Midas Oracle .ORG » Alex Forshaw

Intrade: Obama and Clinton at near-parity

Alex Forshaw — Fri, 06 Jul 2007 22:32:16 +0000

Full disclosure: I trade real money in all markets mentioned.

Both preceding and after the utterly uninformed pronouncements from the past week or so that Hillary was “the one to beat,” that she was “in a league with Tiger Woods and Roger Federer: no. 1,” the futures markets have voiced a somewhat different opinion.

Hillary, past 120 days:

Obama, July 6:

There was an unfortunate misperception that Hillary became an overwhelmingly dominant frontrunner on the betting markets, exemplified by the two articles to which I linked. The only time interval in which that was even arguably true was during Obama’s dip in early June.

Anyway, basically, Obama’s second-quarter fundraising prowess constitutes the second time in a row in which he’s demolished the Clintons at their own game. (The meaning of Q1 numbers is much less clear, because lots of politicians, such as John Edwards in 2003 and Mitt Romney in 2007, wrung their personal networks for as much as they possibly could in the first quarter. The second quarter calls for more breadth and depth in one’s donor base.)

Poll numbers do not mean too much at this point; Joe Lieberman was still winning the Democratic primary at this point in 2003, although nobody took him very seriously. Hillary Clinton has Lieberman-esque name recognition, but her campaign suffers from a yawning enthusiasm gap and a weaker, more reluctant donor network.

From this point on, Obama can expect to be taken at least a little more seriously by the decaying, but still all too relevant MSM. More positive coverage will translate into better poll numbers, which will further undermine Hillary’s campaign.

With Gore having issued something akin to a “Sherman statement” yesterday, and Edwards utterly unable to move the debate beyond the price tag of his last haircut and his own work for the Fortress hedge fund, the Democratic primary is coalescing into a Hillary-Obama slugfest.

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Ron Paul’s zealot(s) on Intrade

Alex Forshaw — Sat, 09 Jun 2007 14:40:41 +0000

It doesn’t take a latte-sipping DC elitist to understand that Ron Paul has a 0% chance of winning the Republican 2008 presidential nomination. Ok, fine: .1%. I’ll even concede .2% for the sake of argument.

One funny feature of the Paul campaign has been spamming online polls and journalists’ inboxes in a (not very credible) attempt to create the impression that Ron Paul should be taken seriously as the candidate of a silent plurality of the GOP.

But you have to give Ron Paul’s axis of spam some credit. Over the past month, they’ve been pumping him up at Intrade, too.

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Flipping off your base: a cautionary tale

Alex Forshaw — Tue, 22 May 2007 20:50:51 +0000

Any guesses as to when that immigration bill made the news?

Anyone?

McCain has blown nearly 40 percent of his contract’s value in one week.

With the obvious exception of speculative attacks, I have never seen a (sustained) decline of that magnitude in so short a time.

(cross-posted from my blog, The Tradesports Political Maven)

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Intrade politics roundup, May 18

Alex Forshaw — Fri, 18 May 2007 23:40:12 +0000

Monsieur Masse asked me to offer another nomination-futures roundup. I was happy to oblige.

First, the Republicans.

Fred Thompson has not impressed at his two “policy” speeches thus far (the first in OC, the second at the “Council for National Policy,” a secretive, no-journos-allowed social conservative powwow in Virginia). My insider at the CNP speech said that Thompson was a “huge disappointment” there. So he has bled quite a bit. I still think he will run (and seriously shake up the race), but he hasn’t helped himself thus far.

McCain has done respectably in the debates thus far. However, he dropped from 28.1 to 24.6 in a few hours yesterday. Tom Bevan of RealClearPolitics was correct in linking McCain’s 3.5-point decline to his suicidal support of the slag-heap of an immigration bill that emerged from Ted Kennedy’s office. (The graph doesn’t reflect that, yet.)

Romney refuses to die. Just when he had nothing to show for millions of dollars spent on his Iowa, New Hampshire, South Carolina and Florida organizations (not to mention ads), he has become competitive in Iowa and probably in the lead in New Hampshire. (Although he still languishes at around 6 percent in the Southern states.)

