Monday, October 8, 2012

Debate creates a buying opportunity for Obama's stock

Last week, I taunted Willard the Rat by advising that he should buy shares in Obama. Time for an update on how that advice turned out.

First, here's what the University of Iowa had to say before the debate about the IEM's price quotes.

Obama still favored on IEM
Will today’s debate narrow gap?
By: Tom Snee
President Barack Obama remains a significant favorite on the Iowa Electronic Markets (IEM) over Mitt Romney, and political observers think that today’s first debate between the two is a good chance for Romney to give some momentum to his campaign.

Recent history has shown that debates have a mixed record of influencing candidates’ prices on the IEM.

As of 8:30 a.m. today, Obama was trading at 77.1 cents, which means traders believe he has a 77.1 percent probability of winning the popular vote in next month’s election. Romney, meanwhile, was selling for 23.1 cents. Both of those prices are in line with their recent trends, although Romney did spike to 27 cents for a time Tuesday before settling back to his current price.
The effect so far has been to narrow the gap a bit. The market is currently forecasting a 71% chance of an Obama victory with a 53% vote share. That's actually an improvement over Friday, when Obama was trading in the mid 60s. Meanwhile, Nate Silver forecasts a 78% likelihood of an Obama win with a 51% vote share.

It looks like Willard did something a smart but unscrupulous investor would do--drive down the price of the stock he wants to invest in before buying it. Nice job, Mr. Bain. Now, can you capitalize on it? Or have you bought your own stock and hope to see it rise, or at least pump-and-dump it? If Willard the Rat believes the the following forecast, which I included in Overnight News Digest: Science Saturday (Change in the weather edition) on Daily Kos, he might actually be holding his own stock.

University of Colorado, Boulder: Updated election forecasting model still points to Romney win, University of Colorado study says
October 4, 2012
An update to an election forecasting model announced by two University of Colorado professors in August continues to project that Mitt Romney will win the 2012 presidential election.

According to their updated analysis, Romney is projected to receive 330 of the total 538 Electoral College votes. President Barack Obama is expected to receive 208 votes -- down five votes from their initial prediction -- and short of the 270 needed to win.

The new forecast by political science professors Kenneth Bickers of CU-Boulder and Michael Berry of CU Denver is based on more recent economic data than their original Aug. 22 prediction. The model itself did not change.
I wonder if their projection would be less favorable to Romney when they include last Friday's jobs report? Probably, but not enough to have Obama winning. Oh, well, Willard's loss.

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