This morning I noted that there was a large disparity between the presidential election futures on TradeSports and the Iowa Electronic Markets. Donald Luskin followed up today with this post:
There is now no question whatsoever that the Bush re-election futures contract at Tradesports.com is being manipulated. Yesterday the price of the futures were sold down from about 55 (indicating the market's estimate of a 55% probability of Bush's re-election) to 10 (indicating on a 10% probability) with a single 10,000-lot order entered by a single trader. An order that size represents twice the normal volume of an entire typical day's trading. Within moments after the order was completed, the price recovered back to the low-mid-50's.[sarcasm] Hmmm...that doesn't seem like the Democrats' M.O. [/sarcasm] (Hat tip to reader Jill Olsen).
Update: Meanwhile, at the un-manipulated IEM, Bush’s numbers continue to climb today (now over 60% - wow!)
2 comments:
Sir,
While George Soros has a wide-spread reputation for market manipulation; a Neo-communist economic philosophy; a deep, irrational hatred for George Bush; and ready access to the $100,000 or so required to manipulate the market, I beg you not to convict this fine man on the basis of these, no doubt trivial, coincidences. Against the slanderous accusations of the Thai and British governments, we must consider the unstinting, albeit rabid, support of the MoveOn.org management, and Mr. Soros' own impassioned, if largely incoherent, statements, including he will "do anything to defeat George Bush" ... well, maybe not the last two points. And besides, George Soros is VERY rich.
Anyway, don't go jumping to conclusions just because a market dropped 45 points.
The most visible IEM and Tradesports presidential contracts are not equivalent. The winner-take-all IEM contracts at http://128.255.244.60/quotes/78.html are popular-vote futures whereas the presidential contracts highlighted at www.tradesports.com are for the election winner (in effect, Electoral-College futures). However, Tradesports also has winner-take-all popular-vote presidential contracts buried within their site: http://www.tradesports.com/jsp/intrade/common/c_cd.jsp?conDetailID=148944 . At Tradesports one can speculate on a discrepancy between the popular vote and Electoral College. This might be something to watch if the race remains indeterminate right up to Nov 2.
At present the IEM quotes are more favorable to Bush than the Tradesports popular-vote quotes. The IEM bid-ask spreads are smaller than the Tradesports ones. I take this as an indication that IEM may be the more efficient (and credible) market. The maximum IEM account is $500 which tends to make IEM harder to manipulate than Tradesports.
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