24May2009
Posted by QuikSand under: Prediction Markets.
Back to sports a bit…
At WSEX, there are fairly active pseudomarkets for the pennant races in both leagues of Major League Baseball. In the American League, we see an intriguing spread:
2009 AMERICAN LEAGUE PENNANT (1-Pay) $100 WIN
Series Name Sell Buy
[AL] BOSTON 23 28 +257
[AL] NEW YRK A 22 27 +270
[AL] LOS ANG A 11 14 +614
[AL] DETROIT 7 9 +1011
[AL] TORONTO 6 8 +1150
[AL] TAMPA BAY 6 8 +1150
[AL] TEXAS 4 6 +1566
[AL] KANSAS CY 2 4 +2400
[AL] MINNESOTA 2 4 +2400
[AL] CLEVELAND 1 3 +3233
[AL] CHICAGO A 1 3 +3233
[AL] SEATTLE 1 3 +3233
[AL] OAKLAND 0 2 +4900
[AL] BALTIMORE 0 2 +4900
Let’s set that alongside the current AL standings:
Eastern Division W L PCT GB HOME ROAD STREAK
Toronto Blue Jays 27 19 .587 - 16-6 11-13 Lost 5
Boston Red Sox 25 18 .581 1/2 16-6 9-12 Lost 2
New York Yanks 25 18 .581 1/2 14-8 11-10 Won 1
Tampa Bay Rays 23 22 .511 3 1/2 11-10 12-12 Won 3
Baltimore Orioles 18 25 .419 7 1/2 11-11 7-14 Won 2
Central Division W L PCT GB HOME ROAD STREAK
Detroit Tigers 24 17 .585 - 15-6 9-11 Lost 1
Kansas City Roy 21 22 .488 4 14-10 7-12 Lost 4
Minnesota Twins 21 23 .477 4 1/2 16-9 5-14 Won 3
Chicago White Sx 19 23 .452 5 1/2 12-9 7-14 Won 2
Cleveland Indians 17 27 .386 8 1/2 7-11 10-16 Won 1
Western Division W L PCT GB HOME ROAD STREAK
Texas Rangers 25 17 .595 - 14-6 11-11 Won 2
Los Angeles Angs 22 20 .524 3 12-8 10-12 Lost 1
Seattle Mariners 20 24 .455 6 11-12 9-12 Lost 1
Oakland Athletics 15 25 .375 9 8-12 7-13 Lost 3
- - - - -
Here, we see several disconnects, but the single most obvious is that the two “big money” teams, BOS and NYY, are dominating the market. Both are widely viewed as major playoff contenders, but do not have dominant positions in the win/loss standings. Without exploring this too deeply right now, it’s safe to say that the extreme weight placed in those two teams makes for buying opportunities elsewhere.
Right now, I think buys on LAA, TB, and CHI all look like very appetizing plays. More to come.
5May2009
Posted by albionmoonlight under: Prediction Markets.
As it turned out, we had a sense to jump onto Souter when it could have made us some money, but the market was not liquid enough to allow us to profit. And, if you recall, I considered the whole market somewhat of a fool’s game anyway. Still, it was nice to have some information to put into the process beyond “Stevens is old” and have it actually be right.
From what I can tell, the market for Souter’s replacement is a bit more liquid, but certainly nothing like the Presidental markets or the sports markets. So, we won’t waste too much time here because, even if we get it right, it might not be information on which we could profit.
That said, what do we think right now? This article gives us something to read between the lines. Basically, Orin Hatch says that he and President Obama have not discussed names, but (1) he thinks that a decision is coming soon, and (2) he takes Obama at his word that he will not appoint a radical. Personally, I read between the lines there and think that he and President Obama have discussed names and that Orin Hatch is happy with the name that President Obama has chosen. I also (and this gets even more speculative) think that President Obama does not want to lose political capital on this pick–he’s banking all that he can to pass his health care and energy packages. So, if Obama does not want to spend too much capital, and if Orin Hatch is happy, then that means that the eventual nominee will be a very moderate candidate. Maybe Judge Motz from the Fourth Circuit? (Her age is another reason that Hatch would be willing to live with her). I actually don’t have a lot of names at this point. Maybe the lesson here is if some names get floated, and the objection to one of them is “that person is too conservative,” you should take your $5.00 flyer on that person.
Of course, getting the actual nominee right is generally the more difficult way to make money in this game. Any peaks and valleys that we can predict? Well, I don’t see any value in the White House putting out minority names as stalking horses. If they are not going to pick a Hispanic justice, then I don’t see why they would try and put one out there just so it will become more of an issue when they don’t nominate that person.
