Why would anyone invest in stocks while Intrade provides so much free money?

[Jacobtm]

I know many people here observe Intrade, but does anyone actually have money in it? I'm looking at the U.S. Election by State market, and there appear to be some absolute steals out there. Of course any one bet may turn out to be wrong for unforseeable reasons, but if you buy like 20 states, you could garuntee about 15% return easily.

For instance, below are contract prices that seem enticing to me:

AK-R: 78
AR-R: 83
CA-D: 88
CO-D: 63
GA-R: 82
IA-D: 75
LA-R: 88
ME-D: 88
MN-D: 84
MS-R: 84
MO-R: 58
NJ-D: 88
NC-R: 69
ND-R: 75
PA-D: 71
SC-R: 87
SD-R: 78
TX-R: 87
VT-D: 88
WI-D: 83

It seems that if a candidate even makes a pretext of competing in a state, like McCain in CA or Obama in TX, the price is automatically in the high 80's. The slightest amount of media attention to an unlikely win, such as McCain in NJ and Obama and Georgia seems to drop a price down to the low 80's. And if there's just a couple of polls showing the underdog ahead, such as in NC, ND and PA, the price goes into the 70's. Sure, when you get to PA, NC, ND, IA, CO etc., you can't be sure who'll win, but when hedged against sure-fire bets like CA-D and LA-R, it's easy to protect yourself from too much risk.

Even if one just made the totally safe bets below you'd get 12.75% before fees. No hedge fund can even come close to that these days.

CA-D: 88
LA-R: 88
ME-D: 88
MS-R: 84
NJ-D: 88
SC-R: 87
TX-R: 87
VT-D: 88

[○∙◄☻¥tπ[╪AV┼cVê└]

There are a few reasons, but the main one is low volume.

[Franzl]

I wired money to Intrade a few days ago.

I'll be investing in R-ND, R-GA, R-IN soon

[Jacobtm]

I wired money to Intrade a few days ago.

I'll be investing in R-ND, R-GA, R-IN soon

Just those 3? I mean, good margins for ND and IN, but the slight possibility of an Obama win would make me wanna hedge them against some more certain bets...

[Fmr. Pres. Duke]

I just bought some Citigroup stock for $18 .. here's to hoping it jumps back to $50 in the long term.

[Torie]

That might work out for you Duke if Citi isn't forced into a shot gun marriage by the FDIC first. These banks are very sick. The ubermensch is Wells Fargo. It actually knows how to manage risk, and the quality of its personnel from top to bottom is just in a class by itself, in my experience. I have a client with defaulted mortgages with a host of financial institutions. What is the one that seems intelligent about mitigating its losses?  You guessed it -  Wells. The worst is Washington Mutual. I suspect that institution is headed towards failure. It seems to want to maximize its losses. The place is packed with incompetent drones.

[Fmr. Pres. Duke]

That might work out for you Duke if Citi isn't forced into a shot gun marriage by the FDIC first. These banks are very sick.

I know, and I realize that it is a huge risk. I figure that at some point, these banks will come back around. Wacovia would've been a good buy when it got down to $7

[12th Doctor]

I just bought some Citigroup stock for $18 .. here's to hoping it jumps back to $50 in the long term.

How do you invest?  I mean, if you use an online system, which one to you use?  I am looking in invest a small amount of money and hope it takes off, and like you, I thought this might be a good time in invest in citigroup and some other places that got a little roughed up by the housing bust.

*Sigh*  I'm going to listen to my gut this time.  Last time I wanted to invest, I wanted to buy up gold.  If I hadn't let my step-father talk me out of it, I would have $120,000 right now.

[phk]

I just bought some Citigroup stock for $18 .. here's to hoping it jumps back to $50 in the long term.

How do you invest?  I mean, if you use an online system, which one to you use?  I am looking in invest a small amount of money and hope it takes off, and like you, I thought this might be a good time in invest in citigroup and some other places that got a little roughed up by the housing bust.

*Sigh*  I'm going to listen to my gut this time.  Last time I wanted to invest, I wanted to buy up gold.  If I hadn't let my step-father talk me out of it, I would have $120,000 right now.

Can't comment for Duke, but I use Ameritrade.

[Bono]

That might work out for you Duke if Citi isn't forced into a shot gun marriage by the FDIC first. These banks are very sick. The ubermensch is Wells Fargo. It actually knows how to manage risk, and the quality of its personnel from top to bottom is just in a class by itself, in my experience. I have a client with defaulted mortgages with a host of financial institutions. What is the one that seems intelligent about mitigating its losses?  You guessed it -  Wells. The worst is Washington Mutual. I suspect that institution is headed towards failure. It seems to want to maximize its losses. The place is packed with incompetent drones.

Bank of America is also in pretty good shape.

[Fmr. Pres. Duke]

I've been with Scottrade for a while now. They always provide good service and I've never had a problem. I can't comment on Ameritrade.

The last time I had a gut instinct was when Apple first introduced the iPod. Apple was trading at $7 a share and I tried to get my grandfather to buy some but he was too gunshy because of the Internet bubble bursting. I eventually got in at $85, but we really missed the boat there.

[12th Doctor]

I've been with Scottrade for a while now. They always provide good service and I've never had a problem. I can't comment on Ameritrade.

The last time I had a gut instinct was when Apple first introduced the iPod. Apple was trading at $7 a share and I tried to get my grandfather to buy some but he was too gunshy because of the Internet bubble bursting. I eventually got in at $85, but we really missed the boat there.

