Tuesday, September 30, 2008

Recovering from The Beltway Bailout

Like the Secretary of the Treasury, the President, and the House leadership, we are also licking our wounds from yesterday's calamity in Congress.

Clearly, Politickr wasn't the only one to bet big on the rescue bill

If you, too, failed to bail out on your Intrade bailout contracts before the collapse, here's what you can do to get back on your feet:

Buy Barack - If you're still holding out, it's time to get on board the Barack bandwagon before this week's Palin-Biden debate. With Palin's political stock now plunging faster than financials on Wall Street, and with every sentence she utters provoking similar shudders, Barack obviously stands to benefit. Although he is currently overpriced at nearly 63 on Intrade, there's no telling how high he could go if the much-harried hockey mom has another cringe-inducing night. 

Short Palin - The above notwithstanding, we still think it's unlikely the McCain campaign will follow Fareed Zakaria's advice and throw Palin under the bus, even if the wheels are nearly off the Straight Talk Express. Then again, after a string of uneven weeks and downright dismal poll numbers for the Republican ticket, Steve Schmidt, McCain's head political strategist, could call for a new distraction. Bank on Palin to stay in place, but don't forget this is a campaign prone to suspending itself.

Buy Democrats to Hold the House - The contract, which is currently trading at around 94, is a good way to balance out riskier investments. After all, if the Democrats don't manage to hold the House this year, all bets are off.

Short Biden to be Withdrawn - Even though die-hard Hillary supporters still maintain there's no way they'll support Obama, don't look for the Demoncratic nominee to placate the PUMAS with a last-minute VP switch. The Biden-t0-be-Withdrawn contract is only selling around 5.5, but shorting it is a sure way to make money in these uncertain times.

Sunday, September 28, 2008

Buy Wall St. Bailout Contracts Now

There's one obvious way Main Street can benefit from the unprecedented Wall Street bailout - by buying bundles of stock in the impending Congressional approval of the rescue plan.

While you were sleeping, Speaker Pelosi and Secretary Paulson emerged to announce that they'd ironed out a tentative deal

As of this writing, the contract on Intrade for Congressional approval of the bailout is selling at 86, suggesting that traders are still asleep at the switch. As a result, there's easy money to be made for early risers.

Sure, Politickr admits that it's entirely possible Congressional Republicans could once again scuttle the deal. The chance, however, that this bailout breakthrough will collapse is remote since the word from Washington is that both parties are now on board.

Bottom Line - There's clearly something ironic about buying stock in the biggest Wall Street collapse since the Great Depression, but it's far less risky than actually buying stock on Wall Street these days. With Congressional approval seemingly imminent (certainly by Monday), it's an opportunity you can't afford to miss.

Monday, September 15, 2008

David Brooks: Bet on Obama

David Brooks, the conservative New York Times columnist, urged the presidential campaigns to "double down on weirdness" in a column last week that argued Obama was at his best early on in the campaign when he was at his most unconventional. While Brooks' advice to political traders was less explicit, he implied on the NewsHour with Jim Lehrer on Friday that wise traders should be doubling down on Obama. 

"I still think it's very unlikely McCain is going to win," said Brooks. "I still think the McCain campaign is basically like a football team with a weak offensive line. They have pulled off some good razzle-dazzle plays to stay close, but the fundamentals are so terribly against them."

Despite the tightening polls and renewed hand-wringing by breathless Democrats (noted in Gail Collins' column), it's not time for Obama to panic, said Brooks. "If I were them, I would not be changing strategy," he said.

Bottom Line - Traders should also not panic. The sudden Obama sell off that followed Palin's RNC speech provided a good opportunity to double down on the Democrat. If you haven't bought Barack's stock lately, now is the time to heed Brooks' advice. Obama is trading below 50 on Intrade and several points behind McCain. If nothing else, he's bound to rebound at least several points in the short term. Cash in while you still can.


Sunday, September 14, 2008

Join Politickr on Facebook

Politickr is calling on all political traders to join our community on Facebook. If you're interested in talking about your trading strategy, tracking prediction market news, teaching newcomers how to trade, or just helping to develop our site, look for the "political prediction markets" group on Facebook.

Here's some of what we have planned in the coming days
  • Meetups for traders looking to connect with others active on Intrade
  • A daily newsletter to keep traders aware of political prediction market developments
  • Seminars on trading strategies and how beginners can get started on Intrade
  • The Politickr Fund
If you have any questions or suggestions, or if you just want to be kept in the loop about Politickr developments, email Politickr at gmail.

Thursday, September 11, 2008

Bill Clinton: Bet on Barack

Bill Clinton, who not long ago famously criticized Barack Obama's stance on Iraq as "the biggest fairy tale I've ever seen," is now foreshadowing a fairy tale ending on Election Day. With his party on the mend and his own political stock finally showing some strength, the former president-turned pundit-in-chief is doubling down on a new prediction: Barack Obama is going to win big!

"I predict that Senator Obama will win and win pretty handily," said Clinton, who met Barack Obama for lunch at the former president's Harlem office.

For his own part, the Democratic nominee seemed convinced. "He knows a little something about politics," said Obama.

Bottom Line - If you buy the fact that Bill Clinton has regained his magical political touch, it's time to buy Obama on Intrade.

