A great day!
Two years ago, I was worried that a Kerry win would bum me out for the whole day. Consequently, I hedged by buying some Kerry contracts on TradeSports, so at least I'd make a buck or two. That way, I was guaranteed to be happy on Election Day no matter what.
The futures really took off on the big day, and by early afternoon I was up nearly a thousand bucks, so I closed my position and took my profit. It wasn't until the contracts had almost stopped trading that they did an abrupt turnaround and broke for Bush. Anyway, it was cool because I made money and Kerry lost. Score!
But my point is this. Until my fond little trip down memory lane this morning, I had forgotten how badly TradeSports botched the last big election. I'm still fascinated by the predictive markets, but they might not be quite all they're cracked up to be. The TradeSports contracts for GOP control of Congress seem to be diverging rather widely from the polls. I can't help but believe TradeSports is exaggerating GOP chances on the downside for the House and on the upside for the Senate. I guess we'll see.
Comments
I don't understand how you read that?
Posted by: K | November 7, 2006 09:33 AM
> I don't understand how you read that?
That's funny, that's what the Missus says when she sees me reading National Review.
All the contracts will be worth exactly one dollar or zero dollars at expiration, depending on the outcome of the event. Until that time, they trade at some fraction of a dollar. Right now, you can buy "GOP keeps House" for about $0.20, but it will probably expire worthless. "GOP keeps Senate" is probably a safer bet, but more expensive at around $0.70.
Posted by: BNJ | November 7, 2006 09:40 AM
Remember, markets are only a good predictor if the the information availabl is accuratee. If the polling data is wrong, so will the share price.
Posted by: CRB | November 7, 2006 11:09 AM