Romney got a boost from the first debate. He did poorly in the second, and there hasn’t been enough time for polls to evaluate any second-debate fallout.

From a high of 42 percent, Rudy was in complete free-fall until the second debate, which he apparently “won” by putting words in Ron Paul’s mouth. He desperately needed the boost. The media’s orgiastic spinmeistering will probably arrest his decline in opinion polling.

The Democrats:

My boy Barack had some lousy polling come out a week and a half ago, in which his gap with Hillary, which he had almost closed, suddenly widened again. This week some more polls came out showing a re-tightening. However, Obama is still well shy of his peak. He and Hillary seem perfectly-inversely correlated for 80 percent of the market; Gore, Edwards, and the minor candidates split the remaining 20.

Even as Edwards has groped for the antiwar mantle with his “We the People” ads, he continues slow-bleeding to political death. He is not making the sale.

Gore is immutably fixed at 10 percent. Until he issues a Shermanesque denial, he will probably stay where he is. He consistently commands ~15 percent in national polls.

I don’t see Gore entering; I think he likes the added media attention of a “potential 2008 presidential contender,” as opposed to an “environmental activist.” It gives his pet cause more press.

His endorsement will be crucial. Given Gore’s long-rumored dislike of the Clintons, I don’t see him driving a very hard bargain in endorsing Obama.

As with Hillary and Obama, Gore and Edwards seem to be closely inversely correlated, for about 17 percent, with Richardson getting the remaining crumbs. This pattern has proven very stable over a period of months.

(all that and more posted at my blog, the Tradesports Political Maven)

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Political futures, exam-week edition

Alex Forshaw — Wed, 09 May 2007 13:25:29 +0000

Since last week’s poli futs post was so popular, M. Masse and I agreed that a sequel was not just right, but necessary.

First, the Democratic frontrunners…

I have not been able to figure these two. Through good news (April 1-20, early May) and bad polls (the past week), Obama remains stuck at about 31%. Hillary’s contract is more sensitive to good news than Obama’s is, but she sticks to 47.5 like super glue, over wholly respectable volume in the thousands. The only clear shift in the long-run baseline occurred with the release of Q1 fundraising figures, in which Hillary lost about 4 points.

Edwards has moved very little. No surprises here.

Gore weirds me out.

On a big-picture level, everything Gore is doing screams “Gore’s running“. He has a bunch of upcoming events that will keep him in the headlines on his signature issue; he is coming out with a partisan-pulp political screed soon, if he hasn’t already (The Assault on Reason); he is building a large email database (ostensibly for Gore to “send a message from America to Washington” about global warming); and so forth.

But the math simply is not there. John Edwards’ loyalists are sticking by him, even as his promises have become outlandishly un-credible. Opinion polls have shown that most Edwards supporters would shift to Gore if Edwards dropped out, with Obama getting a sizeable minority, and Hillary less. Edwards’ refusal to quit is boxing Gore out of the race. Since Gore would probably place third upon entering the race, it’s hard to see him going through the trouble of running.

Furthermore, high-information Democrats are the ones least enchanted with a Gore run. They remember his weaknesses in 2000 all too vividly.

But a few people at most have been quietly buying thousands of 2008DEM.NOM.GORE contracts and 2008PRES.GORE contracts over a period of months. There is a lot of quiet buying support there that isn’t supported by publicly available information. Furthermore, the buyer(s) have shown some sophistication, buying into both the Democratic-nomination and the presidential outright-winner contracts — spreading impact costs over more securities than the obvious one (the nomination contract)

Occasionally, this has resulted in Gore’s presidential-outright probability exceeding his Democratic-nomination probability. That is “inverted yield curve” in event-derivative-speak.

Usually, when those proportions of money and time (with a little sophistication) are involved, the big buyers possess significant undiscovered private information. In other words, Gore’s leaning heavily towards running, if he hasn’t set a late announcement in stone. That, at least, is the implication.

Now for the Republicans:

Giuliani hasn’t changed much since last time. As Jason and I have documented, one buyer is striving mightily to prop up Giuliani’s price as much as he can. It hasn’t worked very well, and at the rate the Giuliani campaign is going, they’re headed for sporadic tumbles trending to zero.

