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Futures Market

Intrade, a futures market which allows users to buy and sell contracts for specific events, is a great tool for political pundits. The theory is a futures market works better than either polls or “fundamentals” because people, when wagering their own money, tend to be much more mindful of “reality.” Also, polls and “fundamentals” can be merged in a futures contract.

Two contracts which interest me right now are the “2008 McCain to Win” and the “MN Senate GOP to Win” contracts.

McCain’s contract is selling for a paltry 17 bucks (to earn 100)

While I like using Intrade as another tool punditry, I will say this contract is undervalued. I would be long this contract and I would expect it to move into the $35 range and I would probably sell it at that point.

No matter what, this contract’s price paints a very bleak picture for November’s general.


Over a year ago I said the Coleman to Win contract was too high and I recommended selling. Now, at 47-49 bucks, I think the contract is properly priced. What’s interesting is the Dem to Win (Franken) contract is very expensive. It’s in the $ 60 range. When summed together, the costs of the various MN Senate contract total over 108 bucks (to win 100). There is some obvious inefficiency in the market. The first obvious culprit is the $60 Franken contract.

But, based on the polls I’ve seen, Coleman is the underdog in this race. Right now, I don’t want to be in either the Franken or Coleman contracts. The next round of polls might completely push the Franken contract over $70. Just as likely, Coleman could close the gap. And remember, with the Independence Party candidate polling at nearly 20% right now, it’s very likely between now and election day those voters are going to break in Franken’s direction.

The situation in MN is very complicated. If forced to buy one contract or another, I would buy the Franken contract, even though it might be overpriced.

The bad news continues


5 Responses

  1. Why so glum? We can all look back on January 2008 polls, which some people used to say that only McCain could win, especially if the dems nominate Obama. Remember 10 months ago, when he had a whopping 6% lead? That should keep us warm.

    Too bad we were conned by some people in the media & our own party to nominate a mushy middle maverick who made it known loud & clear that the economy was not his strong suit.

    I bet Romney would be trading quite high right now, he actually understands the economy… But hey, David Frum got his wish, now let’s not forget his failure to properly read tea leaves.

  2. Martin,

    You were one of the proponents of the “McCain is the best choice, because he can win” (based on premature evidence) as opposed to Thompson or Romney being the best candidate because of they were what the party & the country needed.

    NOW you post this crap about how McCain can’t win, But hey, we can still profit off his loss by buying Intrade contracts?!?

    We’re stuck with this man for at least 3 weeks & possibly 4 years, because of people like you. The last thing you need to be doing is broadcasting that the race is lost to Obama! Which, like the “only McCain can win” tripe, is also little more than media hype! Stop being so useful to these people!

    New Zogby poll has McCain gaining ground: Obama 47.8%, McCain 45.1% That’s a difference of 2.7%, Know what the margin of error is? 2.9%! This race is a statistical dead heat!

    AP/Yahoo also has them statistically tied at 42% to 44%

    People like you unloaded this guy on us, The least you can do is don’t throw him under the bus prematurely.

  3. This is going to be a topic I will talk about on my next podcast.

    And you get me wrong, I saying “Buy” the McCain contract. The race is going to tighten up.

  4. The peanut gallary should read before speaking.

  5. Big Marty has a knack for attracting goofballs.

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