Time Arbitrage

Arbitrage involves taking advantage of different prices for the same product in different markets. You can buy something in Timbuktu for $1 and sell it in Indianapolis for $10. You just have to take care of transport, and pocket the profit.

In time arbitrage, the two markets in question are separated by time, not distance. You can buy something today for $1 and sell it next week for $10. You just have to take care of storage.

You're considering investing in a chain of waffle restaurants. Suddenly, there's a syrup shortage. Shares of the waffle restaurants drop. But you know that the shortage will be short-lived, and that the market overreacted.

Shares are as cheap as you're going to get them for a long time. So you buy as much as you can get. In a few months, you'll be able to sell them at a profit. Time arbitrage.