Archive for August 4, 2006


What’s scary isn’t that fast food is bad for you, but that as so studied a form
of food, what it says about we’re possibly making at home.

August 4, 2006 at 8:11 pm Leave a comment

Some notes about the DOW and Prediction Markets

on I have been correct on the DOW’s ending 4 times and the one time I missed I had invested in the correct outcome too. On intrade though I have pretty much lost all my money on the hourly DOW predictions. In fact I lost twice despite the market predicting a 94% and 74% chance the DOW would end the hour up. This was my original strategy to go with the most likely outcome and to invest only near the end of the hour, despite this I ended up losing two days straight. I’m now down to mere pennies (11 to be precise). Hence, the daily activity of the DOW is easier to predict than the hourly activity, secondly my original strategy was flawed do the nature of the shares system intrade uses. One share is worth 10 dollars. A bidder loses the cost of their bet, a seller loses the difference of their bet. Hence a 2 dollar bid loses 2 dollars, an 8 dollar sell would mean a 2 dollar loss.

The problem with my strategy of betting on the most likely outcome, is that even if the market is at 90% or even 20% the gains and losses will theoritically level out. Let’s take 10 markets in which we bid 90.0 when that’s the going rate. In theory we will win 9 of those auctions netting 1 dollar in profit each. However, we will lose the tenth auction losing 9 dollars pushing us back to our original amount minus 4 cents per bid in fees. Now if we had bought on a less likely outcome at 2 dollars theoritcally we could lose 8 auctions losing a total of 16 dollars, but gaining 16 dollars from our two wins (which is what I’m hoping for right now we my 1.0 bid on a high dow close).

Here is the problem though, what gives prediction markets their edge over polling is that an individual can express contradicting opinions, and later revise their outlooks by buying other shares, hence a 90% confidence at one point in the lifetime of an auction hardly means a guaranteed outcome (especially with the DOW most days). Hence a better strategy is buying contradicting positions when the market favors a price on a bid under 50.0 or a sell over 60.0. If one could in the lifetime of a market invest in both outcomes with low risk on yourself, then you’ve covered both bases. For instance let’s say you buy into the DOW ending 11 at +25 with a bid of 20.0 i.e. 2 USD. The dow then surpasses +25 so you then put in a sell for 90.0 risking 1 dollar against. Then the DOW procedes to trace a drunken line through expectations and end up somewhere else altogether. If you win the bid you win 8 USD if you win on the sell you get 9 USD hence your profits on either position outweighs the loses. Unfortunately, the market obeying such a regularilty that people feel safe making such bets is hard to find when you have 11 cents not to mention that some days the DOW is regular enough that my original idea of a safe bet is the better one. I’m a little pissed that my 1.0 bet on the dow higher wasn’t taken when the dow was at -50 ten minutes ago becuase it’s now at -2 and gaining…

technorati tags:, , , ,

p.s. while I was writing this the DOW closed and someone sniped my 10 cent bid leaving me at 1 cent… so my DOW days are over. Thankfully I lost a meager 15 USD although it was a decent lesson.

August 4, 2006 at 7:58 pm Leave a comment

Ted Talks

Began downloading the Ted Talks the other day and I am rather impressed. Daniel Dennet (who I blogged about before) seems a lot more sensical and his ideas far more pratical coming diretic from him. His ideas that religion has evolved or been shaped by cultural forces is a given taken the paradigms of much thought today, but his suggestions about creating a more open marketplace for religious ideas that rests on is assumptions seem well grounded and realistic.

Cameron Sinclair is the founder of archeticure for humanity (which I just brutally misspelled) and is a Worldchanging contributor. His talk goes over the formation of his NGO and it’s effects and plans. It’s rather interesting in the way it approached aid from an angle that both co-opts the marketplace, but ending with a qoute from Buckminster Fuller and ideals that seem to push the other way.

Al Gore’s speech is more remarkable for it’s humor than it’s ideas most of which we’re already familar with (buy more energy effecient devices and be a green consumer). Gore, much like Jim Hansen’s recent speeches, really highlights what’s wrong with global warming groups, their consistent conviction that the Government needs to get involved, while Cameron Sinclair’s highlights what’s right about NGOs, their ability to inact change at a much faster rate. What’s still lacking environmentally is a large scale NGO harnessing the power of tinkers the way Sinclair’s group does. Gore has recently started a new investment firm so perhaps he’s already on the next thing.

Nicholas Negroponte outlines his one laptop per child program which is rather nice.

Ted Robinson, who I’d never heard of before, perhaps has one of the best qoutes I’ve ever heard, “Our education system has mined our mines in the way that we’ve strip minded the earth for a paticular commodity.” Mr. Robinson’s arguement is that intelligence is variable (duh) and that our education systems narrow down to over-valueing industrial era values of intelligence and squandering people who inherintly utilize other strategies. Ted’s speech is unfortunately light and nebulous on exact solutions, but he hits the major problem head on.

Majora Carter’s speech is definitely interesting not only in how remarkably pratical she is, but also the passions with which she argues. Her example of Bogota is also nice.

Hans Rosling manages to make models that are not only interesting, but should be required for any student of the world. He’s a professor in Sweden and the maker of which is a treasure trove of interactive maps of information.

These two I have finished. The Warren one is rick.

technorati tags:,

August 4, 2006 at 5:40 pm Leave a comment

links for 2006-08-04

August 4, 2006 at 3:18 pm Leave a comment


August 2006

Posts by Month

Posts by Category