Election Market Crash

Via e-mail from Barry Ritholtz:

Tradesports, which has had the incumbent up for the entire campaign,
has now flipped:

PRESIDENT.KERRY2004 trading at 67.0 by 67.9
PRESIDENT.GWBUSH2004 trading at 32.2 by 33.0

Can we please promise to never mention these idiotic exchanges again?
http://www.tradesports.com/

My guess is “investors” are panicking in response to the early exit polls. My problem with these things has always been that, unlike the traditional stock market, investors in these election markets have no more useful information than is available to the average consumer.

FILED UNDER: Campaign 2004, Politics 101
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. McGehee says:

    Nope. Tradesports is manipulable, and has had these kinds of weird, inexplicable swings before. Some have even suggested Soros, who made a big chunk of his fortune doing that kind of thing to real markets.

    Just ignore it. I do.

  2. dw says:

    Don’t you think Soros has better places to spend his money than in manipulating election futures markets?

    Why would he blow cash on that when he could bankroll the legion of Democratic lawyers that will enter the field of play tomorrow morning?

    Not saying the market is being manipulated (there’s some evidence it happened to the IEM earlier this year), but to paraphrase Freud, sometimes panic selling is just panic selling.

  3. Frank says:

    One Word: Buy!

    No matter how low it goes, the winner’s contract closes at 100.

  4. dw says:

    Buy indeed.

    If one was smart enought to buy Kerry at 40 last month, they could by Bush now at 33 and make a profit no matter who wins.

  5. Nick says:

    I don’t know- back in October when someone tried to “game” tradesports, it bounced back within 5 minutes. This story about the exit polls has been out for 4 or 5 hours, and it only continues lower. I personally think there’s so info out there that’s being factored in that isn’t complete common knowledge yet.

    I’ll even go further and predict a comfortable Kerry victory based exactly on the futures markets.

  6. JakeV says:

    I suspect Soros has better things to do than to mess with tradesports (and IEM too) on Election day. The guy really has become a bogeyman for some– sort of a Karl Rove figure.

    Anyway, I can’t see these markets telling us anything. What do they know that we don’t? At best they’re aggregators of conventional wisdom, and I don’t think conventional wisdom means anything at the moment.

  7. McGehee says:

    DW, you’re more than likely right. Then again, I don’t think I’d waste $26 million on MoveOn.org, so our notions of what Soros’ “better things to do” may not apply.

    I think the man’s an even bigger loon than the people who blame him for everything.

    Doesn’t mean the other loons are right. I’m just sayin’.