Double Blind

Some semi-speculative bets I’ve been making in preparation for the election: Bush to take Colorado (Bush at 71%), Kerry to take Michigan (Bush at 23%), Kerry to take Maine (Bush at 20%).

Safe bets: Democrats to NOT sweep the house, senate and presidency: trading at 9% right now; Kerry to take Washington state (Bush at 9%).

Riskier, but probable: Republicans to keep the Senate (68%).

Very risky relative to what a ’safe bet’ is: Kerry to take New Hampshire (Bush at 43%), Bush to win the presidency (56%).

I’ll be putting some of the speculative online gambling capital into these bets, and then put a high portion of it in the relatively safe bet (specifically the Democrats not to sweep all three bodies of government). I’ll have a few token dollars on Bush to win the presidency, but not nearly as much as I was originally thinking when doing my research into this topic. There’s probably going to be a huge last-minute smear in the media which will be difficult to predict.

Two days ago, I was filled in on an order that had me betting that the US Senate would remain under Republican control after this election cycle. I had 10 contracts filled at 68%, so I am risking $68 for a potential reward of $32 or roughly 1:2 on the bet. I think this is a relatively safe bet – there are 19 democratic seats and 15 republican seats that are up for grabs this election cycle. I have hand-counted each race and estimate that the Republicans will net probably one extra seat in the Senate, which would leave the Senate as 52 Republicans and 48 Democrats. This leaves a margin of error of at least one Senator, and two senators in the event if George Bush gets re-elected (if the senate is 50-50 and Bush wins the election, Dick Cheney gets to break ties). Also, if Kerry is elected and the senate is 50-50, Kerry has to resign his senate seat and the subsequent election has to be won by a Republican in order for this bet to succeed. This would be unlikely, as Massachusetts would be likely to vote in a Democratic Senator.

Still, on the balance of probabilities, I think the real chance of the Republicans retaining control of the Senate is better than 68% (my guess is about 80%), so I was surprised when I was filled. I intend to hold this throughout expiration. I also don’t know why I chose just 10 contracts – if I wanted to re-do that order again, I probably would have traded 25 contracts. I don’t know the liquidity of the market though, I’m looking at the one-week graph and it doesn’t even show a drop down to 68% when the order was filled (Oct 22 19:24 if anybody cares).

I wonder why Haiti gets all the media attention. This answer is obvious – the country is a total mess. A couple hurricanes going through the region has not helped any, but the problems on the island were going to happen whether there was a hurricane that went through there or not.

My question is: why has the Dominican Republic, which shares the eastern side of the island that Haiti is on, been able to survive the past 5 years without even having their name in the media? Just goto news.google.com and type in both countries as a comparison.

Haiti has about 28,000 square kilometers of land while the Dominican Republic has about 48,000 square kilometers. Haiti has about 7.7 million people, while the DR has 8.8 million. In terms of natural resources, both countries have equal capacities. So why is it that Haiti is such a basket case while the Dominican Republic seems like a first world nation in comparison?

For that matter, why has Puerto Rico thrived in comparison to the two? They have half the population as Haiti, yet their have more GDP than both combined.

It couldn’t be due to the system of government? Naah, couldn’t be.

This isn’t a scam, and it does involve some risk, but if you bet that Kerry wins the electoral votes of a safe state like California, or Connecticut, you can get a 6% return on your money in a short period of time, especially if you are eligible for your 50 free trades on Tradesports. The only catastrophe that you would have to worry about is some huge scandal that emerges in the last week of the campaign, which is possible, but unlikely to sway voters even if the allegations were true.

An example is that somebody is bidding 395 contracts of California at 6%. What this means is that he would be willing to bet $237 against your $3713 that Bush takes the electoral votes of California. You don’t have to bet such an extreme amount (it can be as low as his $0.60 vs. your $9.40), but the point is that your risk-to-reward is the equivalent of risking your capital in hopes of a 6.4% return based on the results of the election. Certainly an interesting risk profile compared to a savings account at ING Direct, currently yielding 2.25% annually.

Steven Den Beste has come out and written a short article on some anomalies of the polling figures that he has seen on the internet. Personally, I can’t see how he can make a trendline out of that data, but the end of the September rise in Bush’s numbers could be because Kerry finally shut his mouth up about his record (or lack thereof) in Vietnam and got on with other issues? I don’t know how relevant the data is either. Ultimately the only poll that matters is on November 2nd.

Both parties must know that the media polls out there are highly suspect and must do their own types of internal polling. I doubt they would have any incentive to release their numbers to the public and instead try to spin the public numbers. This is oddly behaving like the stock market, where major players have every incentive not to publish good research on companies, and in fact, publish the contrary so that they can buy at lower prices or sell at larger prices. Whenever you have the misfortune of watching CNBC during market hours, anytime you have an equity fund manager interviewed, whatever they “like” they’ve already purchased.

In terms of presidential election polls, if indeed the polls are being “warped” towards showing a Kerry comeback in October (of which both are conjecture), I doubt it’s to Bush’s advantage to cry foul about how wrong the polls are. Something makes me suspect that the aftermath of this election is going to be even uglier than the previous one with all the lawsuits that will be flying about “disenfranchised voters”, etc. What a mess that’s going to be. This possibility can actually be bet on – I’m sure the US markets will decline a few percentage points if there is a possibility for another march up the Supreme Court. Also, Tradesports is selling a contract that will pay out if the presidential election is certified by December 13, 2004.

