Kilroy Was Here
August 13, 2004
Market Manipulaiton?
Salon magazine reports on the Kerry contract's lack of movement after the Democratic convention today.

But traders on the Iowa Electronic Markets -- a real-money futures-trading system celebrated for its accuracy in predicting presidential election winners -- aren't buying it. Or, more specifically, traders aren't buying shares of John Kerry futures, and are instead favoring shares that will yield a payoff if George Bush wins the race in November. After reaching a peak of about 51 cents a couple of days before Kerry's speech, the price of Kerry futures on the market has steadily fallen in the past couple of weeks -- sinking to as low as 47 cents on Aug. 4, and coming to rest at their current price of about 49 cents. Bush, meanwhile, soared after Kerry's speech. The president's shares reached almost 53 cents on Aug. 3, and are now just above 50 cents. (Kerry's share price was rising on Friday morning, and he could conceivably catch up to Bush over the weekend.)

What accounts for the disparity between the polls and the IEM? Are the polls wrong, or is the IEM off?

One idea that hasn't been put out there is the case for market manipulation. This type of article (which every electioneering cycle sees a few of) is pure gold for a canidicy like Bush's. "Everything looks bad for Candidate A, but the IEM shows it to be great!"

This brings to mind the question, how hard would it be to manipulate the IEM market? Sure you might lose your money in the short term, but if you can get some of these articles for your candidate (especially as the horse race tightens), it might be worth your $500.

Currently there's approximately $40,000 in the market. How much would you need to make it look like market forces approve your candidate?

I'm not an expert here, but I am curious. If I come across any info, I'll let you know.

I comment on this here.
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