The Continuing Intrade Mistake

If you're not familiar, Intrade is an online predictions market. The market makers create a market in derivative contracts for, say, Rick Perry winning the Republican presidential nomination, and idiots like me buy and sell them. The contracts are worth $10, and payout comes when the real life event happens.

It's shameless gambling.

I have a problem?

I made the incredible mistake of going short on Romney winning Florida. In my defense, one can observe a decent amount of volatility in these markets, and Florida is just so far off from when I made the bet that it seemed like 86.9% chance of winning was too high at that point. Certainly I could cash out when some new attack ads run or it turns out he's been wearing a rug.

Romney is bulletproof, though, and now his odds are up to 96% (contract valued by the market at $9.60). My 15 share short has reaped me a loss of $13.50, and when you're only starting out with $40 that means something. 

The shame is I've done this before in the stock market. I was able to convince myself that the overbearing regulatory environment somehow diluted the effects of my "get attached to a random company and then make it the world series of confirmation bias" strategy, but it's becoming more clear to me now that I simply should not do this kind of stuff.

Also, there's lots of cold and not a lot of hot today.