Investor's Bet for Bush Over Kerry - Is this a joke?

[NightOwwl]

What is the Iowa Electronic Market and why should I believe these figures are truthful?

***********
NEW YORK (Reuters) - Opinion polls show support for President Bush and his Democratic rival as almost dead even, but as the Republican convention began on Monday investors trading presidential futures did not believe the race would be nearly so close. Trading in the Iowa Electronic Markets showed Bush pulling ahead of his rival, Democratic Sen. John Kerry, with a 54.8 percent probability of victory, compared to a 45.4 percent for Kerry.

The Iowa presidential futures contracts, which were launched by professors at the University of Iowa to study the forecasting power of markets, have had an average 1.37 percent margin of error in predicting the winner of the popular vote, a better record than most opinion polls.

link: http://www.reuters.com/newsArticle.jhtml?type=politicsNews&storyID=6107390&src=rss/politicsNews§ion=news

[still_one]

1. stock market sucked today

I wonder if they were worried

[jfxgillis]

2. No, it's not a joke, BUT ...

... that ridiculous claim about 1.37 margin of error is only for the FINAL trading.

And even at they they were completely wrong last time.

I've made literally hundreds of dollars in that market this year trading Kerry contracts long.

[David Dunham]

3. We should bet on Kerry and make some good money.

[troublemaker]

4. They are truthful numbers, but the predictive ability line refers to where

the contracts close before election day. On Nov. 1 those contracts will be more accurate than individual polls because all the different polls will be factored into them. Today the contracts are as accurate as today's polls.

The key to understanding these things is that Bush being at 54.8 doesn't predict Bush getting 54.8 percent of the vote. It means that you would put up $54.80 for a chance to win $50 if Bush wins, even by one vote.

If the final polls are 51-49 the contracts will be something like 75-25. If the final polls are 54-46 the contracts will be 95-5.

[RamboLiberal]

5. I saw that on CNN today and mean to look in to it

http://www.biz.uiowa.edu/iem/

The Iowa Electronic Markets are real-money futures markets in which contract payoffs depend on economic and political events such as elections. These markets are operated by faculty at the University of Iowa Tippie College of Business as part of our research and teaching mission. We invite you to join us in this mission.

Troublemaker can you tell us how you make money on them?

[Murky Waters]

7. check out TradeSports.com

They have an awesome election betting section. You can gamble on the results of any state. It is done in "futures" style also.

A contract on a Kerry electoral win is selling for just $4.25 or so. Man, if I only had the money! Every contract you buy at $4.25 will be worth $10 in November. Try doing that in the stock market in two months!

You can also sell George Bush electoral win contracts. They are selling for around $5.71 and they are selling like hotcakes. The bias of the monied sure is apparent. If you sell 1000 shares at about $5 each, you pocket an easy 5 grand with a Kerry win.

[MidwestTransplant]

6. People buy in anticipation of a convention bounce

plus we can't pretend that Kerry has polled weak in the last few weeks.

[NightOwwl]

8. I had no idea there was such a thing as trading presidential futures.

I learn something new from DU'ers every day. :)