Monday, September 25, 2006

Buy the GOP? 

I offer, without any useful commentary, the current graph of the "House06" contracts on the Iowa Electronic Markets. The green line represents the price of the "Republican hold" contract, which one would buy if one thought that the Republicans will hold their majority in the United States House of Representatives in November.

(Click to enlarge)

The Iowa Electronic Markets have a good record in forecasting elections. I wonder if that will continue, or if they are illiquid enough that they can be manipulated easily to create the impression of change in fortune. Of course, that would require that one side's artificial buying was not counteracted by politically opposite transactions from the other side. Interestingly, the Tradesports graph shows a similar GOP surge:

(Click to enlarge)

Of course, a lot can change in the next six weeks.


By Blogger Greg D, at Mon Sep 25, 02:34:00 PM:

It would be relatively easy for one or a few people to try to "buy the market" at TradeSports, because you can have as big of a trading account as you like, there.

IEM limits people to $500. So it would take a fairly large group effort to "buy" IEM's market.

So if you see a big move on TradeSports, and a much smaller one on IEM, that might indicate an attempt to buy the market.  

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