Chance of Obama Election Victory Less Than Even

Source: Intrade.com

Things don’t look so good for President Obama’s chances in November 2012. According to Intrade.com, a site that makes prediction markets for hundreds of real-world events, investors believe that Obama currently has a 47% chance of being re-elected in 2012. This number marks a steady progression down from a peak of ~70% in May.

Why should one care about this outcome? It turns out that people are investing real money on these events. And people tend to be more thoughtful about their decision-making when being wrong means losing money.

Here’s how it works. If I believe Obama will be re-elected in 2012, I can buy 1 share for $4.70, which is 10 times the implied market probability that he will be re-elected. If he wins, my profit is $10.00 minus $4.70. If I am wrong, my profit is a negative $4.70.

Alternatively, I can short the outcome that President Obama is re-elected. If he loses, I gain a $4.70 profit. If he wins, I lose $5.30.

It seems the “smart money” is currently betting against Obama.

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About Sean Patrick Hazlett

Conservative clean energy crusader, national security hawk, financial analyst, engineer, and former military officer.
This entry was posted in Finance and Economics, Investing, Leadership, Politics, Predictions and tagged , , . Bookmark the permalink.

15 Responses to Chance of Obama Election Victory Less Than Even

  1. Moe says:

    Someone – Ezra Klein? – wrote this week about a study of the impact of econommy on incumbent presidents. Good economy? They get reelected. Bad economy? Not so much.

    It may be out of the hands of any campaign.

  2. Scott Erb says:

    For Obama the good news is a weak Republican field, likely a very large warchest (he’s raised well over $100 million already), and the fact that the election is over a year away and that’s an eternity in politics. For the Republicans the best hope I think is that a truly electable candidate like Romney avoids getting caught in a bloody, costly primary. Obama proved that you can do that and still win, but McCain’s weak campaign helped cause that.

  3. Scott Erb says:

    Reading “The Selling of the President” about the Nixon campaign of 1968 looks so innocent and naive compared to what has come since then!

    • Moe says:

      Scott, I just pulled that book out of my shelves (dusty!) to re-read, or at least skim!

      Those were the days when voter fraud was real. The States rewriting their voter eligibility laws today are claiminng it’s to protect against fraud, but that’s something of a fake because there is a neglibible amount of voting fraud going on. We’ve got much better controls now – but the 1960’s? Oh boy . ..

      • Scott Erb says:

        True. Here we have a Republican Secretary of State sending out letters to college students telling them that if their car is registered out of state they should immediately invalidate their registration to vote in Maine. There is nothing in the law that requires that, it’s simply that they think college students will vote Democratic. This has angered even College Republicans. The state GOP leader made a grand claim that he had evidence of over 200 cases of voter fraud — which turned out to be a list of 200 out of state students who registered in Maine, including both Democrats and Republicans. Then he said these would be “investigated.” Clear efforts at scaring students not to vote. I think this may end up having a backlash that hurts rather than helps their cause.

        • Moe says:

          I hope so. Here in FL, all the new legislation has thrown up so many barriers that even the League of Women Voters has said they would no longer do voter registration drives (as they’ve done for 75 or so years) because it could expose their volunteers to criminal liability.

    • Looks like another book I should add to my ever-increasing book backlog…

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