While reading the Hansard minutes (it’s a transcript of all discussion that goes in on the BC Legislature), I discovered this interesting tidbit – apparently the BC Government taxes people that take roadkill from roads! Our government is now going to be getting rid of this unenforcable tax. Here’s the transcript from Hansard:

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ROADKILL TAX

B. Bennett: For decades, as a matter of course, British Columbia trappers made use of dead wildlife found at the side of the road. However, in September 2000 the parsimonious government of the day radically increased the tariff charged on this benign and functional rural practice. A dead elk or moose cost $71; a deer or black bear, $61; a red-tailed hawk, $65; a dead bison, $116; and any species not listed, $25. Presumably, if you found a dead or mortally wounded mouse and wanted to feed it to your cat, you would be required to travel to the nearest government office, fill out the forms, pay your $25 and quickly journey home to satiate your eagerly waiting carnivorous kitty. Of course, you might decide to stop at the general store and pick up a $10 bag of cat food, but that would be your choice.

Trappers back in the year 2000, not being intimate with the infinite ingenuity of governments in the field of fees and permits, could not quite recognize the government’s logic. At a Finance Committee meeting in Cranbrook before the last election, a constituent of mine, Carmen Purdy, inquired as to the sanity of this particular regulatory endeavour. One of our distinguished journalists, Mr. Leyne, wrote at the time: “Is this proud province in such reduced circumstances that government inspectors have to roam the roadside ditches looking for people who are looking for roadkill in order to levy a tax on them?”

I’m exceedingly proud to inform the House today that this government has cast the shackles off our enterprising and industrious trappers. Although we do continue to charge fees to British Columbians who wish to utilize roadkill for lunch, a fur coat or living room rug � and I hope we can repeal that tax as well � trappers can now avail themselves, without cost, of the spoils of highway carnage, which no doubt will be compounding as a result of the strengthening economy and increased movement of goods and services.

Now, although this isn’t quite on a scale with the Magna Carta, let us rejoice at the democratic spectacle of free trappers all over this heavenly province scooping up dead animals from our roadside ditches, no longer living in fear a tax collector may be lurking in nearby bushes. At long last the roadkill tax, if not completely snuffed out, is at least gimpy and on its last legs.

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Who says that politicians don’t have a sense of humour?

Just listening to the replay, Cheney said about Halliburton that the people can go to www.factcheck.com to get the ‘real’ story on that. Unfortunately for Cheney, he actually meant www.factcheck.org. Now, I remember watching the campaign on television – factcheck.com originally was some default domain ad, but now they moved it to georgesoros.com’s website, which is of course a list of reasons why not to vote for Bush. Quite amusing!

You can easily detect there is a bias in a reporter’s tone when they write a couple biographical paragraphs, as given in the story titled “Cheney and Edwards square up for debate“. The two paragraphs were on the bottom, quoted as follows:

The two debaters will display vastly different images and styles. The bald and bespectacled Cheney, 63, is a reluctant campaigner who has had four heart attacks while building a lengthy insider’s resume as a member of the U.S. Congress, White House chief of staff and secretary of defence.

The energetic Edwards, 51, was once named People magazine’s sexiest politician. He is known for an upbeat campaign style and populist rhetoric. Before entering politics, he was a successful trial lawyer.

That’s quite the contrast – Cheney is “bald and bespectacled”, while Edwards is “the sexiest politician”. Cheney is “reluctant campaigner”, while Edwards is “upbeat”. Cheney is an “insider”, while Edwards is a “populist”. Edwards is written as a “successful trial lawyer”, while Cheney has built up his career as an insider. I’ll leave it up to the reader to research matters.

If you have the major media saying that the election race is a “dead heat”, how come people betting with their money still believe Bush has a 60% chance of winning? It’s much better to believe what the money has to say, not opinion.

The Bush contract on Tradesports is behaving awfully like a real marketplace – with expectations and inflated expectations built-in.

Anyway, there will probably be an opportunity here after the debates – if the Bush contract drops far enough, it might make it better to take a bet. At least it will make November 2nd a little more interesting.

I went to San Jacinto Park today and went hiking. The map of the route that I took was here. It was a rather nice hike, from 6600 feet elevation to about 8900 at the ranger station that was on top of Tahquitz Peak. The area was full of forests. What was interesting was that in British Columbia, the tree line is around 7500 feet – anything above this and it’s just rock. Here in California, the trees grow at the elevation of 9000 feet.

San Jacinto mountain is 10,800 feet tall, and you could see it, but we didn’t have enough time (or physical energy for that matter) to scale it. Maybe in a couple weeks I’ll make an attempt before the weather gets piss-poor for the winter.

One other comment is that hiking with GPS and 3 litres of water in a backpack is very comforting. It’s also a good workout – this hike, although being equally physically demanding as some others I’ve been on, seemed to go fine. I’m probably in better physical condition now since high school.