Confessions Of A Political Junkie: Tradesports

September 19, 2004


Check out the updated listing over at EconoPundit.

As of this writing, Bush is Sell 71 and Buy 72.


Here is an interesting question. Let me know what you think. The investor class does not make up everybody, but it, I am told, leans Republican. So, don't Tradesports and the Iowa Electronic Markets have natural biases in them leaning Republican?

Posted by Erick at September 19, 2004 11:04 PM | TrackBack

In a word: depends.

What you are reading on the TradeSpot is not really a poll of who people want to win, but a reflection of who people think will win. So the question arises, would a Kerry supporter "sell" Bush soley on the idea that s/he beleives Kerry is really going to win? If so, the person really is a trading novice and in the world of market trading, this person would have a very short career indeed if this was their trading methodology.

Maybe they would Sell Bush because they think that Kerry will run a better race (which would then drive down the Bush buy/sell number) and would be able to cover that Sell order with a buy at a lower level. Now THAT would be a much stronger trading methodology. But would have nothing to do with political ideology.

On the opposite side you might have Republican traders who tend to view their candidate more favorably, and may buy Bush to go higher. But here is the thing....when you buy contracts, there is always a buyer AND a seller. For everyone who buys a contract, there is someone on the other side who is selling you that contract...if there are 10 people who want to buy Bush at 72, there are 10 contracts being sold at 72. And those contracts have to be covered at some point.

Right now what you have are hypothetically 10 people who are obligated to make good on those contracts at some time in the future. And that could cost them LOTS of money if the Bush number went higher....

So why did I explain all that? Because when it comes down to it, it comes down to real money in your pocket and not your ideology. In trading there always are suckers who lose their shirts in the markets to the pros. And the pros are the ones who have the superior methodology and market analysis. Ideology has no place in the big leagues and the winners know it.

Posted by: Gilly at September 20, 2004 08:17 PM
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