run since they are based on simulations. It is not like they offer a J.P. Morgan Funds — Guide to the Markets with actual history performance.

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@danielcarroll, @jonstein, and @blakeross: let’s take a look at the numbers and some back of the envelope simulations.

Feel free to download all charts and spreadsheets here >>

Investing only $100,000 . . . maxing out your IRA contributions . . . maxing out your 401k contributions; with the condition of paying for all fees out of pocket and discarding the free management of the first $10,000.


Then again, let’s be fair. They do run a for-profit corporation, meaning that after twenty years of world-class service, they take away only 1.56% from your portfolio (of course, they could take less — anywhere from 42% to 63% less). To put this in perspective, think of the following analogy: it is like having a credit card with a 1.56% interest rate.

Imagine that one of these robot traders can corner the Exchange-Traded Fund market from Vanguard ($451 billion in ETF assets under management) at a 0.25% fee. That is only $1,127,500,000.00.

Full Disclosure


I think the argument here should be to know whether these founders are clients of their own services like @Shpigford of Baremetrics.

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“Because no one should talk about investing if they are not willing to show their actual holdings and performance.” — @riveranomics

You can see my own income reports here >>

Call to Action


@blakeross and VCs out there: if you really believe this is a problem the world needs to solve, feel free to invest $2 million for 19% (because we are@PledgeOne together) of the #startup to solve this issue under my leadership.



This article was previously posted on dated: July 17th, 2015.

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