Fred Thompson didn’t impress at his OC Republican debut. Given the factionalization and despair plaguing the GOP these days, I have no clue where FT is headed.

Romney did decently well in the first debate, and benefited from Thompson’s underperformance.

However, as he becomes a credible contender for the nomination, electability is going to be a huge issue for Romney, whose negatives and head-to-head polling is the worst of the major Republicans, by a mile. (In my opinion, that has to do with how overslicked he is; I don’t think Mormonism will matter much in the long run.) The ladies love Romney, but to many people, Romney’s “slick” is more unshakeably sleazy than John Edwards’.

McCain had a huge spike yesterday which has mostly subsided. The “last man standing” nature of the GOP primary, in my opinion, is a major help to McCain, particularly as McCain’s moderate competition - Giuliani - continues to implode. McCain is back to 23 today, although yesterday he got as high as 31, briefly eclipsing Giuliani. (I swear, I had nothing to do with it.)

(originally cross-posted from my blog, The Tradesports Political Maven)

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2008 candidates: the bottom line

Alex Forshaw — Sun, 29 Apr 2007 17:55:49 +0000

Here are some candlestick graphs of the major Republican and Democratic 2008 contenders over the past 50 days (when Fred Thompson’s contract began trading). The bottom graph for each measures the percentage fluctuations in trading volume relative to previous trading.

These contracts are gauging the outcomes of the primaries, not the general election.

Note the huge drops and retracings. They had to do with Edwards’ and Thompson’s respective cancer announcements.

Here’s Giuliani’s 50-day trading period. The drop really accelerated before Giuliani’s publicly-funded abortion blunder, if my trading memory serves…

—-

Here’s Giuliani’s performance over the past 75 days. The volume shown backs up Jason’s earlier assessment, which shows about 30k in Giuliani manipulation during the first week of March. Whoever that guy is has about 20k shares at an average price of 34-38. Whoever that guy is, is in the hole by what, 10 grand? More?

Here’s Al Gore. He has been very volatile.

And now for the GOP’s dream candidate herself:

Barack Obama is the “greenest” by far, but for some reason his moving average is still pretty flat around 30.

And the Mormon dude…

(Originally posted at The Tradesports Political Maven)

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Ruminating on political futures activity

Alex Forshaw — Sat, 28 Apr 2007 20:06:13 +0000

With regards especially to the Republican side of the field, the markets are having a difficult time pricing the two unannounced heavyweights of their respective parties’ nominations: namely, Fred Thompson and Al Gore.

On the Republican side, there has been a yawning enthusiasm gap between the grassroots and the GOP “frontrunners.” This gap was the catalyst for Fred Thompson’s unannounced candidacy.Thompson peaked at about 20.5% a couple of weeks ago, after resurging from a low spread of (4, 6) at the time of his lymphoma announcement.

Since then, Thompson has tumbled to a recent low of 13 — and if anything, I slowed that trend slightly.

Every additional day of Fred Thompson’s silence causes me to veer back to my conspiracy theory that he will drop out and endorse McCain at a strategic moment. I find all the chatter of “don’t worry, Fred will be able to raise $20 million overnight in online donations” somewhat suspect.

On the Democratic side, meanwhile, there is much less of an opening for Al Gore. Gore polls at 12-15 percent, and that number is heavily skewed towards low-information Democrats; in other words, his support is unusually soft, and will depreciate quickly relative to other Democrats’. He barely polls 10% among Democrats paying “(very) close” attention to the race.

And it makes sense. The Democratic base has credible candidates whom they trust as ideological brethren (to a much greater extent than on the GOP side, anyway).

For all that, Gore has proven heavily resistant to my short selling. He’s pushing 12% on Intrade; BetFair, a smaller-volume, overwhelmingly non-American market, has Gore priced at 17.5%. (No arbitrage possible, at least not for us Americans… BetFair axed its American membership to stay on the US ~~casino industry’s~~ Department of Justice’s good side.)

I haven’t found any new data suggesting that Gore is running, let alone that he has an opening to exploit. Just more of the same “small circle of Gore advisers meeting in a secluded place to shove Gore into the race” non-articles.

But there’s a decent amount of money keeping Gore where he is, it’s not just any low-information Capitol staffer trying to stretch a few hundred bucks on happy-hour gossip..