As always, don’t count out Hillary Clinton. Personally, I don’t see her leaving Sec. of State to take it, but her Intrade spread right now is 3.0/6.0 and I can’t see this process ending without some news outlet(s) taking the easy path of beating the drum for Clinton just so they can write about it. And I see no value for her in cutting the rumor off at the roots. If she wants to run for President again, getting S.C. buzz for a week or so and then graciously saying that you are happy serving your country as Secretary of State, but thank you for the honor seems like a nice thing to have happen. I could totally see Clinton getting to around 10.0/12.0 or so before she announces that she would not want the pick.
And, just as a complete flyer, I know that President Obama is close to Professor Cass Sunstein, who currently sits at 2.5/4.7. I could see him doing the “Let’s float Cass’ name out there to give him a bit of a boost” thing. Such floating would also help the President by making it look like he is thinking outside of the box before he comes back and picks a safe circuit judge.
So, to sum up: (1) This market is not quite liquid enough for our tastes, but (2) the eventual nominee might end up being a very moderate candidate–much more so that you would expect, (3) and if you are looking for some folks who might get a bit of a bounce, I would avoid minorities and look at Clinton and Sunstein.
9April2009
Posted by QuikSand under: Prediction Markets.
Some recent speculation suggests that perhaps Justice Souter, rather than the more venerable members, may be contemplating a departure from the bench. We have covered this market here a bit… and perhaps the Souter shares are worth investigating.
Thing is… our healthy position at 3.3 won’t do anyone any good without any sellers. Maybe the way to play this thin a market is to use this information as a counter to the more active segments? Maybe to sell shares of Stevens or Ginsberg…
30March2009
Posted by QuikSand under: Prediction Markets.
We have discussed here the difficulties in dealing with events that seem all but certain to occur, but contain some degree of hard-to-measure uncertainty. One such event lingering on the intrade markets is the winner of last Novembers’s Senatorial election in Minnesota.
If you’re reading the papers, you like a Democratic win (Franken) here as basically a lock, with just technical issues holding back from a $100 cashout payment. The intrade markets have been hovering north of $90 for a while, recently sitting just below $95.
Not so fast, says Republican Senate leadership. Read here from Politico on their thinking.
21March2009
Posted by QuikSand under: Prediction Markets.
While we here have tried to focus on the quantitative approaches to markets like those at Intrade, another approach is to try to beat them through being, well, Wiser Than the Crowd. Give that blog a look - they focus on long term markets offered through Intrade, with a bent toward cracking the underlying events to gain better information than the usual market participant may have. Interesting stuff, often a pretty good read.
Will be on the links page here, too.
9March2009
Posted by albionmoonlight under: Prediction Markets.
If you want to make big(ish) money in a low/no risk way, you can play discordant markets against each other. This site exists, in large part, to bring those opportunities to your attention. Sometimes, however, you don’t need to find two markets to play against each other; sometimes, your best opportunity is right in the next cubicle.
I live in the Raleigh-Durham area, which means that, this time of year, college basketball passions run high. The Madness is right around the corner, and Duke and Carolina Blue operate as the perennial spring fashion. Things, to understate the point just a bit, can get heated.
Which got me thinking. Certain teams (mostly college but some pro) inspire a wonderful, delusional insanity in their fan bases. You can take advantage of this insanity for nice small little scores.
Let’s say for instance that you live in Austin, Texas. And UT and Oklahoma are about to play football, with most sites putting Oklahoma as a five point favorite. It will not be difficult for you to find some Hook ‘Em Horns! nutjob willing to bet you on the game straight up. So you bet him straight up, taking Oklahoma. Then you place a similar bet online, betting on Texas +5. Do the math to see how this sets you up for an easy no-lose situation. And, you have a decent chance of winning both bets.
Now, some caveats, of course:
Vig matters. The bet is, of course, not “no lose” because your online bet will take a vig percentage. Depending on how often you do this, that might be enough for you to say “thanks but no.”
You probably cannot make big money on this. I don’t know about the kind of office in which you work, but if you are making the kind of “trash-talk” wager about which we are speaking (i.e. the kind of wager in which someone deliberately takes bad odds just to prove that he isn’t scared of you and your team of pussys), you cannot make it for too much money. Your whole point here is to keep the frontal parts of his brain from engaging. The bigger the amount of money, the more likely he is to consider what he is doing.
