Wednesday, September 01, 2004
He's about as close to the White House as he was to Cambodia.
UPDATE (9pm): Blogger ate an addendum on this. Just as I posted that, Instapundit noted a post by Tom Maguire on the funny behavior of the Iowa Electronics Market, where Kerry closed to even money Tuesday from 46-54 down on Monday. It's important to recognize that IEM is a very thinly traded market. Many days their trade volumes are under $1000. Somebody who wanted to make a big buy of Kerry contracts or to go short on Bush -- perhaps even to move the number for purposes of news or blogging -- might be able to do this for $500. And given the ability to undo a trade within a few days, the amount of capital at risk is a fraction of this. So I don't agree with Maguire that it makes no sense for someone to manipulate this market -- I have an account there, and if I deposited $1000 to it, I could probably make some movements occur.
To get the idea, I drew this graph like a stock chart (a hi-lo-close with volumes). Look at the size of the volume on the 31st, when the contract changed.
The price has already returned to the 54-46 Bush advantage as of 8:42pm CT tonight (9/1). It will be interesting to see the volume. It's important to remember that the contracts are continuously traded -- there is no opening price like a stock would have, and what we're calling a "close" is really just the price that happened to exist at 11:59:59pm Central. The fact that the high price occurred at that time makes me a little suspicious that someone was "running the tape". Without access to continuous time data from the market, I have no way to prove that. So when Pejman says this is something Iowa needs to "remedy", I would argue we need to see the continuous tape before we know anything about that.
But it's pretty clear it's a thin market, and in thin markets one big trader can move a price. In contrast, while I don't have an average daily volume number on Tradesports, volume yesterday was $18,400, more than eight times the volume on IEM. As I noted above, there wasn't a big move on that market. And the fact that the Vote Share market on IEM did not move pari passu with the winner-take-all is another possible tipoff. (Indeed, volume on Pres04_VS was practically nil on the 31st.)
You might have a good deal of fun matching those moves in the Kerry contract price with news events, but I'll leave that one for another blogger. To save load times I won't post the Bush price chart, but if anyone wants it and the data, just mail the site.