(cross-posted at my blog, The Tradesports Political Maven)

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Thoughts on the Democrats’ debate

Alex Forshaw — Fri, 27 Apr 2007 14:57:47 +0000

Dennis Kucinich is stupid; Mike Gravel is utterly insane. Both make Barack Obama’s pacifist tendencies look like the second coming of Genghis Khan.

Edwards’ performance was mediocre. When he wasn’t disavowing his $400 haircut, he needed to have a question repeated to him after two candidates had answered it. Also, that long pause on the last question was weird — I think Edwards meant it as thoughtful theater, but it came across as simply odd.

But I’m biased against Edwards. At best, Edwards met expectations, which means he lost. He really needs to make grand slams out of these high-profile media events to gain momentum, because he lacks structural support among Democratic financiers.

Richardson did very poorly.

Unlike Mickey Kaus, I don’t think Obama “soared,” but because Obama’s competition for the left half of the Democrats underperformed, Obama won by default. Just like the 2004 Illinois Senate election, Obama’s enemies are unwittingly paving Obama’s way to victory.

Biden was funny, but he’s not, nor will he ever be a serious candidate. Both he and Dodd were good to have there — I was surprised to see Dodd refuse to bash hedge funds at all and compete for the “pro-growth Democrat” label. (He’s up to his eyeballs in i-banks’ money because he’s the chairman of the Senate Banking Committee.)

RealClearPolitics, the political news aggregator, has an MSM roundup of the debate, although in my opinion it merely shows how stupid the MSM is. As is the case with MSM 99% of the time, the data tell a different story.

According to a SurveyUSA robopoll of 403 debate watchers, Obama won the debate.

(compiled from my political futures blog, The Tradesports Political Maven)

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Leading political indicators

Alex Forshaw — Tue, 24 Apr 2007 15:39:28 +0000

American politics does not suffer from a shortage of polls. Zogby. Gallup. Rasmussen. SurveyUSA. Mason-Dixon. Polimetrix… In an information-glutted world, what matters is not the supply of sources, but the ability to glean trustworthy information from the larger swath of poor data.

Different polling organizations have different strengths and weaknesses. Some use “tight screens” to scope out likely voters; others simply sample registered voters, without making any attempt to tighten the survey base to “likely voters.” Tight screening is especially crucial to gauge the true state of a primary, when committed base opinion can diverge significantly from less engaged moderate voters, and more importantly, influence those moderates over time to converge to the more partisan perspective. Some use human interviewers, although recently that has given way to IVR (Interactive Voice Recording) polls (the kind where a computer talks to you and asks you to “press 1 if you will definitely support X, 2 if probably…”)

I have found tight-screen, IVR polling to be the most reliable. IVR not only has no marginal cost, but it eliminates all the biases resulting from trying to give the most pleasant-sounding answer possible (the “sexy grad student effect” that exaggerated Kerry’s margin by 15 points in Pennsylvania 2004 exit polling, for example). IVR possible responses can also be randomly rotated from respondent to respondent to eliminate recency biases (first and last responses in a list exaggerated because those are at the forefront of a person’s memory of the list, not because s/he will vote that way).

The poster-child of IVR tight-screen polling success is Scott Rasmussen’s Rasmussen Reports. I have only tracked them over the last two election cycles (2004 and 2006), but considering that 2004 was a GOP wave and 2006 a Democratic wave election, I think the data is sufficient to form a valid judgment. Rasmussen’s track record is simply stupendous. It predicted 49 out of 50 states in 2004 correctly, usually within two percentage points of the actual outcome. In 2006, Rasmussen achieved similarly impressive results — all the more impressive when you consider that most polling models tend to err in favor of one party or the other. (”Likely voter” models tend to favor Republicans, and registered voter-based models tend to exaggerate Democratic strength.)

My other favorite sources include Gallup and Mason-Dixon. Gallup comes closer to the “registered voter” model than the tighter Rasmussen model, so Gallup usually lags tighter-screen polls. By election eve, however, the two models usually converge. Gallup’s election-eve congressional generic vote is hands-down the best in the business. However, their numbers for party primaries have poor predictive value, because they don’t make much effort to hunt down likely voters.

