Therefore, if one notices $20 bills laying on the sidewalk day after day, one should conclude that they’re somehow being continually replenished. And once you’ve established that, then the logical question becomes who’s replenishing them, and why. Enter Simple Linctus’ idea.
I can’t imagine that it would happen at all to any significant effect. The actual costs of betting with Betfair are 5% on winning bets. This is of little concern when arranging an arbitrage within Betfair because the charge is levied on the net result. So if the equivalent prices, 1.51 and 1.41 were available at different times in Betfair the punter would pay 5% of the $47 collect. Since this is not the case in the OP the 5% would be levied on the $709.
Further while betting both sides of a proposition on Betfair your account is maintained so that only money at risk is unavailable for betting. In the circumstances of the OP the total funds for both bets would be tied up until next year, half of it subject to exchange rate fluctuations.
As a punter this all sounds like far too much downside when there are literally thousands of markets to bet on every day. No sensible punter would tie up funds that could be working on such a skinny proposition.
Funny thing actually, the Bank of England doesn’t print £100 notes, but other UK countries do.
Could be a wealthy democrat playing 11-dimensional chess. You know, fomenting the revolution by advancing the class interests of the patricians.
Can you explain this a bit more? I am not an “informed person” on these matters, but am curious.
As others mention, tied-up money and fees are a problem, as is the inconvenience of whatever cross-Atlantic channel may be needed, but I think there is a bigger problem. (I think. To be sure, we’d need to study the trading volumes at Intrade and Betfair.)
Large bets will change the payouts. Right now you can buy Democratic Party candidate to win 2012 Presidential Election at $6.64 at Intrade, but there are only 9 shares available at that price. If you inject a fair amount of money to arbitrage, you won’t get the posted odds.
The same principle applies in the stock market. Even li’l 'ol Septimus identified some trivial arbitrage opportunities on the NYSE, back in the 20th century. For a specific example, consider the closed-end funds BCV and ECF. (Googling now, I see they still exist.) They are managed by the same firm and have very similar portfolios; yet right now their discounts differ: 14.7% and 15.3%. It’s been almost two decades since I checked those discounts; in the past the differential was often much more than 0.6%. If the difference were 2% you could effectively make that in profit, by buying one and selling the other. But the funds are low-volume; if you try to make more than $1000 or so on this play, the discount relation will reverse.
On Betfair there has been $400,000 bet in the last 5 days, $300,000 on Obama who is now $1.37 from $1.46. So there was an opportunity there to back him and now lay the whole lot off and watch for free.
Or, as the old expression goes, “You can’t beat the locals.”.
Guaranteed profit? Where do you get that?
Intrade is bet 662 against their 338.
Betfair is bet 100 against their 41, which is bet 662 to win 271.42.
Don’t assume that Intrade is offering shares on Romney at 33.8, or Betfair’s odds on Romney are 3.44 (bet 41 against their 100).
I am also not an informed person and have nothing to do with anything like this, but as BigAppleBucky alludes to, the existence of dodgy as fook locals basically guarantees inefficiency in the very short term with their stop catching and other such things.
But on a longer time scale, almost all ready liquidity in the commodity markets comes from speculators of one kind or another. Speculators would not play these markets for very long if they couldn’t make money relatively easily (but of course it can’t be too easy either otherwise everyone would play and make the market more efficient). If the markets became so efficient that speculators couldn’t make money, then they would pull out and so the markets would become less efficient again (as there’s no reason for them to stay efficient). Basically the efficiency stays balanced against the expected returns. Quite nifty when you think about it.
This is NOT the case with stocks because you earn a return just for owning stocks, and so there is always an incentive to look for inefficiently priced ones. Commodity markets need at least somewhat predictable prices therefore, while stocks don’t.
I’m converging to Simple Linctus’ point of view on this particular betting market, but I disagree with him with regards to commodity markets. They are comparable to stock markets in terms of efficiency in my view, possibly more so. Specifically, I’m guessing that speculative bubbles afflict asset markets more than typical commodities. (Precious metals straddle the 2 categories.)
http://electoralmap.net/2012/2008_election.php
They were very close. Of course, it was done on election day.
Scroll down to see their poll rankings. Top five pollsters were Rasmussen (A- ), Ipsos (B+ ), CNN (B+ ), Fox (B) and Pew (B- ). Worst, by far, was Reuters, but CBS, Gallup, ABC, Marist and IBD were bad as well.
Overall
Poll Score Grade Accuracy Consistency
Rasmussen Reports 91% A- 92% 86%
Ipsos/McClatchy 89% B+ 92% 79%
CNN/Opinion Research 88% B+ 92% 77%
Fox News 84% B 92% 61%
Pew 83% B- 92% 56%
I tried to get this to line up. Sorry if it didn’t.
I had a friend give me the content for this:
Take a look at the research referenced in amongst other popular books “Evidence Based Technical Analysis” - while that book mostly focusses on showing stock markets to be reasonably weak form efficient, it also in passing references a number of times why commodity markets are susceptible to reasonably simple technical trend-following systems - in effect they can be explained as compensation/risk premium for as I said before offering a hedging service to commercial hedgers.
If may make a quick quote from it:
The Kestner reference is to “Lars Kestner, Quantitative Trading Strategies: Harnessing the Power of Quantitative Techniques to Create a Winning Trading Program (New York: McGraw-Hill, 2003), 129-180.” btw.
And now back to me:
Fuck all this financial shit, it’s the betting that matters. I haven’t checked if this dislocation still exists and will do after posting this - I guess given the last 48 hours maybe it doesn’t cause frankly there’s more chance of Biden being the next president than there is Romney - so that could make the hypothetical rich Republican withdraw… or it could mean them doubling up!
Betfair latest - another quarter of a million on Obama in the last 24. Most recent matched bet was set at $1.30.
Hello all, I found this thread on Google and this is my first post.
I live in London and trade for a living (for a fund). I’ve already put well over $200k of my own money into this trade and as far as I can tell it really is free money. As I see it if Romney wins the election I’ll be up $13k and if Obama wins I’ll be up $20k. I represent almost 4% of the open interest on Intrade and yet I cannot make this spread move. It really feels like somebody on Intrade is fighting back…
Ask me anything
It wouldn’t surprise me. If DJ FC is for real and $100k is 4% of the InTrade market, it would be trivial for Romney backers to keep the spread down a little. Obviously eventually they won’t be able to, but that’s like 2 TV spots. Considering the campaign’s obvious interest in fighting back against the “we’re losing” meme it seems like a no-brainer to drop a little cash in the only betting market that US news interests ever talk about.
Hello, DJ FC. Do you bet persons or parties? If persons, aren’t you worried about circumstances leading to, say, Biden victory?
Do you think there are many others making similar plays?
Spam reported. I’d be ok with Biden victory. He’s not my first choice but more opportunities for the Onion is always a good thing.
We are doing as vanilla as possible… Buying Obama to win on Intrade and selling Obama to win on Betfair.
DJ you don’t happen to trade at that sports arcade in canary wharf do you?
It would appear that the money that Republicans are funneling into Intrade to keep up the appearance that Romney is not tanking… Is going to end up in the pocket of a trader in London.
I find this amusing.