I kept hearing about how this or that political campaign or economic scenario was “trending on Intrade”, so I thought I’d check it out. Then, of course, I had to make some bets. It’s fun! But not a good way to make money I think.
The rules couldn’t be simpler (That page doesn’t mention the flat $4.99/month it costs to play.)
I’m totally not a gambler. Played a bit of poker in college, without much success. Anyone in my trade finds themselves in Vegas sometimes, so once I went and got $100 and tried the casino thing; lost it in an hour without having much fun.
But I’m a keen student of world affairs, and a news-hound. And I quickly saw some markets I couldn’t resist, so I dropped in a big $200, and let’s see how it goes. Just by way of transparency, here are the bets I have on the table. These are all out of 10 so, “$3.30” means a prediction that the likelihood is 33%.
Bashar al-Assad to be dumped by the end of 2012, at $6.13 (currently up to $6.50).
Shorted Condi Rice for Mitt’s VP pick at $0.50 (currently $0.54).
Shorted UK loses its AAA rating in 2012 at $3.30 (currently $3.30).
Problems · I think I’ll probably do this at a low level, for a while at least, purely for the pleasure of matching wits against the hive-mind. But unless I’m missing something (perfectly possible only a few days in) there are two obstacles to making real money.
The market isn’t very liquid. Suppose I think that the current (as I write this) price of $6.57 to bet that Bashar’s gone by 2013/01/01 is low, and I want to up my bet. At the moment, there are only 5 shares on offer at $6.57.
Also, the difference between buy and sell ($6.57 and $6.15) seems steep.
A super-tempting way to make money is to short very-unlikely things where the share price hasn’t gone to zero. For example, Condi is not gonna be the Veep nominee, because she’s pro-choice, and also the Republicans know they can’t win without the racist vote.
But to short her at $0.50, you have to lock up $10 a share, because that’s the cost if you’re wrong. The conventional wisdom is that Mitt will make his pick around August 1; so to make 50¢ I have to park $10 for several weeks.
Did I Mention... · that it’s fun? I don’t know, if my bets keep paying off, I might even put some more money in. But more likely, I’ll just feel quietly smug about outsmarting the world in a small but quantifiable way. And if they don’t, humility is a good thing, and it might still be fun; we’ll see.