[Forgive the light posting lately. Shit happens.]
I mentioned earlier that I was playing around with PredictIt. (Don’t get excited, I’m risking money amounts that would barely buy a pizza.) In a market, any market, the devil is in the details. I had a few folks ask questions about it. Since I’ve gone a bit deeper down the rabbit hole, I can offer a bit more information.
- Buy in is roughly $10 minimum. I didn’t see any provision for PayPal or any other cryptocurrency.
- Shares close at $1 or $0. Nice round numbers eh?
- Events have a “deadline” and that’s when it goes to $1 or $0. Suppose the event is “Will Trump take a shit in the Whitehouse on October 31st?” This will be resolved at a pre-determined moment and the market closed toot sweet. “At 12:01 AM, Robert Muller, who has been monitoring the can for 24 consecutive hours has reported ‘Trump dropped a load at 8:06 am and a followup load at 3:54 pm though he postulates the Russians were involved in the latter. Thus the market closes at $1 for yes.” If you’ve got a share of Yes it turns into a dollar in your account; minus 10% of the profit between your purchase price and a buck. If you’ve got a No, you get nothing. If you’re Muller you spend all day with tweezers picking at it looking for Russia. (Forgive the editorializing.)
- Some events resolve with “Yes” or “No”. Other markets have multiple outcomes and you buy one (or more) possible outcomes. For example; “Who will be Trump’s next nominee for Supreme court?” You might buy a share of “Satan” for $0.12 and someone else might buy a share of highly unlikely “Rosie ODonnel” for $0.01 hoping for a high payoff. Etc… If the real answer is “Fred Flintstone” Both “Satan” and “Rosie” shares go to zero.
- There’s also a market for who’ll be the first to leave the Supreme Court. This is another good example of a multiple outcome market without a known resolution date.
- If nobody else quit or dies and it takes 5 years before the Grim Reaper finally takes out Ruth Bader Ginsberg in a knife fight on her 90th birthday (give her credit, Ginsberg is damn well gonna’ rage at the dying of the light) then the market has been active all that time.
- Shares go up and down in value from inception to resolution. Assuming you find a wiling buyer / seller, you can buy in or bail out anytime you want. That’s the point of a market.
Now some details for the sharks out there. You know who you are, the ones that nobody would play Monopoly with even when you were nine…. yeah I’m talking to you.
- Max buy in is $850 per market. This is a hard rule.
- It’s based on price at purchase. Suppose you put in $0.20 a share of Clarence Thomas being the next SCOTUS Justice to step down. You wanna’ go all in because you’re sure Ginsberg is unkillable. You can buy 4250 shares at $0.20 and you’re all in at $850.
- Suppose some hippie throws a brick at Kavinaugh and misses but knocks Thomas cold. He’s in the hospital and nobody’s saying anything. Shares of “Thomas is out” are going for $0.80 because everyone’s expecting a dirt nap. Your shares are now worth $3,400! You can’t buy any more shares. Sorry.
- You can bail out now. You’ll eat a $255 fee on your profits and put another $3,145 in your account.
- Suppose Thomas walks out of the hospital, high fives the shocked press, strips his shirt off and does 6 pull ups on live TV. The share price for “Thomas is out” drops to $0.10. You notice Ginsberg sidling up with a shiv in her hand and a wild look in her eye. Thomas is doing jumping jacks to the theme from Rocky. Dude’s gonna’ take a dirt nap real soon! You wanna buy more “Thomas is out”! Tough shit. You bought in at $0.20 and that’s still your “buy in” price and you’re still limited to $850.
- I don’t know if you can cash out, take your losses, and then re-buy in at the lower price. You’ll have to investigate yourself. Do it fast! Ginsberg is pulling a flamethrower out of her purse and Thomas is choking on a cherry pit.
- Suppose you’re Elon Musk and want to blow a market one way or the other? I can’t tell yet but it seems trading is light enough (low volume) that a few “whales” could move the needle on some markets.
- What’s the upper limit in shares? I’m not sure there is an upper limit in shares. I suppose mathematically 85000 shares at $0.01 a share is max per buyer.
