Free Lunch Theorem

A while back there was a chap who spent a whole lot of time figuring out something you already know -- there is no such thing as a free lunch. That is to say, there is a cost to everything. Even if someone else pays the tab, you have paid with your time. Quite often the lure of the "free lunch" makes people think irrationally. Dollar signs light-up in their eyes, common sense goes out the window.

An individual in need of obtaining a mortgage shops for the lowest interest rate. He lock's into the lowest interest rate, but the lender never gets him to the settlement table.

An individual is buying a house and insists on offering the lowest acceptable price. Instead he should have paid a higher price and let the seller contribute to his closing costs.

An individual doesn't want to pay commissions on a stock transaction and enlists a discount broker. Instead of investing intelligently and frequently, he ends-up not wanting to deal with it.

The Bottom Line

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