Using an Online Trading Market to Predict Success - Entrepreneur Magazine

Very positive piece about PMs:

Stephen Marcus wanted to predict the success of a new business book his company was producing. So his company set up an online trading market where thousands of people purchased imaginary securities based on how well they thought the book would sell. When more than 85 percent of the market participants predicted that the book would rank among Amazon.com’s top 1,000 sellers, Marcus breathed a sigh of relief.

Based on the accuracy of previous prediction market forecasts, the president and co-founder of 35-person Shared Insights likes the chances for the new book, to be titled We Are Smarter Than Me. Standard forecasting tools, such as focus groups, involve much smaller numbers of opinions, while the prediction market aggregates thousands of opinions, notes Marcus, 42, whose Woburn, Massachusetts, company generates annual sales of more than $10 million helping corporations build online communities.
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Now businesses are using them to foretell sales and profits, identify the most appealing product features, anticipate likely project completion dates and perform other prognostications. Eli Lilly, General Electric, Google, Microsoft, Pfizer and Yahoo! have all used prediction markets.

Time Mag Satellite Chart

Click for larger version

Very interesting chart. It only covers what the Chinese can shoot down. Britain has fewer satellites than you would expect. Nigeria and South Korea have the same number of them.

007 Finance - NYT on Intrade

An article about off-beat investments in the NYT mentions Intrades political contracts:

For that matter, why not go to Intrade, an online betting site, where you can hedge the 2008 presidential election? If you’re a Democrat, try betting Republican, so that if the vote doesn’t go your way, you can take solace in the cash you make on election night.

This is very similar to an idea on The Economist blog:

Go to Tradesports (or the officemate you like to argue politics with) and lay a wager against your party. If they lose, your sorrow will be mitigated by the burst of dopamine which accompanies a sudden realisation that you are now several hundred quid to the better.

DOJ To Criminalize More Americans

The DOJ is dropping any pretense that the Gaming Ban was to hunt terrorists and help kids and is now on a massive fishing expedition. For what purpose? One can only guess at this point. Gambling911 reports:

THE US Department of Justice has ordered the world’s biggest investment banks, accountants and law firms to hand over all e-mails, telephone records and papers connected with internet gaming firms as part of an investigation into illegal online gambling in America.
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The source went on: “The Department of Justice has taken a shotgun, not a rifle approach in relation to lots of gaming companies and has just asked everyone to hand over all the information they have.”

The request could force banks and other advisers or former advisers to the gambling companies to hand over hundreds of thousands of e-mails and files to American investigators.
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“UK plc should be really worried about yet another encroachment of American investigators on to British territory. The City is clearly under threat,” said one British businessman who asked not to be named.

We know from experience that Bush lapdog Tony Blair won't do anything about it

Insight or Connection - How Kynikos Associates Profited from the Gaming Bill

The FT has an excellent article about short seller James Chanos predicting and profiting from the gaming bill.

His hedge fund, Kynikos Associates, had put a large slice of its $3bn in assets on a bold punt that shares in the internet gambling sector were about to go into free-fall.

And on October 2, shares in the companies did precisely that as about $5bn was wiped off their value in just a few hours of trading in response to a US Senate decision to introduce tough new laws cracking down on gambling on the web.

It took the industry and the markets, in fact almost everyone except Mr Chanos and his team of traders, by surprise. The consensus view had been that the sector was about to ride higher on a wave of consolidation.

No doubt he has done his research – but so did every other bettor on the gambling bill contract which didn’t go above 20% until after the bill passed. How did he make such an astute bet? Mr. Chanos didn’t comment in the article but FT said, “most analysts think his acute political antenna had come into play. He is widely regarded to be more tuned in to the Washington political scene than most of his peers.”

They say “more tuned in” but I have another idea – it was pure connections, it’s likely he knew information about the bill before it passed. All the research in the world didn’t reveal it to other speculators - so who else knew about Bill Frist’s sneak attack?

One Senator that would have been involved is John Ensign of Nevada. As a Las Vegas based Senator, who has supported protectionism against gambling expansion outside Nevada, he would have a strong incentive to see this bill pass.

His campaign contribution list says it all.

Ensign and Frist had a common interest in the gaming bill and a close relationship besides.

Since it was very likely Ensign had advanced notice that the bill would be pushed throught he would have discussed it with close Las Vegas GOP colleagues – including George Chanos.

Who is George Chanos?

Besides a cousin to hedge fund manager James Chanos who, “considers him a brother,” he is the Las Vegas Attorney General and long time GOP insider – he worked for the Nevada Republican Party for nearly a decade.

George Chanos attended UNLV and worked in student government with Senator Ensign who later endorsed him for his Attorney General position. Chanos and his wife are also campaign contributors to Senator Ensign.

While there is no direct proof - the chain of information and connections are clear. Frist and Ensign knew that the bill would pass. George Chanos found out and passed the information to his cousin James Chanos. James used it to make a massive bet on the sector.

