Would you rather be right, or make money?

by Daniel on September 1, 2008

Following on from my stock-picking post of a couple of days ago, it appears that the people selling Obama into the convention were right in as much as they didn’t expect a post-convention bounce.

However, the Obama WTA contract was offered around 54 when I wrote the post, and remained at that level all day. CT readers who bought on my advice can now close out at 59.8 and make a quick 10% turn. So at least I haven’t cost you money.

Two points (I realise I’m getting sucked back into a debate I had sworn to give up, but there you go). First, there was no convention bounce in the polls but there was in the IEM numbers. So was there a convention bounce? I think the fact that this question doesn’t obviously have an answer rather underlines the fact that the IEM market prices aren’t giving us very much useful additional information over and above the daily tracking polls (which are themselves not incredibly useful). Second, all the action is in the WTA contract; the vote share contracts have hardly moved at all over the last few days.

Update: I’m now seeing reports of an “8-point convention bounce, which would make the IEM action seem more sensible, albeit at the cost of rather demonstrating how pointless this short-term horse race coverage is.



David in Nashville 09.01.08 at 10:03 pm

An 8-point bounce? I clicked through the link, and found a five-point bounce [from 45 to 49], while McCain sank four. Basically, both remain in the range they’ve been in since May, with the gap between them rising or shrinking. Obama is now at the top of his range, having shot up from the bottom in three days.


Dan Simon 09.01.08 at 10:48 pm

I think this is the joke you’re looking for…


Lisa 09.01.08 at 11:47 pm

Good joke. I recently realized one should always take the money.


Drew Robertson 09.02.08 at 12:40 am

The Rasmussen Market is more liquid and therefore more functional. You have lots of non-money players (like me). markets.rasmussen.com
Watch the Palin Vp chart for today. It binged down to 96 when the Bristol Stomp news came in. That’s where I covered some of my shorts. Now upon reflection why would I do that? Sarah is a damn fine looking Xian woman. But I covered my shorts.


Drew Robertson 09.02.08 at 12:50 am

Since I wrote the last post Palin has dropped about 50 basis points. Short some in the mid-97s.


Matt McIrvin 09.02.08 at 4:25 am

Yeah, it’s clear now there was a significant if not huge bounce. That CNN poll was an outlier–there’s so much noise and systematic error in these things that it’s ridiculous to make sweeping statements about public opinion based on a single poll.


dsquared 09.02.08 at 6:22 am

I’ve just noticed that Jeff Matthews, a reasonably intelligent hedge fund blogger, was short the equivalent InTrade contract going into the convention, looking for a possible knifing by Hillary, so maybe the idea wasn’t as crazy as I thought.


ejh 09.02.08 at 9:48 am

I always find the term “horse race coverage” a bit puzzling when used to describe media coverage of the interminable US Presidential campaign. When you go to watch the nags (or for that matter see them on the telly) the commentary is skilled, as precise as it can be, concentrates on the basics and is over as quickly as is possible.


Zamfir 09.02.08 at 11:45 am

EJH, al those characteristics apply to horse race coverage as well, and they are over a lot more quickly…


Lex 09.02.08 at 12:31 pm

Umm… ‘the nags’? That’s what s/he means…

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