Posted on 11/03/2006 3:34:27 PM PST by oblomov
On election day 2004 bush was at about 20% at 8:00 PM EST on trade sports. Bad info in bad bets out.
Wouldn't be the first time that the majority of a betting pool called it wrong. Not by a long shot.
I'm not really a political "gambler," but if I were, I think I'd be loading up on the Burns (R-MT), Kean (R-NJ) and Steele (R-MD) futures for their respective Senate races. All have a fair shot at winning, though they very well may lose, but are only currently valued between ~15.0-25.0. Buying them gets you a 4x-6x return on your money if they come in as winners.
markets *always* knee-jerk react to unexpected data or news in the very short-term. the area of interest is not the contract value the afternoon of the election, but in the weeks running up to it.
"On election day 2004 bush was at about 20% at 8:00 PM EST on trade sports. Bad info in bad bets out.
"
you are selecting a very narrow time frame impacted by unexpected data (exit polls) to make your point. Markets are not 'efficient' in the sense you expect. They always over-react, on the upside and downside, to news. In this case, you have a contract essentially hours from expiration and there is news in the media that a certain outcome will occur. Of course people will trade on that news.
The area of interest in these contracts is not in the last .1% of the contract life, but in the days and weeks prior to election. Another items of interest is total value of outstanding contracts, since the larger the value, the more accurate it is assumed to be. If it is only 10 million, I don't consider it a notable liquidity pool. Get it to 10 billion and it is much more noteworthy.
"In fact, every share someone bought on the market is being sold by someone who no longer believes the stock is a winner. "
Or has a margin call and has to sell indiscriminately, or has been sold out by their clearing firm.
Or has other fixed obligations with the money outside the market and simply has to sell.
Or has tax motivation in the sale.
Or is part of an index arbitrage trading system and never had any interest in the stock itself.
Or has loss-management rules in place which essentially obligated them to cut a loss, or on the other hand to take a partial profit.
or any of a number of other reason why people sell (long or short) stocks.
Oh. So in the weeks running up to the election, speculators are basing their bets on real data as opposed to poll driven hype?! What were the odds on Foley's seat remaining in Republican hands 3 days after the scandal erupted? What are they now? What changed in the interim? Foley's constituents?!?
Yes, thank you for the mini-lesson on Wall Street trading. Now apply all those points to a Tradesports type market (the subject of this thread) and I'll be impressed. The point I am making is that the fact people are using "real money" in a predictive tool like tradesports does not indicate they have anymore insight on what they are buying and selling than anyone else. They rely on the same polling data we all look at. Since there is no underlying value to a share of "Rick Santorum", they are essentially betting on whether or not the polls are correct. This is clearly evidenced by the fact that most of the moves in any political tradesports market result from new polling data.
"Oh. So in the weeks running up to the election, speculators are basing their bets on real data as opposed to poll driven hype?! What were the odds on Foley's seat remaining in Republican hands 3 days after the scandal erupted? What are they now? What changed in the interim? Foley's constituents?!?
"
0) Main issue is how much liquidity is there in the tradesports contracts on the subject. If we are talking 100000 contracts (10 million proceeds) total outstanding, this is a sideshow in the financial world. 1000 times that, and you have a liquidity pool larger players can get involved in. Small players have the same or less info than you or I. Larger players would have more, but who knows how reliable it is.
If you have a really deep liquid market, you also need to take into account how a player could hedge a presidential bet with various other contracts, including control of house/senate, individual races, etc. I am not sure that such a liquid market exists.
1) You present a good example of knee-jerkism with your foley example. GOP prospects couldn't go lower than they were at day 3, though they may indeed lose the seat (no clue, though I am 20 miles away).
the kerry/bush exit poll item was more along the lines of games you see played in stock and index option expiration. this isn't a 'ride out the storm' issue rather than 'the titanic is sinking and you have 3 hours to decide to jump or stay.' At this point, many would bail out and just try to recoup whatever (assuming they paid around 50, maybe get out for 25 and count themselves lucky).
For me, this scenario is more akin to buying custom google options that expire at 8:00 pm on the evening google releases earnings. Better to just play blackjack and be done.
'Yes, thank you for the mini-lesson on Wall Street trading."
