Questions about using InTrade
InTrade currently (post GOP convention, pre Dem convention) has Obama's chances at 57.5%. This means that you can buy shares at $5.75. If Obama wins in November, you get $10.00 per share. If Romney wins, you get nothing and lose your $5.75.
My first questions relate to due diligence. Has anybody here transacted on InTrade? Are they a trustworthy service? Do they settle promptly? Are there any hidden fees?
Beyond that, I am wondering about something more strategic. It seems to me this election (like almost every election) will be won on perceptions. Americans like to go with the winner. If Obama is packing in big crowds -- and I think he will -- that energy will attract many fence-sitters.
InTrade may be a significant part of this perception. It is a "crowd source" site. Because it represents people who "put their money where their mouth is, it may carry more weight than some polls.
If you look at the Obama shares http://www.intrade.com/v4/markets/contract/?contractId=743474
you will notice that the majority of posts are from right-wing morons bloviating the usual talking points. I also notice that 57.5% is significantly less than the odds Nate Silver gives Obama.
So here's the real question. Why shouldn't we take these right-wingers' money? If we believe Obama is going to win, this is an opportunity for a 60% return in 60 days. And if a bunch of us bought those shares, then the InTrade prediction would move much closer to the 70ish% that Silver has, helping to fuel the self-fulfilling prophesy.
Any thoughts about this?
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