Just recently in the presidential election, for example, I followed Intrade.com’s election markets. Here, the odds are formed by people betting their own property on the outcome. They have every incentive to extract every possible amount of truth out there so that they can make their money work for them.
I figured that the markets knew more than the blabberheads on television. This way I could ignore all election coverage. One guy would win, and it would probably be the one Intrade said would win, and then the whole thing would end. I would have used my time during the season doing actual productive things, rather than listening to the dopes on television who pretend to know what they do not.
It turns out, of course, that Intrade was right. Obama won. Romney never really had a serious chance, despite what every Republican operative claimed even up to the last minutes before the election was called. Intrade might have been wrong, of course, but it turned out to be more right than every expert.
My strategy of following the markets over the pundits worked. That’s generally true of markets: They are more correct than any individual. Not always, but most of the time.
It further turns out that I’m not alone. Even Washington Post energy reporter Brad Plumer wrote, “I’ll confess, I spent a good chunk of the 2012 campaign clicking on Intrade.com several times a day to see where the House, Senate, and presidential races stood. All those traders betting on the eventual outcome, I figured, could provide a more accurate synopsis of the race than reading endless blog posts and tweets.”
He points out that Intrade predicted 49 out of 50 state races as well. (Read more)