The Curl, the Loop and the Easy Money

The Curl, the Loop and the Easy Money

You can earn money easily and quickly by making a loop or a loop. There are no impediments or risks. You only need the initial capital and the principal account in the stock exchange to do so. What are you waiting for? Do it! ”

Words more, words less, this is the new revived Argentina, the favorite of account executives and self-proclaimed finance geniuses who designed their light version of “made the law, cheated”, because, finally, After all, there was no trap, although there was a clear vocation to take advantage of the government’s confusion and the price distortion generated by the stocks.

If you are a compulsive buyer of colored mirrors, don’t read today’s column. We come to lower expectations. On the one hand, curlers and loops are not so simple to perform. On the other, they have hidden costs and risks (financial and other) that scare away retail investors.

Let’s take action. Let’s analyze each type of operation.

Financial arbitration

The financial arbitrage is a transaction that arises from a discrepancy, the temporal distance on the price of two assets with similar risk characteristics, future cash flows, etc. Since in normal situations they should be worth the same for the market, one is said to be overvalued (the one that sells more expensive) and the other undervalued (the one that sells cheaper).

Faced with this situation, a fast reflex investor acts by buying the one that is “cheap” and selling the one that is “expensive” (or betting on its low while maintaining the active brother). And if we talk about the same asset with two different values, depending on how it is bought or sold, the investor intervenes by buying it with the “cheap” price mode and selling it with the “expensive” price mode.

This operation is carried out by numerous investors until prices are equalized. In the market, it is said that prices are “arbitrated” until they match.

The truth is that, for the operation to be considered a financial arbitration, there must not be any type of risk, whether it is a variation in prices in the middle of the operation or hidden, derived or implied costs.

We will see that this is not the case of the loop or the loop, wrongly promoted as a safe handrail.

The curl

Baptized in the financial jargon, this operation consisted of buying dollars in the bank at the official exchange rate and, with those dollars, acquiring a dollarized Argentine bond to convert it to its version in pesos and selling it immediately taking advantage of the conversion of the bonuses there is a difference in the exchange rate that plays in favor of the maker of the roll. With the pesos obtained, the same dollars were bought as before and the investor had those savings in currencies plus a surplus in pesos.

The rule was based strictly on the price difference between the official dollar and the MEP dollar (which governs the price of the dollar for Argentine bonds that are quoted in the local market but are traded in dollars).

This operation could be done several times to reach $ 10,000 per month, the limit set by the Government for the purchase of foreign exchange in the exchange market. Lovers of the ruler said that with this operation you could earn in a few minutes up to 7% of the investment in pesos.

Beyond that, the Central Bank and the National Securities Commission issued regulations against this operation (first restricting it to one operation per week and then forcing the liquidation and compensation agents to previously have an affidavit from the investor stating that the dollars they do not come from an operation of the Single Market and Free of Changes -MULC- carried out in the last 5 business days), the rule already had other intrinsic factors that made it very difficult for the ordinary citizen enthusiast of fast money and easy. These difficulties were:

  • The acquisition of dollars at the official price to start the operation is not so simple. Many banks only sell 1,000 dollars a month per person per window. The rest must be purchased by home banking, for which you have to have the money banned and in pesos, with the risks that that means in terms of currency devaluation and loss of purchasing power.
  • In the future, AFIP could make inspections of the people who performed the operation to study the origin of the funds involved.
  • It is very likely that the money involved and profits end up paying the tax to the financial income for the gain.
  • The financial highway had to be oiled in order to get into the loop. This implies an account in a stock exchange, low commissions that do not liquefy the gain, reduce costs of transferring money from a bank to a stock exchange, avoid delays in transfers and more.

Loop

The loop recently appeared as a VIP version of the loop, designed for wealthier investors with $ 10,100 previously acquired.

With these currencies, a special type of bond is purchased, which is the 2024 dollar Bonar (AY24D), which has the peculiarity that it is immediately and cash-settled. He converts it to his cousin in pesos and sells it in the market. With these pesos, the $ 10,000 allowed per month is bought at the official exchange rate. Thus, the investor will have the original capital (100 dollars less, strictly speaking) plus about 60,000 pesos.

To make the loop every month, you will have to buy about 10,000 dollars every 30 days, something difficult to justify before the AFIP (the operation must be done in a personal capacity since companies are prohibited from buying dollars for treasury). On the other hand, it is likely that a change in the rules will also end with this practice, which also hides all the risks mentioned above for the loop.

Conclusion

We have already talked about this in previous columns: the search for easy and fast money is nothing more than a waste of time that takes energy and frustrates those who pursue it.

Just as it seeks to lower the expectations of the dreamers of the financial blow, this note should bring relief to those who eagerly read the details of the loop or the loop and feel that they are missing something superb because they have not been encouraged to act.

Better to use that time and energy to invest money based on less vertiginous, but realistic and profitable businesses.

Financial arbitration s exist, and we can all take advantage of them when we are prepared to do so, although in general they last very little and are usually exploited by traders who know the vicissitudes of the operation, have contacts to do it without surprises and know how to avoid or reduce risks in their adventure.

  • For the rest of mortals, nothing is lost: if we focus the guns on investment in the long term, we can obtain great results in the coming years. The current context is conducive. Let’s imitate the spider’s patience. It is much more effective than human anxiety.
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