Quote from seneca_roman:
In the last election INTRADE picked correctly all 50 states, something no other poll did. INTRADE is not a poll, rather it is a futures market where real money is at stake.
It also picked all senate races correctly in the 2006 elections.
Seneca
Everybody gets lucky. Ritholtz on "Intrade". Not that there is anything wrong w/being a college student, though.
Prediction Markets Fail Again
Monday, October 20, 2008 | 08:53 PM
in Commodities | Markets | Trading
GO FIGURE: Prediction markets -- those thinly traded games played by college kids and other traders who lack the capital to trade in deeper broader markets (equities, fixed income, commodities, currencies) -- are for shit:
"To the amazement of economists and online bettors, the answer has varied a great deal among betting Web sites.
Markets are not supposed to work that way, even online prediction markets, where bettors trade on the chances of a candidateâs winning an election in the same way that they might bet on pork bellies to go up in value.
In the last few weeks, Intrade.com, which is based in Dublin, had consistently given John McCain as much as a 10 percentage point edge in his chances to be elected president compared with other large online overseas betting sites. These include the British-based Betfair.com, as well as the Iowa Electronic Markets, a research project at the University of Iowa that allows bets of $500 on election results."
Actually, thinly traded markets such as this are supposed to work EXACTLY this way. What prevents the "real" markets from operating this way (most of the time) is the enormous amounts of money at stake, and the huge and diversified crowds of traders watching for aberrations. Little markets, small amounts of money (millions not trillions) and thin trading are prone to this sort of nonsense. (Don't say you weren't warned)
Here's, the question of the evening: How many legitimate market strategists, economists, and traders still believe in the Efficient Market Hypothesis? Anyone?