Textbook Arbitrage: Making Money Off Used Books
On the most recent episode of our show, we told you the story of two guys who think they've found a guaranteed way to buy low and sell high. Their secret strategy — buying and selling used textbooks.
Bob Peterson told us he got the idea after he watched a used economics textbook nearly double in price between the day he posted it for sale online, and the day he shipped it out to the buyer. Bob saw this happening with other books, and he guessed that the prices of the textbooks were going up and down with the college calendar. His theory was that prices would fall in summer (no one is looking for a nice textbook in July to curl up with on the beach) but then rise when classes begin and students really need the books.
If he was right and this was happening reliably with lots of books, Bob figured he could make money. So he enlisted his brother-in-law, Kenny Jacobson, a computer programmer, to help him sift through the data.
Over a year Bob and Kenny gathered data from Amazon on sales of all kinds of used textbooks, and they found the pattern was there for lots of textbooks — prices fell in the summer and jumped back up as classes started at the beginning of a semester. It was as if they'd found a stock that went up and down at very regular times, so that they could know exactly when to buy it, and exactly when to sell it.
For every dollar Bob and Kenny put in, they say they've gotten $2 back. They doubled their money in a semester.
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