Someone has been keeping John McCain's stock, which had been plunging along with the Dow long before he ever invoked Joe the Plumber at the final debate, from sinking all the way down the drain. Intrade, which just revealed the results of its own internal investigation into the suspicious trading, fingered a single, rogue "institutional" trader for artificially inflating McCain's stock price and causing the mess. But even with a slew of major political news outlets now following the story, from CQ to Politico, there still seem to be more questions than answers. Why would a trader flush with funds sink hundreds of thousands of dollars into what surely looks to be a losing bet? Who could be behind the price manipulation?
A couple of theories seem to be emerging:
- In a post on Midas Oracle, one commentator suggested the culprit could be Centrist Messenger, the campaign advertising company that guarantees your money back if you bought an ad for the losing candidate. While it's apparent that the company has been hedging on Intrade, is it really possible that it's been spending hundreds of thousands of dollars on McCain just in case he pulls out a November surprise and it's forced to pay back devastated Obama supporters?
- Clusterstock suggests that it could simply be a bullish McCain trader skeptical about the polls. While this may seem implausible on its face, it's important to remember the most dramatic Intrade success story reported in the media so far this year:
Just a couple of weeks ago, The Washington Post retold the story of Bethan Brome Lilija, a trader who risked $75,000 on McCain back when the Arizona Senator was low on money and had been left for dead by the pundits. On Intrade, his shares were down to around 5.
John Stossel told the same story in his May 2008 report on 20/20.
Given Intrade CEO John Delaney's account of an "institutional" investor, the first scenario seems more likely. But at a time when the economy seems even gloomier than McCain's prospects, some traders are surely once again buying McCain for a buck and hoping to win the lottery.
2 comments:
I actually think the institutional trader explanation holds water although I can see why a lot of people are so skeptical. The 'hedging' had a major impact on the price of the market which coincidentally is the market that is widely reported (the Democrat/Republican contract isn't).
It wasn't me... And the Post story didn't quite get the numbers right. I bought more like 20k McCains. It wouldn't have been possible to buy 75k worth last fall without driving the price way up. I had another 75k invested in other contracts was the confusion. Thanks.
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