I sure hope the ChicagoBoyz usual faith in markets is wrong this time.
27 thoughts on “I am hating this.”
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Some Chicago Boyz know each other from student days at the University of Chicago. Others are Chicago boys in spirit. The blog name is also intended as a good-humored gesture of admiration for distinguished Chicago School economists and fellow travelers.
I sure hope the ChicagoBoyz usual faith in markets is wrong this time.
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If Obama does win this will be the first Presidential election in my lifetime where the Republican Party was enthused, yet still lost.
There are no such things as free financial markets anymore.
They are all now some shades of either government or criminal frauds.
I realize you’re being dry and sardonic, Lex, but I’m going to post a humorless, patronizing response anyway, because that’s the kind of person I am:
I’m not sure to what degree the term free applies to Intrade, in its current form.
There’s uncertainty about the legal standing of accounts opened from the US, and the daily volume of trades is very low when compared to more mature financial markets. This can’t help but affect the volatility and pricing of contracts, especially for a US election.
Moreover, I think most market supporters would agree with me that their benefit is not in eliminating irrational behavior, but in punishing it in a consistent, objective fashion. Human folly is a universal constant; market systems just tend to exhibit it to a lesser degree than other systems.
Well, you pays your money and you takes your choices, as they used to say in Brooklyn.
Karl Rove was optimistic today:
“Sifting the Numbers for a Winner” by Karl Rove in The Wall Street Journal on November 1, 2012 at page A15
http://online.wsj.com/article/SB10001424052970204846304578090820229096046.html:
It comes down to numbers. And in the final days of this presidential race, from polling data to early voting, they favor Mitt Romney. He maintains a small but persistent polling edge. As of yesterday afternoon, there had been 31 national surveys in the previous seven days. Mr. Romney led in 19, President Obama in seven, and five were tied. Mr. Romney averaged 48.4%; Mr. Obama, 47.2%. The GOP challenger was at or above 50% in 10 polls, Mr. Obama in none. The number that may matter the most is Mr. Obama’s 47.2% share. As the incumbent, he’s likely to find that number going into Election Day is a percentage point or so below what he gets.
* * *
On Friday last week, Gallup hinted at the partisan makeup of the 2012 electorate with a small chart buried at the end of its daily tracking report. Based on all its October polling, Gallup suggested that this year’s turnout might be 36% Republican to 35% Democratic, compared with 39% Democratic and 29% Republican in 2008, and 39% Republican and 37% Democratic in 2004. …
Gallup delivered some additional bad news to Mr. Obama on early voting. Through Sunday, 15% of those surveyed said they had already cast a ballot either in person or absentee. They broke for Mr. Romney, 52% to 46%. The 63% who said they planned to vote on Election Day similarly supported Mr. Romney, 51% to 45%.
* * *
But doesn’t it all come down to the all-important Buckeye State? …
… as of Tuesday, 530,813 Ohio Democrats had voted early or had requested or cast an absentee ballot. That’s down 181,275 from four years ago. But 448,357 Ohio Republicans had voted early or had requested or cast an absentee ballot, up 75,858 from the last presidential election. That 257,133-vote swing almost wipes out Mr. Obama’s 2008 Ohio victory margin of 262,224. …
Democrats are now hanging their hopes on a new Quinnipiac University/New York Times/CBS News poll showing the president with a five-point Ohio lead. But that survey gives Democrats a +8 advantage in turnout, the same advantage Democrats had in 2008. That assumption is, to put it gently, absurd.
… My prediction: Sometime after the cock crows on the morning of Nov. 7, Mitt Romney will be declared America’s 45th president. Let’s call it 51%-48%, with Mr. Romney carrying at least 279 Electoral College votes, probably more.
I expect they’re responding to polls. Some of these people – I’m guessing here – have looked at the polls, done the electoral college math, then decided to bet. Question: How accurate are the polls?
What’s the dip at the 24? That require explanation if you want to judge the accuracy of the trades as a whole.
More about Ohio. I am an Ohioan, and I have a certain amount of faith in my fellow Ohioans. They have not turned into Californians yet.
We have lived near the Governor’s official residence for about 26 years now. During that time there have been Republicans for 18 years and Democrats for 8 years. In 2010, Ohioans turned the Democrats out of all of the Statewide offices and made the House and Senate Republican.
I think that Ohioans may be closely divided between the parties, but it is absurd to think that Ohio is D+8. I thought the polls that showed BO running way ahead of 2008 were probably flaky, and I think most Ohio Republicans feel the same way.
Jim Rummel, are you listening? What do you think?
Another point about markets in general. They are right until they change their mind.
An example: The tech bubble of the late 90s.
It was obvious to many investors that it was a bubble for a couple of years before the Nasdaq index hit 5048 on March 10, 2000. 2 weeks later it was 4963. But that was it. The index started to slide and by the end of May it was at 3205, it rallied and held up during the summer, but began to fall again at summer’s end, going from 4234 on September 1, 2000 to 1720 on April 6, 2001.
