[ExI] puzzle for intrade fans

Sat Oct 27 12:53:09 UTC 2012

From: Gordon [mailto:gts_2000 at yahoo.com] 
Sent: Friday, October 26, 2012 10:47 PM
To: spike; 'ExI chat list'
Subject: Re: [ExI] puzzle for intrade fans

>…Hi again, spike. You've offered a lot of interesting ideas here. I haven't had time to really think carefully about them. I will tell you my default positions, though: 

>…3) I doubt anyone is actually manipulating the market at Intrade…

Unacceptable!  If no one is doing this, someone should be.  There is big money going unmade here.  This is a shameful waste of perfectly good capitalism.

>…4) The behavior of Intrade prices on contracts for Obama and Romney has been very interesting.

Ja!  Check out the weird series of trades in 4 cent increments at 741 PM and the two at 1006 and 1008, both of which are a rapid-fire series of various volume trades at 5 cent increments all within a few seconds of each other.  All this might be completely software driven, with no sinister motives.  Our mission: provide sinister motives.  Failing that, ordinary profit motives will have to do.

So now we have seen a rapid series of trades of equal volume and equal price, we have seen a rapid series of trades at 4 and 5 cent increments of varying size lots.  The trades are too uniform in size and increments to be meat-based traders; they must be scripts reacting to market conditions.  

I still don’t know what to make of the observation that one candidate changes slowly up and quickly down, or even if that signal is real.  It does not seem to be based on any news items that I can tell, or even the release of really fun ads such as these two yesterday:

http://www.youtube.com/watch?v=o6G3nwhPuR4

and

http://www.youtube.com/watch?v=sSxDE1QCHA4

{8^D  heeeeheheheheheeeeeehehehehaaarrrharharharrrrr…

>…Most US polls show the race to be close, but Intrade prices suggest Obama has a huge advantage of 60% or more…

Hmmm, Gordon, do recognize that 60 cents on Intrade is not a huge advantage.  That is a tossup.  It corresponds to polls very close to the margin of error.  We seldom see an active meme that stays as well-balanced as this one has for as long as it has.

>…5) How do we explain 4)? Well, Intrade is an international market, headquartered in Ireland. Polls show that Europeans and most people in many foreign countries overwhelmingly support Obama over Romney. This might explain the Intrade bias toward Obama…

Ja perhaps, but I think most of the trading on this one is US-ian.  Also, the price is driven by what you think will happen rather than what you want to happen.  I suspect there is some price influence by wishing it so.  There is likely some price influence by the press as well, which overwhelmingly support Obama.  I don’t know what the press is saying in Europe, Africa, Asia and South America about this race.  Gary Johnson is getting almost no ink over here, damn.

>…6) If 5) is true, how do we exploit it? One could in principle short Obama. The contracts are in theory over-priced as a result of non-voters in Europe and other places…

No, me lad, betting on one or the other of the mainstreamers won’t make you much money, and it is risky.  What I have been studying is how to make money by stampeding the herd.  It sure looks to me like others have thought of this too, or are experimenting with it.

>…On the other hand, I really don't want to short Obama. <shrug>

The idea is to short both of the mainstream guys when their combined prices exceed a dollar, which is actually most of the time, then cover your shorts and go long on both during those periods when the combined prices drop below a dollar.  I expect that phenomenon is what causes the oddball signals, but I haven’t yet been able to figure out how those scripts work.

>…Right. It's hard to get excited about about hundreds. :)  -Gordon

It’s just a game Gordon, just a game.  

The whole exercise of voting might be just a game: we have no way of verifying our vote counted.  Our country is making exactly no moves to create more verifiable voting systems, we still have computerized non-auditable voting machines in some places, and the transparency of the system is actually decreasing rather than increasing in some ways:

http://dailycaller.com/2012/10/24/texas-attorney-general-warns-un-poll-watchers-to-keep-their-distance/

In Wisconsin in 2008, a senator was elected by 316 votes in an election where they later discovered approximately 1100 ineligible voters, yet there is no means for undoing those votes, for they cannot be tracked or verified.  So the outcome stands.  That senator gave one party a super-majority, which allowed our health care system to be brutally overhauled without a single republican vote and without debate on the senate floor of an over 2000 page bill with enormous consequences.  This act is reverberating to this day.

There were ineligible voters in Florida in that crazy 2000 election as well, that one which chose (we think) W, but we cannot know for sure.  The invasion of Iraq might have been an enormous mistake, and might need to be cancelled, the whole thing, bring back Al Gore and all of Saddam Hussein’s people we can find, replay.

Failing that, we need completely auditable accountability in all elections, even at the expense of privacy.

spike

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