We are not believers in information socialism or “illegal insider trading” but of Occam's Razor. This wasn’t a bold trade based on a research edge – it was a simple information advantage from Chanos connections.

FT called the trade a "million-to-one-chance"; it would be - if your cousin wasn't close with the Senator.

The War on Minorities

Quiz: What the most second most commonly seized "illegal" drug in pounds in the US?

From the VillageVoice:

Later, I find that over the past year khat (pronounced "kot") was second only to marijuana in total pounds seized by U.S. Customs agents nationwide—more than double that of cocaine, and 28 times more than methamphetamine.

Even a New York DEA official admits:

There's no real related spin-off crime (burglaries, robberies, shootings); it's traded and consumed in private, not out on the street; and there's no proof it has spread beyond the small Somali and Yemeni communities scattered throughout the United States.

So what are tax payer dollars being wasted?

"We've had so many funny, funny cases," says Moore, set to be the lead prosecutor in the Operation Somali Express case next summer in New York. "It's been like Keystone Kops ever since 9-11. . . . For some reason when these local police forces encounter anyone named Mohamed they're going to consider him a terrorist until proven otherwise." His comment brings to mind the case against the tall, lanky, bearded Somali wedding singer who looked so much like Osama bin Laden, his musician friends took to calling him that. A hotel clerk heard "Osama" and saw the resemblance.

Real Life 'Ace' Rothstein - WSJ

Stats are not enough, you need a voice! These are gamblers ready to risk what they can't afford for what they can't have, you're selling the world's rarest commodity: certainty, in an uncertain world. - Two For The Money

The Wall Street Journal has a fascinating article about a full time sports handicapper:

Each Thursday morning at precisely 10 a.m. Nevada time, every major casino sports betting operation in the world from here to Costa Rica was being simultaneously pounded by thousands of bettors wagering millions of dollars on the same few college football games. Odder still, most of these lock step bets were turning out to be winners, costing the casinos a fortune.
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There were rumors. Some thought terrorists were involved, or hackers, or maybe a shadowy international gambling syndicate known as the Asian Group. But as the month wore on, the truth began to bubble up through the Las Vegas whisper pool.

Turns out there was no grand conspiracy. The global business of sports betting was being jolted every week by one person: an obscure 41-year-old statistician from San Francisco named Dr. Bob.

If you've never placed a sports bet in America, you are fast becoming a member of the minority. Since its beginnings at Colonial horse tracks in the 17th century, the amount of money Americans wager on sports has grown to rival the gross domestic product of New Zealand.

He won't disclose his revenues but its hard work:

As well as these methods have worked, they have done nothing to cut his workload. In the months when basketball and football overlap, Mr. Stoll works 18 hours a day nearly every day, sleeping in bursts of no more than four hours.

The full article is excellent, if you can't get paste the gated version send me an email for the full one. Do not miss it.

Trust Fund Baby Elliot Spitzer’s Sleazy Start in Office

Remember the mediocre New York politician who abused his office and tax payer resources to personally benefit his wife? No NOT Hevesi.

Trust Fund Baby Elliot Spitzer was barely excreted on to the steps of the Capitol when it was exposed that he is putting his wife in an office at the capital at your expense. Her official position in his administration? She doesn’t have one. Her job? That’s not clear either. So much for everything changing – the dirt is already piling up.

New York taxpayers are paying to have Ms. Trust Fund Baby play office manager a few days a week.

How is this any different from what Hevesi did?

December Non Farm Payroll - CME is showing it low

Economists' consensus - 100,000
CME Auction Market participants' consensus - 82,000
ADP - -40,000

I'm taking the under on this one - only gov't jobs can save this from being a total disaster.

Power Hungry Mayor Bloomberg Expands His Grip

Comrade Mayor Bloomberg and his useful idiot lapdog Thomas Frieden have decided to ring in the New Year by expanding the grip of the state using blatant Stalinist tactics. No surprise coming from the same gang that has been waging a War on Private Property since they’ve been in office.

The latest area of your life they want to control is pet ownership. Unless you agree with your government’s vision of the ideal amount of pets you can own - they will brand you mentally ill. That’s right – it’s not for you to decide how many pets to own, only the State is qualified to do that. Since there is nothing legally they can do to you, it’s off to the institution, because if you don’t agree you must be crazy. Just like Stalin!

Its only stage 1. It’s easy for people to get used to such shocking violations of property rights and abuse of government power. Simply use them initially against people who are impossible to defend. Do you really want to see more dead kittens? Once this trial balloon goes unchallenged, the tactic will inevitably be expanded and citizens encouraged to inform on other undesirables.

The article is full of propaganda. Citing individual cases that look horrible but showing no general trend. Labeling animal lovers as mentally ill. Encouraging informing on neighbors to the authorities. Using criminal terminology to describe people who have done nothing wrong, “recidivists”.