Arbitrage and the trade examples you describe are by no means "riskless" as was prescribed in the OP. I've personally seen arbitrage trades - even basis trades in the interest rates and commodities, get completely blown out due to squeezes.
The trades that I outlined are indeed risk-less. Let us know how much you can lose from a long euro box paying (rates) above carry or a vertical spread bought at zero. You are talking out of your ass. Basis trades; on/off the run Treasuries, etc., are not arbitrage. HTF do you get "squeezed" buying a euro box?! Or any of the trades in the following quote to which you're replying: "I've traded, and seen people trade debit verticals (1x1s) at zero many times on a single ticket. This also belies any basic rates arbitrage like conversions, boxes, etc. I've done dozens of boxes at implied rates on European ops at up to 8x LIBOR."
Suppose OP play home poker (NO RAKE AT ALL) with 1000 persons, with equal seed of 10K. If you show best record (consistent for 40 years) so that all other 999 players bust for 40 years, then you have annual compounded 15% return. CAN YOU DO THAT? ***************************************** In the game of trading WITH EXPENSE (tax and commission), you should beat 2000 person to show annual compounded 15% for 40 years, if your tax rate (=tax/BeforeTaxReturn) is roughly 50%. CAN YOU DO THAT?
Are you just able to get filled on the verticals at zero when things are really volatile or something?
I mean that 50% CapGainTax implies roughly 30% of 1040 and 20% of commission. To make return rate (after expense) annual 15%, one should show annual compounded 30%, with 50% of CapGainTax rate.
Yeah, it was pre-2008. Obviously it is not a everyday occurrence to pick off a vertical at a credit. Rallymode saw the fill, FWIW. Again, it's the least likely (vertical-arb), but every day there are arbs traded better than carry. I know guys at retail that babysit boxes all day. They may fill 50 lots in a month, but it doesn't deny that it's possible, albeit improbable for most. Discount arbitrage is the most prevalent I see. Not a true arb as there is risk between the option fill and moving shares. Bid for a call under intrinsic, fill, short shares. If there is anything in the put you can offer it. I know a few people that make a living doing nothing else.
For example, let us suppose 50 years of investment (from 30 to 80) and compare annual 10% and 20%. A) With seed of 10K and anuual 10%, he should make 10*1.1^50 = 1173.909 = 1200K = 12M B) With 10K and anuual 10%, he should have 10*1.2^50 =91004.38 = 91000K=910M Therefore B) has roughly 90 times than A) Thinks about annual compounded 15% of middle profit, as described in OP. Note that stock market is being open for 400 years in Netherlands. I am sure there was no logic and no one who attain annual 20% for 400 years. If there is at least one, then he got all the asset in the world and Buffet/Gates is broke now.
Let me ask you one. Top ten wealthy persons, like Buffet/Gates, has how much portion he has now? For example 10% or 5 %?