At some point on that roller coaster ride the number was “correct”, I don’t know when that was but it has taken a decade and a lot of inflation to get the index back to the 3000 level.
It just confirms that people should stick to their core competencies. Anyone attracted to intrade should stick to analyzing debt ratios. I guarantee Obama’s loss as confidently as Joe Namath guaranteed Super Bowl III.
Be of relatively good cheer, InTrade’s worth as an indicator of what is happening in the United States has been eroded for some time.
The Unlawful Internet Gambling Enforcement Act of 2006 did not directly make it illegal for US nationals to bet on InTrade. However, it made it illegal for US financial institutions to process funds for internet gambling. Functionally, that means to participate, an American has to set up a foreign bank account; and that attracts all sorts of hostile attention from the IRS, DHS, and any government agency interested in keeping Americans dependent on the US government.
Most bettors/investors in the question of who will win the election are therefore foreigners. Just as Americans are frequently … uninformed/misinformed … as to life in other countries; the vast majority of foreigners get almost all of their knowledge of us from Hollywood and from the likes of MSNBC.
Their comprehension of the political situation here, and therefore the bets derived from it, is about as “reality-based” as the American Left. Therefore, in itself, InTrade is not an accurate measure of the real odds in any American political event.
Add to that low volume mentioned above. A small investment has a greater than expected affect than in say the NASDAQ. That makes it particularly susceptible to manipulation. American campaigns are multi-billion dollar affairs. On the Democratic side, much of the money already comes in illegally from foreign donors and it is an admitted standard practice to disable the identity verification software for online donations. Given the propaganda tool that positive InTrade odds can be; the diversion of an “investment” pool of a few million dollars of easily spared and unaccounted for cash to this purpose [possibly less than a month’s advertising buy in a major metropolitan area] spread over the entire campaign is a bloody bargain.
The Left may be a collection of fools, miscreants, maladroits, and unindicted co-conspirators; but they are not known to be blind to the benefits of deceit and fraud.
Until and unless Americans can freely participate in InTrade, I tend to discount it as a valid predictor of American events.
Subotai Bahadur
Yes, at what point do take a prediction market as a predictor of the final result? Over the years I’ve become less and less a fan of these. They need a theoretical rework.
O.K., I’m also irritated that Sandy blew my call of the selloff. It almost worked. Well, the buyers are probably dumpster diving in New York for food right now. This looks to be going south and I don’t think the media will stand idly by as their friends go without electricity or other modern necessities. An ambassador and 3 others being killed in Libya is another story.
The total open interest is only 57,000 shares and todays volume is 677 shares.
I live in Oak Lawn, just south of Chicago, my unofficial poll of signs driving through the neighborhood is at 20-1 for Romney………literally. I could be off on Romneys at this point, but Ive seen 1 Captain Zero sign. One. In a blue collar chicago area neighborhood.
I have seen numerous “proud union member” signs, more than 20 by far. So the Captain Zero fans are either too embarrassed to show it, or its going to be a blowout.
When was the last time an Captain Zero supporter was embarrassed to admit it?
Plus, Captain Zero called twice today. First one rang twice and hung up. Second one I did answer in time, and I swear …….silence………..literally…..I said hello more than once to kick in the recording………nothing. I swear.
That Clint Eastwood chair thing……genius.
Subotai Bahadur: Bingo. InTrade could be a cheap way of faking popular support for or against any candidate.
Rich: In San Francisco and environs, Obama 2012 stickers and signs are remarkably rare, maybe 1/20th the number of four years ago. I don’t think I’ve even seen a window sign this year. A few Sundays ago there was an Obama flashmob/dance in downtown SF. Perhaps some of the small crowd (maybe 40 people) had come for the event and weren’t just passersby, but I don’t think more than 15 people danced, and the YouTube video got about 250 views. The demoralization is palpable.
I have gone on and on now for weeks about most INTRADERS seeming, from the comments, to be nothing but ideological hacks. I stand by that. Put not your trust in INTRADE, for it is not a real market. As Ronald Reagan used to say, I am cautiously optimistic about Tuesday, and, remember, he won in a landslide when the polls said it would be a nail biter.
Good old Subotai –never know where he’s gonna pop up, but when you see him, it’s because he will have done some work –compiled some information you probably needed –and has presented it superbly.
More currency manipulation by Soros, is my wager.
:-D
I agree with Buddy Larsen above.
If the internet gambling laws weren’t so sketchy I would love to pile in on the R side in this trade – I think that by every poll and pundit I have seen/read that you would be getting a very nice discount for Romney.
I also agree with Bupkis above – Intrade is such a tiny market that it would easily be manipulated by a Soros or anyone else with deep pockets. In fact, I think it is.
Intrade publishes the book giving the size of the bids and offers at each price. The market for president is fairly deep compared to most of the other markets they have. Over the last two days limit orders of 500 or more shares have followed a pattern. Considerably more sell limit orders have appeared on the Obama market and considerably more buy orders have appeared on the the Romney side. This has strengthened today.
