Wednesday, September 01, 2004

Iowa Electronic Market Being Played?

Look at this interesting development over at the Iowa Electronic Market. The market is famous for predicting the outcome of previous US presidential elections better than any poll or exit poll has done, and people can trade contracts on the outcome of the November 2 Presidential elections. In the 2004 Presidential Winner Take All market, DEM04 contracts closed on August 30 at $0.452 having traded between $0.450 and $0.454 at normal volumes, and REP04 contracts closed that day at $0.549, with lows of the day at $0.540 and a high of $0.548, also at normal trading levels.

Then, on August 31, the second day of the Republican National Convention, volumes are up almost four-fold on both contracts, shorting REP04 to bring it to a close of $0.501 and heavy buying of DEM04 brings it to $0.500.

Did somebody make a quick buck? Current quotes show DEM04 trading at $0.463 and REP04 at $0.540.

Evil thought: Is some Dem operative with deep pockets playing the IEM, to ensure the closing prices graph shows favorable DEM04 ratings, to unload again at the beginning of the next trading day?

It's costing money, but does in return provide the Dems with a favorable reading in what some of us consider a more valuable tool in gauging the country's opinion of both candidates.

Ok, evil thought over. Would like to hear the IEM's thoughts on this, though, or anyone investing in it.

UPDATE: D'oh! While emailing Greg Reynolds of with the tip that's for sure going to put my blog on the map, I see that he already has done an exact copy of my post, way earlier too. Oh well, that's why he's the instapundit. Next time, though!