I was listening to an audio version of the economist, when I had to drop what I was doing when I heard them mention Prediction Markets. A quick google search pointed me to intrade.com. Very cool. People bid on contracts that expire at either 100 or 0. It’s a market for a betting pool as to the outcome of any event.
Check this out:
Now I’m no expert, but get long Obama, get long McCain that seems like a 3% yield arbitrage. One of them is going to win.
Stock Market participants are more likely to dig these insights:
I took the data from their “probability of a US recession in ‘08″, made a moving average, then took a derivative and smoothed that out too, then mapped it to the S&P.
It’s interesting to observe the causality get weaker as the contract gets closer to expiring.
Check out the earlier surges in the derivative, they appropriatly correlate, a bit at least, to the market then a reversal in the derivative means a local max or min - in some cases - in the S&P…it’s a stretch.
How do I get long Prediction Markets? I want to invest, in the actual exchange. What a cool system, I am enthusiastic about it’s growth and want to see it succeed.
Recent Comments