Thnaks.  I was alos looking at Starbucks.  Cramer said its a good buy right now, which also happened to be my gut feeling.

[Fmr. Pres. Duke]

They might be. I'm kind of wary about them because they expanded so fast and now they are shutting down stores. Last time I bought a stock with an up and coming stock, it was Crocs. I watched it run up to $74 a share, missed their earnings EPS by $0.01 a share, and it sits at $4 today. One of the worst investments I've ever made.

[I spent the winter writing songs about getting better]

Most of these are fairly low volume. Granted there were some more high volume ones that were sure things, such as shorting Paul to be the GOP nominee or Gore to be the Democratic nominee. However keep in mind at his peak Paul was still running at about 7. Bid $100...win $107 (before InTrade fees.) Even bidding $1000 would only win you about $1070, an extra $70. So is it worth it to have that $1000 frozen for that long? If you had enough money to where it didn't matter, the $70 wouldn't matter either. That's the main reason I never invested.

[elcorazon]

Most of these are fairly low volume. Granted there were some more high volume ones that were sure things, such as shorting Paul to be the GOP nominee or Gore to be the Democratic nominee. However keep in mind at his peak Paul was still running at about 7. Bid $100...win $107 (before InTrade fees.) Even bidding $1000 would only win you about $1070, an extra $70. So is it worth it to have that $1000 frozen for that long? If you had enough money to where it didn't matter, the $70 wouldn't matter either. That's the main reason I never invested.

well, the thread was based on the idea that it's easy money, unlike stocks where you can lose your shirt.  Let's say you have $10,000 to invest today, and don't plan on using it for at least 6 months +.  You can buy stocks if you like, and hope to get a decent return... or you can get 7% via intrade investing in the election (arguably a sure thing), which means in November you'll have $10,700 to invest... that's a pretty hefty return in 3 months...

On the other hand, depending on the state involved, there is always a 5% or so chance of some sort of major shift in the electorate - a major gaffe, a big international event, something that changes the dynamic of the race.  As the race is today, of course McCain CAN'T win in Washington, and Obama CAN'T win in Arkansas, but some unforseeable event could lead to a true landslide allowing some of those states to swing wildly enough to change the winner.  This is even more true with states like Montana, Indiana, Wisconsin, even New Jersey, under the right scenario.  Elections are a snapshot in time and we are still 3 months from election day.

[Small Business Owner of Any Repute]

The real money is not to be made in "sure things," because of the startling amount of risk in some of those investments when related to return.  (In some cases, you're risking over $90 to win $5.)

The best way to play Intrade, I've found, is to come up with clearly undervalued/overvalued contracts, and play them.  (Especially good if there's an unusually attractive bid/ask with low volume.)  I've made tons of money already on NH-Sen by setting up competing buy (@25) and sell (@50) orders.  Thanks, wild poll fluctuations!

I'm expecting that race to pay a lot more dividends come September and October, because Sununu seems to have a post-Labor Day strategy while Shaheen is putting up ads now.  (Shaheen has already spent more than half of what she's raised; Sununu hasn't even spent a quarter yet, resulting in a $3,000,000 CoH lead.)

Once Sununu unleashes, polls will tighten, Sununu's contract will rebound, and I'll start selling off closer to 50.

I've also got some money invested in Zimmer (purchased pre-primary, when Lautenberg was essentially at his peak), some on McCain to win the Presidency (purchased way back during the early part of the primary season).

I started with $100 just to play around with.  It's up near $270 now.

[Small Business Owner of Any Repute]

By the way, a great strategy I used last cycle (2006) was to make bets on select GOP Senate candidates, but to hedge using a longshot bet on Democrats to win the Senate.  Even though the GOP candidates I bet on lost, the longshot paid off, and I still made plenty of money.

[Beet]

By the way, a great strategy I used last cycle (2006) was to make bets on select GOP Senate candidates, but to hedge using a longshot bet on Democrats to win the Senate.  Even though the GOP candidates I bet on lost, the longshot paid off, and I still made plenty of money.

Implicit arbitrage.

[Torie]

That might work out for you Duke if Citi isn't forced into a shot gun marriage by the FDIC first. These banks are very sick.

I know, and I realize that it is a huge risk. I figure that at some point, these banks will come back around. Wacovia would've been a good buy when it got down to $7

Citicorp in the news - again!

[Stranger in a strange land]

Is there a limit to the amount you can invest on intrade? I'm not seeking to invest thousands of dollars, just maybe a few hundred on things like Obama winning California or McCain winning Texas.

[Beet]

That might work out for you Duke if Citi isn't forced into a shot gun marriage by the FDIC first. These banks are very sick.

I know, and I realize that it is a huge risk. I figure that at some point, these banks will come back around. Wacovia would've been a good buy when it got down to $7

Citicorp in the news - again!

It's just getting that out of the way earlier than other banks, Torie.

"Citigroup is the first Wall Street firm to settle federal claims amid a probe into how banks sold auction-rate securities before the $330 billion market collapsed in February. The accord may set a precedent for negotiations with firms including UBS AG, which has been named in civil complaints by Cuomo and authorities in Massachusetts."

[Jacobtm]

Is there a limit to the amount you can invest on intrade? I'm not seeking to invest thousands of dollars, just maybe a few hundred on things like Obama winning California or McCain winning Texas.

Your initial deposit is limited to $250.