Yield of Dreams

Who's Going to Win the Presidential Election? Let the Markets Decide


There are markets and exchanges for determining which companies and sectors do well and profit, why not do the same with the presidential elections? On Intrade.com, you can buy and sell shares of Obama or Romney, depending on who you believe will win the election. (I don’t know the legality of using the site in the U.S., but it’s based off-shore.)  

Right now, Obama’s selling for $6.75 a share, meaning the market believes he has a 67.5 percent chance of winning. To bet on Romney, you’ll pay $3.25 a share, meaning he’s got a 32.5 percent chance, according to the predictor site.

Surprisingly, after Wednesday’s debate, which many say Romney won, Obama’s stock price was up 0.9 percent, while Romney’s fell 2.7 percent in Thursday trading.

The trouble with this is, investors may put their money into the candidate they want to see win the election, not who they think voters will turn out for. Or vice versa. More emotion goes into it. So my theory is, anything can happen. Markets aren’t always right, but worth looking at. After all, we know retail investors usually do the wrong thing: Buy high and sell low.   

That said, if you really want to put your money where your mouth is, check out Intrade.com.

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Casting a gimlet-eye on asset management issues.

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