Dec

16

 I'm sure you all will be able to come up with some brilliant daylight-robbery stories around Christmas tree scalping. I have one to share that provides some nice little trading lessons.

Over the weekend I visited a large market in one of the more rural suburbs of Sydney to find a tree. Now, being a big kid, it just doesn't feel like Christmas to me if my tree is smaller than I am…which would be fine but for the fact that I'm 6'7". This means I am used to getting gouged on large size trees, but I'd never come across dudes who were more shameless than some characters I met on the weekend.

Walking onto the premises, my wife and I scoured the lot for suitable trees. We picked out one that we liked and one for my mother, too. We found a sales assistant and asked him to quote us a price including delivery. He quoted us AUD120 each - insane - so I began to talk him down using my various tactics. However, his supervisor and the lot owner were nearby. They sensed a big sale and wandered on over…all smiles. I tightened my grasp on my wallet and prepared for the worst.

"So, friends, how much have you been quoted for these trees?" asked the boss. "You guys are dreaming at the prices I've been given" I replied. "Well," says the supervisor, "it's been a tough year with the droughts and all - and, as you can see - (all smiles) it's a very busy day out here…but as you want to get a couple, let's see what we can do". Boss's antennae are up now: "How much did the assistant ask for?". "One twenty each" I said.

Supervisor goes into hyperdrive…"One twenty? No…they're one-eig…" Boss nudges him and interjects, "They're all two-fifty".

Silence.

Not even in the options market have I seen a markup of that magnitude appear so fast when the chance of getting lifted approaches one.

"Are you guys serious?", I said. "You're crazy…you honestly expect me to pay that now? You're seriously going to move the price that much? I'll pay you 90 each for all of them, and that's being very full of the Christmas spirit". He actually scoffed at me.

"You guys must hate money", I said as we turned on our heels and made for the exit. Usual comments from them about being cheap etc etc.

We left the lot less than thrilled with what we'd encountered. However, driving about 2km down the road we saw a sign for fresh trees on a small, family owned farm. We went in to see what was on offer.

The family were really lovely. They had much nicer trees and quoted us 70 for one, and 50 for the other…including delivery. I lifted him straight away and paid the guy an extra 30 on the spot and wished him and his family a very happy Christmas.

it's rehashing an old lesson but, with repetition being the mother of skill, it bears repeating again: there is always a better price if you are willing to hunt for it, and the best deals are always where you least expect them. Stay away from crowds…the vig reacts to crowds on a mission like water molecules reacting to heat.

Finally, it occurs to me I might still have been fleeced…perhaps there was collusion between the big lot and the small farmer??? Institutions may quote overs on a price so you go deal with their smaller subsidiary or soft-dollar market maker…who is still killing you, but you're so glad to have just avoided paying the big ticket that you'll still happily pay overs while your defenses are down.

Also, makes one wonder if there is a world Christmas tree index much like the big mac index? With AUDUSD at .914 I will be interested to hear from you all if there are any arbitrage opportunities in this very lucrative market! …surely couldn't cost much more than AUD5 bucks to raise a tree on a farm anyway?


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