Will you get paid off? Or will your sucker demand that you roll the bet over to next week? Or just not pay you? Or start bitching about point spreads and how it “wasn’t fair” when he tries to get out of paying you?
As always, money and friendship/family/work can be a dangerous combination. Make sure that you don’t cause more problems for yourself by making your boss owe you money because you bet against his favorite team.
So, all in all, this is not going to send your kids to college. But, if you are willing to stay with small stakes, remember that you don’t need to find two discordant markets to play the middle. You just need to pay attention to who around you seems to like Notre Dame just a little too much.
21February2009
Posted by QuikSand under: Prediction Markets.
Today a new item has cropped up, detailing a letter circulating that details the winners of the major Oscar categories. From the BBC report:
The document, circulating on the internet, names Kate Winslet as best actress for her role in The Reader.
The list, which features an authentic-looking letterhead, also claims British film Slumdog Millionaire will bag the best picture and best director prizes.
Academy spokeswoman Leslie Unger said it was a forgery and the event’s auditors were still counting votes.
Since most of the top races this year are dominated by fairly heavy favorites, there’s little opportunity for something like this to move things, unless it predicts an upset. If you like Slumdog Millionarie to win best picture, a likely phony item like this isn’t going to make that look like a great betting proposition at 92 cents on the dollar, in most cases.
What, then, of Amy Adams, touted by the letter as the Best Supporting Actress winner? Intradehas her shares selling at 13.2 — a pretty good bargain, perhaps. It’s actually the most nearly competitive race among the higher profile awards — making it either a place to beat the conventional wisdom, or else an obvious place for a forger to come up with a surprise winner to add credibility. We’ll likely never know.
Is this a “beat the market” opportunity? Unlikely. Might the news spreading convince some to give it a shot and make this a “ride the market up a bit” opportunity? Perhaps.
20February2009
Posted by QuikSand under: Prediction Markets.
As the Academy Awards approach, close attention to offerings makes a difference. Prediction markets like those at intrade, set alongside futures markets like those at WSEX, sometimes suggest different paths.
Mickey Rourke is the favorite for best Actor for his work in The Wrestler. At intrade, your offering is to buy shares at $65 to win $100. That’s an implied return of about +154. WSEX is offering Rourke at 7-5 odds, translating to a +140 line. There’s no justification for these markets diverging this much, other than imperfect information, and the general tendency for a fixed-odds futures market to build in more house edge than a free-floating shares market. Intrade is the preferred spot for that wager, by far.
9February2009
Posted by albionmoonlight under: Prediction Markets.
A while back, we discussed Supreme Court retirements, and the markets related to them. Should Justice Ginsburg’s announcment that she has had cancer surgery cause us to revisit the thinking in that post? Not yet. All of the caveats discussed in that post still apply, and now we have the added caveat of having to be doctors and pretend that we know anything about how early-detected pancreatic cancer will affect the life planning of an elderly woman who has access to the best medical care in the world. This market is, at this point, still just gambling with a signficant house (i.e. bid/ask spread) edge.
I will, however, take the opportunity to note that some of the best information/speculation about the Supreme Court can be found at SCOTUS Blog. This blog is considered one of the better legal blogs out there, and it has a reputation to protect. It is not a rumor site. The first thing that you will see there is that the writer and commentors tend to approach their subjects with a kind of learned humility–always a good sign that when they do make a declaration or prediction, it is more in the manner of something they actually know and less in the manner of Drudge.
Basically, Supreme Court retirements are still personal decisions, and actionable information about them will still be rare. If, however, the market interests you, and you want to be a small step ahead of those getting their best info from cnn.com, then you may want to pop on over to SCOTUS every so often to see what they say about it.
4February2009
Posted by QuikSand under: Prediction Markets.
Since our last post on the inTrade markets for the Best Picture Academy Awards, we have seen the necessary consolidation of entries, as the five nominees have been announced. But surprisingly, the momentum for Slumdog Millionaire has seemingly driven this market to a foregone conclusion.
Is this movie such a lock to win the best Picture award that its shares should truly be selling for over 80 cents on the dollar?
WSEX has seemingly abandoned its long term markets for the Oscars — a shame, since they were seemingly pretty beatable in the past. Alas, we’re principally left with non-quantitative analysis like this — interesting and potentially enlightening, but not really a formula for beating a market.
A price of 80 or more, in something so tough to analyze, seems to beg for a “beat the market” approach. But without an obvious second choice (Crash, anyone?) it’s tough to conjure up anything on that front. Short Slumdog? Sorry, once bitten, twice shy there.