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Wed Jul 18, 2012, 04:34 PM

How Obama shares at Intrade are tracking stock market

Not familiar with Intrade? Go here: http://www.intrade.com/v4/home/

As stock market fares, so will Obama
By Allan Roth (CBS)

(MoneyWatch) Will President Barack Obama win another term? If he does, it will have little to do with health care or televised debates. The only thing that matters in his re-election is largely outside of his control, and that is how the stock market performs between now and November. Here's why.


Referring to the robust market for trading in American politics, Carl Wolfenden, exchange operations manager at Intrade, noted that though the company also makes markets to speculate on European politics, such trading isn't nearly as active. Trading in American politics is likely more active because "in America, politics is a blood sport," he said.

As you might imagine, the U.S. presidential election is the most frequently traded instrument. As of this writing, Obama shares were trading at $5.59 a share. That means a share purchased for $5.59 can be cashed in for $10 after an Obama victory or end up as a worthless security if he loses. Put another way, the $5.59 price translates to the market believing Obama has a 55.9 percent chance of winning.

It appears that, on average, every 1 percent change in stock prices translates to a 1.14 percent change in Obama's prospects of a November victory. In case you think the relationship between U.S. stocks and Obama's chances are random, statistically the odds that this relationship is real are well over 99.999999999 percent.

More at: http://www.cbsnews.com/8301-505123_162-57468124/as-stock-market-fares-so-will-obama/?tag=re1.channel

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