<html><body><div style="color:#000; background-color:#fff; font-family:times new roman, new york, times, serif;font-size:12pt">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: <br><br>1) I think free markets are basically efficient, including what you're calling idea markets. This is to say that I think prices are the best estimates of the future, even if they're often wrong.<br>2) I think these new prediction (idea) markets might be a special case, an anomaly to rule 1). They might be inefficient on account of low trading volume or other reasons.<br>3) I doubt anyone is actually manipulating the market at Intrade, even if the market there might be inefficient.<br>4) The behavior of Intrade prices on contracts for Obama and Romney has been very interesting. Most US polls show the race to be close, but Intrade prices suggest Obama has a
huge advantage of 60% or more.<br>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.<br>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.<br><br>On the other hand, I really don't want to short Obama. <shrug><br><br>Finally, as you say, <span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">Ohhh there is money to be made here, big money, scores of dollars, possibly hundreds.<br><br></span>Right. It's hard to get excited about about hundreds. :)<br><br>-Gordon<br><div><span><br></span></div><div><span></span></div><div><br></div> <div style="font-family: times new roman, new york,
times, serif; font-size: 12pt;"> <div style="font-family: times new roman, new york, times, serif; font-size: 12pt;"> <div dir="ltr"> <font face="Arial" size="2"> <hr size="1"> <b><span style="font-weight:bold;">From:</span></b> spike <spike66@att.net><br> <b><span style="font-weight: bold;">To:</span></b> 'ExI chat list' <extropy-chat@lists.extropy.org>; 'Gordon' <gts_2000@yahoo.com> <br> <b><span style="font-weight: bold;">Sent:</span></b> Thursday, October 25, 2012 9:58 AM<br> <b><span style="font-weight: bold;">Subject:</span></b> RE: [ExI] puzzle for intrade fans<br> </font> </div> <br>
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--></style><div><div class="yiv1668585258WordSection1"><div class="yiv1668585258MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div><div style="border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in;"><div class="yiv1668585258MsoNormal"><b><span style="font-size:10.0pt;font-family:"Tahoma", "sans-serif";">From:</span></b><span style="font-size:10.0pt;font-family:"Tahoma", "sans-serif";"> extropy-chat-bounces@lists.extropy.org [mailto:extropy-chat-bounces@lists.extropy.org] <b>On Behalf Of </b>spike<br><b><span style="color:#1F497D;">…</span></b></span><span style="font-size:11.0pt;font-family:"Calibri",
"sans-serif";color:#1F497D;"></span></div></div></div><div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">></span><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">>…</span><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">Note the twitchy bulls in the Romney graph below:</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">…</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span
style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">>>…</span><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">And here’s the roughly corresponding Obama graph:</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">…</span><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"></span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">>…</span><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">OK cool, I may have stumbled on some evidence to figure out what is going on here</span><span
style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">…</span><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">spike</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">…</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">Pardon please my high-volume posting on this topic, but be assured it will end (well, it will probably end) in a couple weeks.</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span
style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">OK so imagine the scheme was to make a bunch of trades under the radar, 20 shares at a time in the middle of the US night when not many US traders are watching. Then the trick would be to make money in the US daytime when the USians, who are most interested in this particular meme, are doing most of their trading. Then one could transfer a ton of money in the night without drawing much attention. The fact that all the trades were the same volume and the same price leads me to think it was the same person or program doing the trading, perhaps somehow selling the shares to itself. </span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal"
style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">I don’t know how that works, but imagine something creating that appearance intentionally to create the apparent signature of high volume trading, perhaps to get the attention of the software traders who do not sleep, but who watch for certain signals. Then the program could own shares of both mainstream candidates, and be ready to trigger, or take advantage if something else triggers, any stampede either direction. That allows the software to take advantage of the observation that this complementary pair of memes tends to be active as hell during the US daytime and relatively inactive in the night, a feature less available on the stock market.</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri",
"sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">Actually this still doesn’t explain the apparent asymmetry where one feller’s prices drop suddenly but rise more gradually. That one is still puzzling, and I don’t even know for sure if it is real or just a coincidence. If I get time today, I could go through and calculate slopes on any change greater than 1 cent.</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">Ohhh there is money to be made here, big money,
scores of dollars, possibly hundreds.</span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;"> </span></div><div class="yiv1668585258MsoNormal" style="background:white;"><span style="font-size:11.0pt;font-family:"Calibri", "sans-serif";color:#1F497D;">spike</span></div></div></div></div></div><br><br> </div> </div> </div></body></html>