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January 09, 2008



"Hillary leapt out of the grave."

There's a name for that.



I was surprised that Obama jumped to 70 after Iowa, I was thinking I could double my money pre-iowa with an obama win, but he did more than that (well not anymore). Although, I think Hillary has somewhat of a lead now, I'd probably put her more at 51 to 45 or something like that, with 4% other. Like the media and blogs, intrade markets seem to OVER-react to every new piece of information -- there has gotta be a way to exploit this for $$.

sammy small

Blogs are just following the lead of the MSM in spending way too much time overanalyzing the meaning of "is". Iowa is a huge hype, not because it actually is, but because the MSM says it is. The blogs trying way too hard to be relevant, in real time like the MSM, trying to predict trends and outcomes, and will continue to stumble as long as they do. Wake me up when its over. I think I'll go on over to Fox and try to find out the latest on Natalie Holloway.


TM--I made a small and perhaps ineffective argument that the folks counting the votes in Iowa were ordinary people keeping an honest tabulation with many eyes watching.
In NH something funny happened--if you get my drift.


I think the pundits were too quick on the draw because the campaigns started so early and it was eons before anyone actually voted on anything. So once Iowa was over, there were finally Results to Examine! So of cours, they must Mean Something!

It's just Iowa, people. In days of old the same folks would have been more skeptical, I think. But in fairness, the compressed primary schedule this cycle has made it seem like everything will be decided very quickly.


Dead Cat Bounce.


Eh, NH is northeastern liberals, Iowa is Huckabee liberals.


Iowans shuck and jive at cornhuskings; Hampsherites cull the dairy herd.

Paul Zrimsek

Blog triumphalist suckered by MSM CW! I can't tell you how much I love this.


TM = Hillary. Just when I'm about to write you off completely, you pull one out of the hat.

You really ought to bust these right wing grand "thinkers" more often.

Rick Ballard

"And on the right, McCain has been anathema among bloggers for his immigration stance (and McCain-Feingold, and torture, and tax cuts, but not the surge) - how is he doing?"

Fantastic. He's the real deal. You could tell from the forceful manner in which he delivered his victory speech that his age will be no drawback. His promise to adhere to the Powell doctrine in the application of military force is comforting to anyone who admires rigid doctrinaire approaches requiring that currently nonexisting forces be raised (without a draft), ill trained and ill equipped in order to respond too late.

I wonder if he'll bring back the battleship or mounted cavalry?


With Hillary leaping out of the grave, what does that do to the Garlic Futures Market? I'm thinking bullish.

JM Hanes

I thought he truly looked and sounded old as dirt, Rick. He was great on global war, but the rest of his speech just struck me as preening on his own patriotism -- at exorbitant length. The paragon of honesty can't even discuss his own immigration bill forthrightly. The press love him because he'll talk to anybody, anytime, anywhere, but I'm not sure he actuall listens to anybody. Bush has always gotten a bad rap in that regard, where McCain, unfortunately, strikes me as the real deal.

And the action in this prediction market has reinforced my opinion that these are less futures markets than immediate-past markets.
Which is just another way of stating the Efficient Market Hypothesis.

To further TM's point about Wretchard's confusing of cause and effect, there is the question of what the election market data really says about the market. As someone who spent the biggest stock market crash in history (21 standard deviations down, bubba...) providing quant and tech support to futures and futures options traders, I can tell you that exchange data during "events" melts down, too. Prices are stale, the computers can't keep up and timestamp the trades late, and people don't understand how the rules work in a fast moving market and so they end up finding themselves having executed trades at prices that are vastly different from the prices that they thought they were going to execute at.

I read a really interesting paper in about 89 or 90 which examined the conventional wisdom that the S&P500 futures price (which trades on the merc in Chicago) "led" the spot index calculated from actual prices of the 500 stocks as they traded on the NYSE on the day of the 1987 crash. The paper went through and very carefully examined all of the tick-by-tick data for all 500 stocks, and the first thing that they saw was that the reported prices for about 400 of the 500 stocks were simply bogus. There were no trade prices, because there were few buyers and since there were no buyers the short sellers (who can only sell on the uptick) weren't allowed to trade when they wanted to. So these were bid and offer prices that by eyeball were clearly stale. So the guys who wrote this paper went through and calculated the "spot" index differently: if I understood correctly (and I may be misremembering the details -- it's been almost 2 decades!) they took the data for the few stocks that were trading vigorously, and then they used historical correlations to generate prices for the stocks whose markets had broken down, and then used that mixture of real prices and generated prices to calculate a spot index. And, sure enough, things were still pretty noisy and chaotic, but the whole "tail wagging the dog" thing went away. When you limited the calculation of the "spot index" to using data that you believed wasn't bogus, it was falling just as fast as the futures markets.

The political futures markets are pretty dubious as markets. They trade mighty thin, trading on insider information is not illegal, so they are not really markets. (For example, if Hillary had been greedy enough, she could have sold Hillary contracts out the wazoo back when they were at 80, and then pulled out of the race -- take the money and run, baby!) It's hard enough to collect meaningful data on real markets during fast-market conditions -- why should I believe the data coming out of this made-up pseudo-market?

Rick Ballard

"I thought he truly looked and sounded old as dirt"

I think I'd go for basalt. Dirt is a relatively new product - maybe pre-organic would suit better?


Here is a somewhat related article on Small Band of Economists Trumpet Sports Betting for Insights.

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