Float Capital as Free Leverage

“Float capital is money you can use temporarily before you have to pay it out. A marketer would sell trading stamps directly to a merchant for a price. The merchant would then hand out the stamps over a period of time to his customers, who would paste them in books. Eventually many of the stamps would get turned in — redeemed — at a local stamp store for merchandise. But the average span between the time a merchant bought the stamps and the time they were redeemed at a stamp store was about eighteen months. The stamp marketer, in other words, had roughly a year and a half to play with the money before he gave anything back for it. A sharp investor with millions of dollars in available cash can turn a lot of profit over eighteen months.”