Coffee Arbitrage at RaceTrac Gas Stations
3 commentsThe purpose of this post is to compare retail coffee to bond coupons. Bond coupons are the cash flows from regular interest payments on a certificate of debt.
As you know, I like buying my weak American coffee at Atlanta-area RaceTrac gas stations. Refills of RaceTrac brand coffee inside of my Starbucks mug cost $.52, and I purchase one to two refills per day.
I recently discovered a unique bargain: With the purchase of a $2.60 RaceTrac coffee mug, the owner is entitled to five free refills.
The math thus far is simple: $.52 per refill x quantity 5 refills = $2.60. We are getting the cheap RaceTrac mug for free (estimated value: somewhere between nothing and $.30).
I measured the volume differential and was pleased to note that the RaceTrac coffee mug contains approximately four (4) additional ounces of coffee. This additional gross of coffee is, if I understand correctly, my bond coupon. Four additional ounces of coffee = $.13, based on $.52 for a 16-ounce mug.
The actual bond (my investment in the $2.60 RaceTrac coffee mug) has a five-refill coupon term, because I cease to receive free refills after five uses.
But today the mugs were on sale for $2.02. So, to the claim that "This coupon has no cash value," -- I call bullshit.
$.52 per refill * 5 refills
=
$2.60 - $2.02 cost of mug
=
$.58 immediate card value*
*Based on current sale price and assumption of daily refill purchases.
Financially-minded friends, is my analogy correct? Can I arbitrage the heck out of this?
Coffee Card |
Bond Coupon |
|
| Time period | Refills |
Annual or monthly |
| Expiration | Five uses |
Bond maturity, fixed future date |
| Return, variable | Extra coffee |
Regular interest payments |
| Return, fixed | Coffee mug |
Principal repayment of debt |
An investment in a RaceTrac coffee mug actually provides infinite coupon returns ($.13 each) in the form of four additional ounces of coffee per refill, but I don't know of a financial instrument that divests coupons over an infinite period of time.
Friday Bites
Random notes for friends...- I like writing and drawing in the margins of my dead-tree books, and I finished reading all of the digital content I had wanted to read on the Librie... So, Sony Librie Librié EBR-1000 e-book reader 1000EP for sale on eBay - $1 No Reserve
- Big IFE news - Scary JetBlue landing as passengers watching live DirecTV hear cable commentators speculate on their death
- Burger King's drive-thru LCD screens are remarkably bright and crisp. Can you guess what I had for breakfast this morning? Oh, and Starbucks Lightnote brand mild brew coffee is a nice Friday treat.
- Planzo adds function, ease to web-based scheduling.
- I dropped my first (and last) empty glass of beer at the bar last night. It totally shattered into ten million pieces and caused a minor scene for about twenty seconds. Surprisingly, I had been juggling three beanbags only hours earlier with moderate success.
- Thinking about going to Athens tonight...
- Our company is notoriously cheap, and we don't put our travelling salesman up in fancy hotels. Last night, our hero salesman almost got mugged in his parking lot. Thank God the 60-year old all star is in great shape; his respone was to "get the hell out of there" and he sprinted away from the would-be-muggers in good humor.
Donald Rumsfeld is giving the President his daily briefing on Iraq.
He concludes by saying: "Yesterday, 3 Brazilian soldiers were killed."
"OH NO!" the President exclaims. "That's terrible!"
His staff sits stunned at this display of emotion, nervously watching as the President sits, head in hands.
Finally, President looks up and asks, "How many is a brazillion?"
Zach visits Atlanta, and Local Fishing Talent
My buddy Zach is visiting me in the suburbs of Atlanta for the weekend. While Cumming, Georgia (ZIP code 30040 and 30041) might not offer an array of quality Manhattan entertainment, we do have a few novelty sights.
If anyone else were to come visit me at my home, you would get a very similar tour to our Saturday of events.
- 6:30am - Mr. Swiss for breakfast
- 7:00am - A dawn climb up Sawnee Mountain, to the Indian Seats
- 9:00am - Drive to Alpharetta to visit our office
- 9:30am - En route, we stop at a RaceTrac gas station to observe the famous beverage stations
- 11:00am - Rent IMAX Space Station DVD from Hollywood Video's unlimited rental program
- 12:00pm - Lunch at Pappy Red's BBQ
- 1:30pm - Veg out with books, laptops and more DVDs at the house
- 5:00pm - Drive to Buford Dam, hike around with backpack and picnic, talk to local talent
- 7:00pm - Dinner of ham and egg noodles cooked by my mother
- 8:30pm - Beers at the local bar, Spondivits
- 11:00pm - Asleep to laptops and TV
InstaPack foam-in-place - New packing machine
We got an InstaPack foam-in-place for the office. There are two tubes of chemicals that, when mixed, make a very warm expanding packable insulator. Pictured is our high school apprentice, Jeffrey, learning how to properly use the foam-in-place. It's very difficult and messy at first. Definitely requires training...
Text of Red, White and Blue Beer radio commercial
This blog post is dedicated to Ricky Van Veen, since we both share an appreciation for vintage quality capitalism.
Here's a transcript for an old radio advertisement for the sale of Red, White and Blue Beer. It was printed in the book Ogilvy on Advertising because it increased the beer company's sales by 60 per cent.
ANNOUNCER: And now, another inflation-fighting message from Mr Harmon R. Whittle.
WHITTLE: One of the biggest strains on our budget is the foreign aid program. Each year, we send billions of dollars worth of planes, computers, tractors and things to foreign countries... Then we pay technical advisers to train them how to use it all. This is expensive.
A more responsive form of foreign aid would be to send them beer. American-made Red, White and Blue beer.