This is not meant to be an adversarial conversation. You said "In fact, every share someone bought on the market is being sold by someone who no longer believes the stock is a winner. " which is not true, so I responded. I forgot to mention market-makers balancing their books and program trading, which is itself a large % of market volume and does not really involve a human. I am puzzled by your sarcastic thanks for the 'mini-lesson' as in fact you brought the erroneous buyer/seller issue up in the first place.
Seriously, if you want me to comment anymore on tradesports, the main issue is the number of contracts outstanding. Can you give me this info? I have made numerous comments on this above, perhaps you can review those comments?
I would expect a discount or premium factor to published pools **if** there is sufficient liquidity as institutional players take into account the demographics of the poll, question bias in the poll, etc., BUT if there isn't enough room in the sandbox, it will be as you describe a bunch of folks just reacting to polls.
Absolutely. At least in Blackjack you are fighting known odds and playing with a dealer who must adhere to published and clearly stated rules. Even in the stock market, you can do your own research to determine the real value of a stock. But in tradesports, you are gambling based on someone else's generated data. It is monentum trading in its purist form. It's a market for day traders. Not long term investors. It isn't a blue chip. It's a penny stock.
"Even in the stock market, you can do your own research to determine the real value of a stock. But in tradesports, you are gambling based on someone else's generated data. It is monentum trading in its purist form. It's a market for day traders. Not long term investors. It isn't a blue chip. It's a penny stock.
"
This is a fair analogy until the contract markets in political events gets big enough (if ever) that institutions can begin to participate, with their own research staff, etc. THe issue is how to draw them in, and if such a market would co-exist with tradesports or be independent. Given the appearance of 'october surprises' in many elections, I would think any institution would be leery of owning such a contract.
As you note, any contract with essentially a 50% chance of being zeroed is a very high-risk speculation. I am not even sure the tradesports contracts are momo trading - more like red and black.
OK. Would you settle for most. I used the stock market analogy to illustrate how well intentioned and well educated people throw real money everyday on losing issues. If people spending "real money" on something were an indicator of its actual worth, than slot machines would be top income producers...for everyone but casinos.
And no, I do not want to start a discussion on the economics of running a casino.
"And no, I do not want to start a discussion on the economics of running a casino.
"
I imagine this is the Jefferson/Cunningham-thread sort of item. Once you fix that part, the rest is gravy, if you have customers.
Not sure how to do it with Tradesports, but intrade allows you to do it, and there are instructions on adding a ticker on their website.
"Professional gamblers rush in where market analysts fear to tread."
IMHO blackjack is, not only more honest than stock trading, but more logical.
Blackjack is the only casino regulated game where the odds change from trial to trial.
Dr. Thorpe's wonderful work on basic strategy and the subsequent development of card counting methods have revolutionized this game.
In the beginning, when MIT and Harvard teams were terrorizing the casinos with some of the most brilliant counting and teamplay squads - it was like war.
But now, largely because of the amount of dedication and mind-numbing patience necessary to be successful, it is quite nice.
Single card decks are everywhere, pit bosses are lenient (if you are not greedy) and there is a new casino on every corner.
So when you gentlemen get old and long for the competitive rush without the stress, remember old Huck and his advocacy of the cowboy life (i.e. old whiskey, cold beer, two gambling sessions a day X 5, and never pickup cocktail waitresses who live in a trailer).
Huck
"IMHO blackjack is, not only more honest than stock trading, but more logical.
"
I agree with everything you say. Locally where I live all casinos are 6+ deck shoe low-limit and in the end the rush is the same and already knowing the stock game, there just isn't time. I am pretty sure that no panama casino has single-deck 21, but....
the idea of calculating odds on the fly has some appeal. graphs or curves would probably be the easiest way.....thoguh basic counting would do fine. How many card will they deal of a single-deck shoe before shuffling?
"So when you gentlemen get old and long for the competitive rush without the stress, remember old Huck and his advocacy of the cowboy life "
My memory on this might surprise you, you have in fact made the single best advocacy of card-counting as entertainment vs. income that I have seen.
Those phony exit polls in Ohio skewed everything and everyone but it corrected early on in the evening and pretty much called it correctly. I put a lot of credence in the betting lines; much more than the so-called polling data which I now largely discount. The only polling worth looking at would be internal polling which we are not privy to.
That was entirely due to the phony exit polling. It corrected later on as good data started coming in.
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