Thursday, September 11, 2008
The Iowa markets still signal Obama
I've always liked the concept of prediction markets. The granddaddy of prediction markets is the Iowa Electronic Market, which allows traders to buy and sell futures contracts that pay if one candidate or the other wins. The theory is that financial self-interest, as reflected in thousands of individual decisions, is a better predictor than public opinion polling, for example.
So, it is interesting that the Iowa Electronic Markets are showing a substantial Obama advantage, notwithstanding the big swings in the opinion polls in the last week.
MORE: Tradesports is showing a slight McCain advantage, so there is perhaps an arb opportunity between the two markets. Hotlinked the Tradesports graph below, so you can come back and see whether it moves as long as this post is on the front page.
13 Comments:
By 
, at
Thu Sep 11, 11:14:00 AM:
The IEM attracts a largely academic pool. Could explain some skewness
By , at
Thu Sep 11, 11:52:00 AM:
I would imagine that it also lags behind the political polling that is going on now. Note the two are in a dead heat at the end of the graph, which is presumably 1 September.
By , at
Thu Sep 11, 12:08:00 PM:
Rasmussen Markets shows McCain with a very slight advantage over Obama for the very first time today. Lots of distance to go in this race, though.
By 
nigeleccles, at
Thu Sep 11, 12:14:00 PM:
IEM and Intrade are both out of line with UK betting markets: http://www.oddschecker.com/specials/politics-and-election/us-presidential-election/to-be-elected-president
They are showing Obama as the favorite at about 55%. Hubdub is also in line with that.
By , at
Thu Sep 11, 12:38:00 PM:
In view of the value traded, would you consider that maybe Soros is burning a few mil to keep his darling on top for a little longer?
By , at
Thu Sep 11, 01:34:00 PM:
Ever larger agricultural subsidies are everything in Iowa politics.
By , at
Thu Sep 11, 01:58:00 PM:
Current asking price:
McCain 50.9
Obama 48.5
By Escort81, at
Thu Sep 11, 03:08:00 PM:
Which is the deeper, more liquid market? We might check with Mindles, but remember that differences in liquidity among or between markets add another layer of risk in arbitrage opportunities, TH (though I believe you had tongue firmly in cheek there). Nigelcccles, nice link, but again, hard to know the liquidity in terms of basics like volume or bid/ask spreads.
Maybe the safer bet is to go long on volatility -- that would have been a nice derivative to be in a few weeks ago!
By , at
Thu Sep 11, 04:39:00 PM:
Hedge your purchase of US obama shares with UK mccain shares. Either way, you win!! Hrmmmmm.
By Roy Lofquist, at
Thu Sep 11, 06:18:00 PM:
Dear Sirs,
These guys are chartists. They don't look at what's going on. They pore over polls and "sophisticated" political analysts. These methods may yield some degree of success in a normal elections.
I've been watching these thing since 1952. It is the most unusual - strange - election I have ever seen.
Regards,
Roy
By , at
Thu Sep 11, 11:40:00 PM:
Maybe in light of a creationist Republican VP, some people are taking out hedges to employ tutors in the event of catastrophe /snark.
In all seriousness, the road has been long, but there is a long way yet to go. And I am unsure as to why a seasoned war hero being even with a comparative n00b, or a generic congressional ballot shortfall of 8% against Republicans, is something to be pleased with.
By Roy Lofquist, at
Fri Sep 12, 12:03:00 AM:
Dear Anonymous,
I don't think that you understand the spirit of this discussion. The folks that visit here are, in my observation, people with a world view that fits in with the historical view of the Republican Party.
Folks, please let me know if you disagree.
This is not a partisan discussion. We are talking about the predictive value of the online election markets.
We do not appreciate the juvenile dementia that is illustrated by your puerile ad hominem attacks.
Please let us have our civil discussion and vent elsewhere.
I don't really expect you to understand what I am saying. Through long and sad experience I have found that there are people who are not civil, rational people.
So let me try to formulate this in a way that you might understand.
Fuck off arsehole lest I put your left elbow in your right ear.
Roy Lofquist
2353 Shuttle Circle
Titusville, Florida
p.s., Tea is at 3, cocktails at 6. In case you'd like to continue this discussion.
By Roy Lofquist, at
Fri Sep 12, 12:42:00 AM:
Dear Anonymous,
My apologies. I have reread your comment in reconsideration of my intemperate remarks above.
I can now see what you are trying to say. But frankly, it is a bit obscure - kinda like reading Virgil in Latin.
I have the advantage on you of having people whack me upside the head for about 60 years when I didn't express my thoughts cogently.
A pointer which I just made up a minute ago. Your thoughts are not well received unless you frame them in terms which are generally understood. Grammar, punctuation and agreement between subject and object are important. Not because you will be graded by your English teacher but rather because your arguments will be more readily accepted if you display a disciplined mind.
Thought, in and of themselves, are of little value. Communicating these thoughts to others is what makes the world go round.
Again, I apologize.
Regards,
Roy