- There appears to be a hard limit of 5000 investors in each market. This might matter or it might not.
- If 3,000 people were in the SCOTUS Deadpool and 5,000 random nerds see Ginsberg with a rocket launcher aimed at Thomas on live TV… only the first 2,000 of those new investors that stampede the site will get a buy. They’ll count as “investor” whether they buy one share on the “Thomas is toast” theory or hundreds on the counter proposition that “Ginsberg is walking dead”. An investor is an investor weather he focused on the rocket launcher or the dude with a robe carrying a scythe that was approaching Ginsberg.
- At least that’s how I interpret the limit.
- You lose 5% when you take your money out of the system. This is regardless of any profit or loss. Keep that in mind. Like all betting (and most investment) you lose the minute you participate. Drop $100 in the system and it’ll read $100 in your account but you’ll only get $95 back even if you never bet on anything.
One last question: What is the “trader level” on my account?
- Every trader starts off as a Novice. Sell ten shares for a profit to become a Prognosticator. The other levels are Diviner, Soothsayer, Fortune Teller, Prophet and Oracle.
What this means to me is that they’re trying to appeal to social media freaks. I can’t see how it matters in any possible real world situation.
I grudgingly accept one exception. Every market has a forum with chatter… that I ignore. Suppose you want to fuck with people? You buy a gazillion shares of something that’s pretty sure. Say you spend $98 to buy 100 shares at $0.98 each for “Will the sun shine tomorrow?” When Armageddon doesn’t happen it closes at $1. You “earn” $2 which is $1.80 after the 10% fee. You risked $98 and earned $1.80 for a profit of 1.8%. Meh.
However, you made a profit on 100 shares and your trader level is elevated to “Krugman”. (I’m joking here, Krugman has never been right about anything as far as I can tell.)
Then you pick a market, buy in, and then blather all over the forum how space rays from your toaster explain everything. People who read the forum see your high rating, (Oracle?) and believe your bullshit. Not realizing you were betting counter to your posts they all buy in, do what you recommend, and then you fleece their ass like the vicious capitalist honey badger you are.
If people pay attention to trader ratings and if they listen to forums and if they’re dumb sheep, this might work. It might not be moral but I’m not thinking it’s illegal. (YMMV.) It’s the “pump and dump” gambit applied to a forum that may have gullible snowflakes. I’m too fuckin’ lazy for such things but y’all are welcome to have at it. Good luck. Tell ’em Curmudgeon sent ya’.
Last comments. This is a toy for fun. I don’t advocate serious gambling any more than I advocate drinking a full bottle of tequila among strangers.
I am finding it fun to watch though. I’ve got $20 in it now and I’ve gotten a “case of beer and a pizza” worth fun out of it.
I like it as a fabulous reality check. Whenever NPR screeches “Blue Wave Enough To Kill The Tidy Bowl Man” and/or Reason Magazine predicts “Trump Will Literally Vaporize Nancy Pelosi With The Power of His Awesomeness” I check the markets. As far as I can tell they nudge to and fro a penny or two… indicating to me that it’s all bullshit. Clearly, nobody’s putting real money on their dumbass ideas. This tells me a lot.
Incidentally, when someone invades my world with “Russia, Russia, Russia, this time we’ll impeach Orange Hitler for sure”, I eagerly tell them all about that very market on PredictIt. I urge them to cash in on their knowledge. “Dude, you’re on to something! I see it now. It’s so obvious! You should make a bet with real money so you can buy a jet ski with the proceeds!” Funny thing, nobody’s done it. Almost like they’re saying words that even they don’t believe.
Incidentally, I made a risky bet at $0.35 a share. Almost two beers worth of money. (I’m a low stakes player y’all!) On a yes/no market it’s a longshot. I was lured in by the chance at a 135% payoff if it goes to $1. Was I wise? Will I crow like a fuckin’ rooster if I “win”. Who knows.
It’s foolish to play with real money but people who won’t put up real money are just blowing smoke out of their ass. Someone help me with the conundrum in the comments.
A.C.