Red, White and Blue is less expensive than planes or computers. So we'd save a bundle, right off. It costs less than other premium-quality beer, so we'd save on that. And Red, White and Blue is easier to teach people to use than a computer. So we'd save on technical advisers, too.
And if there's any doubt whether our international popularity would increase, ask yourself this: if you lived in one of those hot, dustry countries, what would you rather have? A computer, or an ice-cold, Red, White and Blue? It's an honest beer. At an honest price.
ANNOUNCER: Mr Whittle's comments do not necessarily reflect the views of this station. They do however, reflect the views of the RWB Brewing Company, Milwaukee.
It's an old book that discusses TV as a relatively new marketing phenomenon. I wonder what year this ad was written?
Ad hoc mesh networking in an emergency
Reading an article in this month's EE Times that lambasts the criticism of communications failures in hurricane-hit areas."It depends on how many nodes you're talking about. A minimal survivable radio network for emergency crews, the improvement of state emergency-management operation centers- these kind of steps are feasible. But when people start talking about a nationwide survivable network, I tell them, 'Welcome to what's called the ral world.' No one is going to pay for such a thing." --John Pike
It's true. Something that people are imagining- a totally fail-safe, hurricane proof communications infrastructure for hundreds of thousands, or even millions of people- just isn't possible today. eeTimes says that FEMA is talking about the possibility of ad hoc mesh networks. "Meshs are an important adjunct to a backhaul mix of microwave and fiber, but they're not a panacea."
Did you see the New Orleans boat rescue footage on Current TV? It was great television from the front lines. Even that reporter noticed the failures in communications and messaging.
Update- Did you see the rad Vonage-Saves-New-Orleans plug in the cover of this weekend's WSJ? Feature p1 story, At Center of Crisis, City Officials Faced Struggle to Keep in Touch.
Scott Domke... remembered that he had recently set up an Internet phone account with Vonage Holdings Corp... At 12:27am on Wednesday, Aug. 31, the mayor's inner circle made its first outside call in two days.
The World in Dubai (Island resort development)
I admit to blowing off The World development project the first time that I heard about it. But after seeing this picture (right), I'm amazed. What a huge construction project!
Dubai's land-reclamation projects — the Palm Islands of Jumeira, Jebel Ali, and Deira and The World archipelago — will be the world's largest artificial island complexes, developed with villas, golf courses, and holiday resorts.Similar to The Palm, which I still can't fathom. More information on this Wikipedia page, or visit The World (Dubai) home page.
The World is an archipelago of artificial islands, shaped like the continents of the Earth, being constructed off the coast of Dubai. The project is inspired by the artificial Palm Islands also being built in Dubai. The World will consist of 250 to 300 smaller private artificial islands divided into four categories - private homes, estate homes, dream resorts, and community islands. The entire project is slated for completion in 2008.
Each island ranges from 250,000 to 900,000 square feet (23 226m² to 83 613m²) in size, with 50 to 100 metres of water between each island. The development covers an area of 9 kilometers in length and 6 kilometers in width, surrounded by an oval breakwater. The only means of transportation between the islands will be by boat and helicopter. Each island will cost an estimated average of $25 million (USD)
The book Freakonomics
If you bought me the book Freakonomics and had it mailed to my house, thank you. But please e-mail me. There is something I should tell you.chain IM on AOL Instant Messenger
I got this chain IM on AIM yesterday. It is totally bogus, but at least it is a little more clever than the other "Forward this message or else!!" I've seen.
Dear AIM users,
Because of our overloading of our servers, we are being forced to extract our non-active AIM users. Because this is a free service, AOL has exceeded the budget for the AIM service. We are asking that you send this exact message to 20 other AIM users to ensure us that you're an active AIM user. Our system tracking devise will pick up this message to keep you on our active list. You have 72 hours to complete this task or your service will be cancelled immediately. Starting October 9, 2005, we will be charging a small fee for registering of a screen name for AIM. Thank you for your time and for using AOL or AIM.
What a wasteful meme! It probably plays on the fact that AOL has recently expanded the AIM BuddyList to 250 buddies, as well as doubling the profile limit (from 1024 to 2048 characters).
Books I Read
Recently read:- How to Win Friends & Influence People by Dale Carnegie
A definite classic. I enjoy reading business books that stand the test of time. Simple and obvious. - Ogilvy on Advertising by David Ogilvy
Speaking of classics... I'm still reading this (just started yesterday) but already there are plenty of good tips and advice that I plan to take to work tomorrow. A fast, fun read. - The Worldly Philosophers by Robert L. Heilbroner
- A Brief History of Economic Genius by Paul Strathern
The above two books took me a while to thoughtfully finish. Both chronicle the great minds in economic theory- Adam Smith, Karl Marx, John Stuart Mill, John Maynard Keynes, etc- and detail how these leaders influenced today's concept of a market economy (capitalism). I like reading books like this to learn about economics, but their practicality to "real work" is next to nothing. "Inspiring history" is a good summary for these two books. A Brief History by Strathern was probably my favorite. - The Money Game by Adam Smith
Another classic text. Warren Buffet recommended this book in one of his early Berkshire Hathaway shareholder letters. I picked it up on Amazon and read it during our vacation in Thailand last month. What a treat. The book was written in 1976. A great read for anyone interested in investing in the stock market. - Winning by Jack Welch
Only finished half of this. It wasn't as good as Welch's previous book, Straight from the Gut. - Long Distance by Bill McKibben.
This book is about "Testing the limits of body and spirit in a year of living strenuously." The author trains for a year to become a world-class cross country skier. I couldn't pay attention after the first half, but my dad finished it on the airplane and really enjoyed it.
Some other lists of books I have read- January 2005 (a great list), December 2004, September 2004 and June 2004.