Differing survey methods can yield very different results. Rasmussen has long shown a much closer Democratic nomination race than most established, “registered voter” pollsters — most recently, it showed a 32-32 tie between Clinton and Obama, with Edwards wallowing 15 points behind. Gallup’s last numbers tightened drastically to a 31-26 race between Clinton and Obama (Gallup’s numbers are also hard to compare with Rasmussen’s because Gallup includes Gore).

Many smart Democrats, notably MyDD’s Chris Bowers, believe that Gallup and others are mistakenly including lots of “low information voters” who simply lag the opinions and thought processes of more-attuned Democratic partisans.

Now that more establishmentarian polling firms are coming in line with Rasmussen’s results, one can infer that the likely voter/ Chris Bowers theory has gotten the better of the argument.

A survey of pollsters wouldn’t be complete without knowing which ones to stay away from. Stay away from Zogby and CNN polling. James Carville’s and Stan Greenberg’s DemocracyCorps polling outfit is not trustworthy, either — for example, when they doubled the percentage of blacks in an October 2006 survey sample to bump the Democrats’ generic advantage by 5 points, to reinforce the Democratic narrative of a building wave.

Lastly, partisan pollsters in a competitive election season should always be taken with a grain of salt — they will use heuristic subtleties to create the best impression possible for their party’s candidates. Strategic Vision, a Republican outfit, deserves a three- or four-point handicap. Franklin Pierce generated a dubious Romney result for New Hampshire right after its lead pollster, Rich Killion, went to work for the Romney campaign. Such polls should be trusted only as a last resort.

For those of us who wish to divine movements in politics futures, discerning trustworthy data from bad data is paramount. Poll-rigging is the high art of Washington, DC, and as any interest group — or candidate — knows, it’s easier than easy to produce a poll that diverges wildly from reality, if the heuristics are threatening enough.

(cross-posted from my blog, The Tradesports Political Maven)

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Danger of “self-fulfilling prophecy” in political event markets

Alex Forshaw — Tue, 06 Feb 2007 14:57:02 +0000

People near the eye of the storm in DC have a way of always getting drawn to one side or the other, with very few exceptions. Those biases also creep into the polling business, making the outcomes of American politics even less predictable than they already are, because the information becomes so suspect. Questions such as, “Does RasmussenReports have a hidden Republican bias?,” and “Does AP/Ipsos slant its polling to undermine the Republican position?,” and “How the hell did John Zogby ever become somebody in this business?” are always on the minds of us political junkies when we parse results of polls.

So it makes sense that people with a bigger stake than us — namely lobbyists, corporations, big donors, et al — would eventually make their way to the Intrade politics markets, to get what they perceive to be a more objective gauge of the political climate.

Unfortunately, the politics markets are still not very large. Any serious candidate who knows other people are basing decisions partly on Intrade numbers could easily throw the Intrade numbers out of whack with six figures’ worth of cash. Judging from the 2006 elections, $100,000 worth of marginal campaign advertising is virtually irrelevant in a campaign that spends more than a few million (just ask ex-Sen. Mike DeWine). Donations themselves are one measure of a candidate’s “inevitability,” but once the donation has been made, it will simply gather dust until a couple months before the first primaries, at which point it will compete with noise from everyone else’s campaign kitties. Much better to invest that money influencing numbers that are highly respected by observers. If it is effective in reinforcing the aura of inevitability, it will probably pay for itself, with plenty to spare. Even if it doesn’t pay for itself, a hundred grand of propping up your candidate on Intrade still reinforces that aura of inevitability, which is the more important point.

The Rhode/Strumpf study of the Wall Street 1880-1932 election market (which was orders of magnitude larger than today’s Intrade market) showed lots of manipulation going on by both parties on the market, to influence the public perception of “who the frontrunner was.”

An enterprising political campaign could easily be doing the same thing here. To what extent, it’s impossible to say. But some of the past perturbations in the Democratic nomination market have been very, very strange, exhibiting the exact opposite of conventional, profit-maximizing trader behavior.

Just something for interested parties to keep in mind when they are looking at Intrade numbers.

(cross-posted with editing from the TS Political Maven)

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