Arbitrage and the Advice We Give

In March the gap between London and New York gold prices jumped to $60 per ounce, 40 times the typical spread of $1.50 per ounce. In times of fear, investors prefer to have their gold in New York. These extreme arbitrage1 opportunities have short windows. Arbitrage is one of my favorite words and economic ideas.

Other dislocations in prices are less pronounced but more enduring. Irish playwright George Bernard Shaw said that “all professions are conspiracies against the laity.” Insider knowledge, regulations, and credentialing barriers produce opportunities for sustainable ways to wiggle into the belly of the system, to capture some of the value of the conspiracy.

The domain range of this truism is wide. If you’re a financial advisor, what do you tell family and friends at a barbeque when asked for advice? Nobody says: “pay 1% of assets for subpar performance.” However, those are the results many get. I’ve been a lifelong student of finance. Though I’m not a financial adviser, if a friend asks for pithy advice, mine is this:

1) Own assets.

2) Build skills that the market values.

I recently asked a group of healthcare industry insiders on the advice they give to friends and family on healthcare coverage purchasing2. I’ve summarized a couple of my favorite replies:

  • Buy prescriptions where you buy peanut butter, “the bigger the building the bigger the bill”; ask for a second opinion.
  • Look for alternatives to traditional coverage, cost-sharing options like Sedera along with a direct primary care membership (a monthly cash membership for unlimited primary care).
  • Choose the highest deductible you can. If you qualify for an HSA, invest the bulk of it. When switching jobs, use a benchmarking tool to negotiate a higher salary based on possible benefit differentials3. Benefits are not like grains of hard red winter wheat; they’re far from being a commodity4.

With so much data, the infrequent nature of medical interventions for most, and a fast-moving system, consumers need tools and tips. Firms like Paytient work with employers to help ease the friction at point-of-care by offering zero-cost financing for medical, dental, prescriptions, or veterinarian procedures. This is a great benefit and is shown to reduce employee turnover and increase enrollments in high deductible health plans.

Firms like GoodRx provide coupons for discounted prescriptions. I used it last month to save over $40 off the cash price of a prescription. Try it yourself below.


Some will say that gold in London can’t be mispriced, or that it’s not worth trying. Others say the same about healthcare. We’re lucky enough people think that way. It creates arbitrage opportunities.

Disclosures: my personal healthcare coverage is a $5,000 deductible cost-sharing plan (non-ACA compliant). Healthcare investments: long CI, HQY; short (via long puts): TDOC. I have a Lively HSA and have invested most of the balance in 5 stocks7 via a self-directed TD Ameritrade account. I’m currently consulting with Paytient on research and quantitative storytelling.

Photo by Frame Harirak

  1. arbitrage: to simultaneously buy low and sell high; everyone’s dream.
  2. not the eat broccoli and get 10,000 steps but the actual buying part
  3. this is my answer
  4. The last time I negotiated a salary for a job offer, I requested and was given $8,000 more due to payroll and deductible differences compared to my previous job.