Wednesday, September 10, 2008

Matthews: 80 Million Americans Will Watch First Presidential Debate

Politickr is as giddy as Chris Matthews to watch the first presidential slug fest slated for Sept 26. Still, we think the Hardball host may have gone a tad too far when he predicted on his show that at least 80 million people would tune in on a Friday night for the first presidential debate.

Mathews made his own prediction after citing some statistics he said he had his intern dig up about the first presidential fireworks between Kennedy and Nixon. More than a third of Americans reportedly tuned in for the first presidential debate in 1960, which, coincidentally, also aired on Sept 26. What Matthews failed to mention, however, was that Sept. 26 fell on a Monday in 1960.

When asked by the host whether an equal or greater proportion of Americans (100+ million) would tune for the Obama-McCain debate, his guests could have been forgiven for responding with Matthews' signature "HA!" Or they could have simply referred him to this.

While Intrade has yet to announce a contract on the size of the audience for the first debate, politickr has suggested one. Let the trading begin!

Tuesday, September 9, 2008

Countdown to...Oct. 15?

NBC News Political Director Chuck Todd, appearing tonight on Countdown with Keith Olbermann, predicted that the 20-month election campaign will come to an early end.

"Because there's so much early voting in this country, where the race is on October 15 is where it's going to be," said Todd.

Approximately half the states allow for some form of early voting, according to the National Conference of State Legislatures. Still, it should be noted that Virgina, New Hampshire, and Ohio are conspicuously absent from that list.

Any predictions on where Intrade will be on Oct. 15?

Monday, September 8, 2008

New Zealand Launches First Prediction Market

iPredict, New Zealand's first real money prediction market, launched today with a layout that looks strikingly similar to Intrade's. The site, which is run by the Victoria University of Wellington and so far only features contracts related to New Zealand politics, wasn't accepting U.S. credit cards as of this morning.

Midas Oracle reports that the New Zealand site received regulatory approval from the New Zealand Securities Commission to operate as a futures exchange under securities law. 

With its flashy design and intuitive interface, iPredict it will catch on fast. I also predict, however, that MSNBC will not be happy.  

Any predictions on the fate of prediction markets in Asia? Is Intrade looking to break into the Chinese market? Let us know in the comments.

Friday, September 5, 2008

HubDub Partners With Huffington Post

HubDub, the play-money prediction exchange, announced that it will provide its market data to The Huffington Post. The popular liberal blog, which recently unveiled its Big News pages to aggregate info on politicians and hot topics in the news, will soon sport widgets containing Hubdub forecasts.

Look for Sarah Palin's page to contain the latest Hubdub numbers on whether she'll pull out of the race (now an 11% chance according to Hubdub and a 6% shot, according to Intrade).

"We think our news obsessed users will get a kick out of Hubdub's fun forecasting feature," said Mario Ruiz, vice president of media relations for The Huffington Post.

See the full release here.

Thursday, September 4, 2008

About that Sinking Stock Market...Intrade Reports $100 million in trades while Wall Street Suffers

In a recent article on the predictive power of markets, the Financial Times buried the lede: Political traders at Intrade have invested more than $100 million in political stocks this election cycle, a six-fold increase over 2004! With a slick new site and more press coverage than ever, Intrade will continue to pad that number nicely over the final two months of the campaign.

With the Dow down nearly 350 points this afternoon, and with analysts like Henry Blodget predicting there may be a lot more pain to bear, prediction markets are poised to fill the void. Even as the CFTC is still deciding if and how to regulate political prediction markets like Intrade, some traders getting socked in the stock market have been diversifying their traditional portfolios with political futures.

One particularly bullish investor sees a very bright future in political futures. While acknowledging that such markets are still plagued by liquidity issues and other problems, he notes that "if a major exchange such as CME Group were willing to create a news event market and did it at their current standard it could become a trillion dollar (in outstanding notional value) market in months."

So, while traditional traders cling to the silver lining cited by Blodget after today's crash that "the farther stocks drop, the better the return long-term investors will be," and that "if the Dow drops another thousand points or so, investors might even be able to look forward to a 10-year return that exceeds that of cash" -- political investors are finding an unconventional way to stay afloat in the current trading environment.

Tuesday, September 2, 2008

McCain's Harriet Miers?

Political traders at Intrade are now betting on the likelihood that Sarah Palin, McCain's VP pick, will be withdrawn. The new prediction market contract, which was unveiled this morning and is currently trading at 13, comes on the heels of Palin's acknowledgement this weekend that her unmarried 17-year-old daughter is pregnant.

With the McCain campaign still too reticent regarding the rigor of its vetting process for some party loyalists, a handful of conservative bloggers are already expressing (pregnant) pause at their candidate's choice.

Still, Politickr is convinced that John Edwards would sooner claim responsibility for this pregnancy than John McCain would throw Palin under the bus for her straight talk. Any such acknowledgement that his first major presidential decision was so badly mismanaged would surely doom his candidacy. As a result, the new contract is a screaming short.

Other than the tabloids, the biggest winner here appears to be Intrade itself. The new contract has provided major news outlets, like Reuters, The Washington Post, and Huffington Post, with the news peg they need to write about a topic that has so far only generated off-the-record whispers.