This PM, Intrade and Tradesports were going at 98% for Obama for NH primary. Time and time again these markets have been shown to be a schizophrenic parlor game. As has been outlined by others, these predictive "markets" have proven incapable to harness true market power due to structural inadequacies. In reality they are herd-like poll-trackers, that don't harness collective wisdom insofar as they provide a very uneducated guess, heavily influenced by what others tell them collective wisdom should be. bigtexxx - your car is parked in the red zone. The red zone is for loading and unloading only. The red zone is not for unreliable political futures markets that meekly follow the polls.
Isn't this how all markets are? There can be lots of volatility in times of uncertainty. Look at Countrywide's stock, or the price of Gold, or anything else.
Well I posted a bunch on this on another thread - but anyway no, political futures markets have been touted, by many(or just one individual in particular) on this website as vastly superior to polls insofar as they harness a collective wisdom that polls don't, due to the incentivizatin of market participants, etc and all that good stuff. The problem with political futures/prediction markets is that unlike things like gold or Countrywide or whatever, the traded volume is a pittance and there are very few participants, all playing for very low stakes (in the low 4 or high 3 figures) and more for amusement than for money....accordingly the collective wisdom is not as valuable because the incentivization is not as muc. For something liek gold or Countrywide, lots of independent research is done. FOr recreational things like futures markets, people take a guess based on polls. (If we're talking on a purely economic level, btw, the $$ motivation for Gallup or whoever to be right is far greater than the total traded volume in any given futures market). But anyway, rather than replace polls, as they have been touted, by some, or should I say, somexxx, futures markets tend to reinforce the need for polls, as they largely just track them.
Quite comical, Samf. The real question is, how much money did you make off this market inefficiency you have found? Did you have the cojones to put your money where your mouth is? I doubt it. You could have made a fortune, Samf. You could have made so much money that you could have quit your job as the women's armpit hair comber for the democratic party. Instead, you brazenly come onto a Rockets message board to claim victory after your candidate went t*** up in New Hampshire.
Good grief, Samf. I know you quit your job as a high profile attorney, but did your document review skills fall by the wayside, as well? Or did you just drink yourself silly after Ubama flopped tonight? Lots of spelling issues in your paragraph. Please edit and correct. TIA
by the same token how much did you lose? Or did you not have the cojones to put your money where your mouth is, since you come on here, and talk about how accurate the political futures market is? You might have lost so much money, that you couldn't pay your dues to the Republicans "in the closet" club. Tell me how much money you lost.
As i explained before Texxx - the arbitrage opportunity at stake here with such a microscopic market was not in the millions, but, rather in the $100's or the very low $1,000's. There's simply not enough contracts traded to fill a lucrative bet. A few weeks ago I could have bought Obama at 32 and cashed him out yesterday at 98. That would have been a profit of $6.60 per contract, according to Intrade. So to make say, $1000 I would have had to buy up ~ 200 contracts - the problem of course is that the number of contracts on offer at the time was in the single digits. And unlike a REAL capital market, there's no market maker willing to complete my order. So I'd have to up my price and buy even more contracts. In fact i probably could have driven the price up to 98 all by myself with a very modest investment - and reaped very modest returns. I have a modest personal holding in the real equity markets, if chasing small gains were like that was worth my time I'd just day trade or something. Anyway speaking of t*** up, what has Bain Capital's ROI been in IA and NH?
Urgh...ever the dullard. Samf, first off, each contract that you see on intrade represents 10, so go ahead an multiply your figures by 10. Also, there are market makers at work there - but not on all contracts. The more liquid "Obama to win the democratic nomination" contract (that has MMs) swung from the high 70s down to the 30s in a day. You could have shorted that and won quite a lot of money. I guess you've never heard of the concept of leverage (borrowing money in layman's terms...), either, which magnifies your return. Oh well, you left quite a bit of cash on the table, Samf. Back to work!
Where does it say they are traded in lots of 10? I looked over the website and could find nothing that says this; on the contrary, Intrade seems to claim that each contract represents one contract...witnesseth: ^accordingly, to take advantage of a $6.00 gain in an Obama contract and make even a modest sum I'd have to buy 1000's of contracts, given that the gains would shrink every time I bought a new contract, which would have repesented a substantial multiple of total Obama contract volume at the time. HOw do you know this? Do you know of any market makers in the political futures markets? Where is this stated? Some support please.
I want to know two things first: 1, who are the most market participants? Political Operatives? Political Junkie? Or average folks who want to make a buck? 2, Where are information comes from? Polls, isn't it? Isn't that bringing us back to square one?
Some mix of the above - it's essentially online gambling for recreational purposes. You can't make any real money off of it currently. Yup.
Samf, any dullard can take a look at the bids and asks for each contract and tell if a market maker is working it. I can't believe I'm having to drop down to explain first principles of futures contracts to you, but go on there, take a looksie at the contract you're interested in, and see if there are large blocks of bids/offers around the last traded price - that's how you'll know if there is a MM at work.
i am inclined not to think that. it seems as if the futures market on these sites is pretty dumb. huckabee is still trading at 17% chance of being a nominee for the repubs.
there are market makers on there. Go check the bids and offers. They aren't NYSE sized, but they are in fact making markets
yeah there are. i wonder what they would do if someone swept the book down a point. i wonder if they would come back or not.
with the low prices and low volumes (300 for Clinton today) - the total daily take of a market makers profiting off the bid-ask spread, which is about 5-10 cents or less, would be about $15-30, less transaction fees. What kind of microcenterprise market makers are theses? Do they hope to invest the profits in the McDonalds 99 cent value menu?
