Acknowledging that my own perspective on the possible US election outcome might be colored by hope and my own pathological optimism, I have taken some refuge in the wisdom of crowds as a better predictor of these events. While polls may be imperfect and the "Bradley factor" may still be in play, there is place where thousands of "investors" are playing with real money buying and selling shares in the possible outcome of hundreds of events around the world, including the US election.
Attached is the latest graph of the contract price for a share in "Barack Obama to win 2008 US Presidential Election" on www.intrade.com. Today's price for a share is 84.5, which means that there is an 84.5% chance that this will happen and the cost would be US$8.45, with a possible payoff of US$10 after November 4 2008 (when the possibility would be 100% if Obama wins.) Conversely, the price of a share in McCain is currently selling for 15.9, a great potential for profit if you believe that the Republican candidate's campaign will suddenly engineer the biggest election comeback in history. But, when people are investing their own dollars, with the possibility of real profits and losses, smart money today is on the Democratic ticket.
As an intelligence tool, InTrade is very valuable for sniffing out possible movement in areas where only insiders might have knowledge and they, or their friends, would try and profit on events by trading in them early. Imagine that a small group of people in Washington (or the Virginia suburbs) and in Afghanistan knew that an incursion into Waziristan was being planned and that this might result in the capture of Osama bin Laden. Leaks happen, word gets around and suddenly there is accelerated trading on the shares of "Osama Bin Laden to be captured/neutralised by 31 Dec 2008" on InTrade. If I were a news editor or writing intelligence guidance documents for analysts, I might want my people to start paying some attention to chatter coming out of region. Also, if you were hoping to avoid an "October Surprise", Intrade would be a good place to monitor.
I'm not superstitious, however if the gods do abhor hubris, I prefer to be careful and not tempt or provoke them just in case. In October 2004, the New York Yankees were three outs away from sweeping the hated Boston Red Sox in the American League Championship series when the TV broadcast showed workers in New York at Yankee stadium already painting the World Series logo on the field, anticipating a Yankee victory. I remember wincing at that moment, knowing that this would only anger the baseball gods, if there are such things. Indeed, the Red Sox came back to win that game in the bottom of the ninth inning and then won the next three games for the pennant, beating the Yankees and going on to sweep the World Series, 4-0.
That said, this is politics and not sports. The polls look good, the InTrade futures market looks good and both trend lines and my gut feelings are indicating an Obama sweep. However, just to keep the level of hubris down below that which might anger the gods, let's add the caveat that there is a long time before election day and, well, anything might happen.
(This was originally posted to my Facebook notes on 17 October 2008)
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