Chapter 8: Relative Value Trades

Everyone on the planet is a relative value trader, even when they don’t trade securities or commodities. Being a relative value trader means simply choosing one product over another. You may choose Belgian waffles over English muffins, a satellite dish over cable TV, or boxers over briefs. You’re bullish on the thing you choose and bearish on those things you reject. Bearish, in this case, means that you feel the goods you choose are going to provide more value.

Here’s how a trade like this starts. While you’re traveling in the United Kingdom, a friend recommends that you try the Best Little Belgian Waffle House in London. It hasn’t been there long, but the Belgians have a thing for making the most delectable ...

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