I think people who place orders this way may be a little shrewder than the average participant BUT this is no more than a straw in the wind. The open interest in Presidential contracts is worth about 15 million dollars. This would be absolute chump change for Soros if he wanted to paint a picture. That is not to say that this has happened. When it comes to understanding public policy Euros live in LaLaland. According to Michael Ledeen over 90% of Euros like the Zero.There probably is no need to manipulate Intrade then.
http://pjmedia.com/michaelledeen/
To paraphrase Churchill, markets are the worse predictive systems save all the others. Our general ability to predict the future sucks, even in something as relatively simple as a Presidential election. Intrade could be the best possible indicator and still be wildly off.
Still, I agree that the high bar set for American investors in Intrade will most likely skew it for questions such as an American election. My opinions on European elections would be nothing but noise on Intrade and I imagine European knowledge about the American political pulse is little better. Unless, foreigners are picking up on something in America that American have missed, Intrade isn’t likely to be very accurate.
My experience is that Europeans have considerable confidence that they understand Americans, a confidence that gets in the way of any real understanding. (Yes, there are exceptions.) This is not unlike other patterns -(Pauline Kael is representative of a similar, domestic version.) If that’s the basis for Intrade I’m less worried. We’ll know soon, whatever.
John Zogby explains that Sandy disaster made “Independents” more sympathetic to Obama.
http://www.newsmax.com/newswidget/zogby-election-tracking-poll/2012/11/02/id/462571?
This is seen in the polls close narrowing as well as in the rising Job Approval Obama gets.
Will the post-disaster tide turn soon enough? Possibly: Friday’s WaPo/ABC tracking poll has R&R up by one percentage point.
http://www.nationalreview.com/corner/332364/wapoabc-tracking-poll-romney-now-point-ahead-katrina-trinko
If other tracking polls this weekend add to this direction, then YES. Otherwise, it is a neck and neck contest on Tuesday.
How will the media massage this? Continue the horse-race themes, downplay any Romney turnout surge, and keep Benghazi from burning Obama.
If Zogby’s correct, then “Independents” are the short-attention-span theater cadets of the voting world.
Scotus ays “As Ronald Reagan used to say, I am cautiously optimistic about Tuesday, and, remember, he won in a landslide when the polls said it would be a nail biter.”
As I remember it, this change occurred over a one week prior prior to election day, back in a day when tracking polls were rare and polling was unsophisticated. Therefore, they missed this week-long shift in opinion.
And thus, trotting out this relic example should provide us with no comfort.
R&R up 5 in Florida. And Pennsylvania’s Susquehanna poll – the most reliable in the state one – has R&R ahead by 4. (My guess is that Catholic vote has solidified behind the Rs ~ or Pubbies.)
And Michael Barone, the judicious, “sees Mitt Romney rolling up 315 Electoral College votes, including the states of Ohio, Virginia, Florida, Colorado, Iowa, New Hampshire, Wisconsin –and Pennsylvania!”
http://townhall.com/columnists/hughhewitt/2012/11/03/mittmentum_builds
If so, perhaps Nat Silver will look at his crystal state-by-state ball Sunday night, and publish as climb-down on Monday.
Hugh Hewitt [from last link above] rounds out the scene of a candidate that is already assuming the mantle of prez-elect because he knows Mitt-mentum is with him, while Obama slouches because it isn’t. We did see the reverse of this four years ago, with McCain playing the walking in defeat image during the lat week of the campaign.
It is powerful yet nuanced imagery:
“Romney’s amazing ‘closing argument speech” in Wisconsin yesterday is the sort of performance that flows from a candidate who knows he is winning. The enormous crowds that are greeting Romney and his running mate Paul Ryan wherever they travel tell the same story, and the pictures from this afternoon’s rally at Fiddler’s Green in Colorado promise to send the same message.
“If Romney delivers a blowout rally in Pennsylvania Sunday a shocked political establishment will look up from Nate Silver’s ‘model’ and begin to realize that they have missed something big.”
Orson,
Gallup’s last preelection poll in 1980 was on November 2. (Election day was November 4.) In that poll, Reagan led Carter 46 to 43. The previous poll (October 27) had Carter ahead 45 to 39. So, Gallup did show significant movement toward Reagan, while still indicating a close election. Now, I’m sure you will say this provides little comfort for Romney supporters, given that this year the polls show movement toward BO.
I remain cautiously optimistic. Sandy is having an effect. Is it that voters are moving toward BO, or is it that the storm is screwing up polling. Rasmussen is the only major pollster who has continued to release numbers post-Sandy. (Also, remember Rasmussen is +3D in its weighting. This may be accurate historically, but I have my doubts about this year.) Gallup (+1D weighting) determined they could not poll accurately until three days after Sandy hit. They will release new numbers tomorrow (Sunday, November 4). BTW, the ABC/WP poll that has Romney up 1 is also +3D.
Finally, let’s not forget about the margin of error. The “turn” toward BO indicated by Rasmussen is within the poll’s MOE. Sandy seems tailor made to produce MOE results. We shall see what we shall see.
FWIW today large trades (500+) on intrade placed as limit orders were running 9/1 in favor of Romney.