Wednesday, May 25, 2005

XXXXX bites the dust in The Half-Blood Prince

Spoiler alert: Do not click on the title if you don't want to know which major character will die in the latest Harry Potter book to be released in mid July.

It's not trading on which surprisingly (to me) has John Bolton's chances of confirmation at 90/96%. That 90 bid is mighty tempting...

[For new readers and/or those not familiar with the markets, "90/96" means there is someone willing to pay 90 units to win 100 units (including the 90 invested) and someone else is willing sell the right to win 100 units for 96. Odds are also given in the 3-1 format which translates to bet 1 unit to win 3 (or about 33%) or 1-4 which is bet 4 to win 1 (about 80%). I like the decimals much better.]

Some folks argue that these markets are nothing more the collections of conventional wisdom. I disagree. These are betting markets where folks are investing their money. There are regular folk who do this but there are also some very clever folks whose primary driver is return. If the conventional wisdom is significantly off-market the clever folks aka market forces will push it back towards equilibrium. When deciding whether markets like these are accurate, keep the following in mind:
1. Is there good access to the market?
2. Is there good volume in the specific contract/event?
3. Is the market free (not signficantly manipulated)

In each case the more the better.

Other interesting markets:

- Bo Bice is 58/60 to win American Idol
- France to pass EU Constitution 38/39
- Liberals to win the most seats in next Canadian federal election 50/54

HT: Instapundit

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