October 21, 2005

"Confirm Miers" shares have crashed.

Something dramatic? (Via Info Theory.)


Too Many Jims said...

When the data set gets larger it would be interesting to look at how accurate such trading is in predicting things like nominations, legislation passage and election results. I don't know about the size of the market on these things but it would seem like (at least as to nominations) someone with inside information could manipulate and/or make a killing on the market.

Jonathan said...

Actually, the Miers contract on Intrade traded at least as low as 25, but this fact isn't obvious from the Info Theory post because Intrade's time-and-sales data show only the last 5 trades and do not seem to be archived. Info Theory's snapshot was made during the rebound after the low point was reached and is ambiguous. It is conceivable that the price dip resulted solely from one large sell order -- either a liquidation by a holder of a large long position or an attempt to sell down the market to hurt the public perception of Miers's chances. The latter kind of activity occurred in the Bush-reelect contract before the 2004 election. In either case there would not necessarily be an implication for Miers's actual odds, i.e., it could be a buying opportunity. The only way to know whether Miers's odds really are worse is to watch the contract and see if the price rebounds to the 50 area, where it was before this morning.