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Public Markets For Predicting Google's Market Cap

timothy posted more than 10 years ago | from the put-your-non-money-where-your-mouth-is dept.

Google 169

k2enemy writes "The Iowa Electronic Markets have created two markets where traders may buy and sell contracts based on beliefs of Google's market cap at the end of the first day of public trading. The first market, GOOGLE_LIN, trades contracts with liquidation values linearly dependent on the market cap. The second, GOOGLE_WTA, trades six unique and exhaustive contracts in a winner-takes-all market. The markets are currently suggesting a market cap around $30-35 billion. The IEM is also popular for its political markets, which have been very successful (more accurate than polls) at predicting political elections."

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yea (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9938372)

Frist Post


JismTroll (588456) | more than 10 years ago | (#9938572)

Parent FP has been claimed proterty of JismTroll


Foogle (-1, Offtopic)

Anonymous Coward | more than 10 years ago | (#9938377)

Foogle []

FUD (4, Interesting)

swordboy (472941) | more than 10 years ago | (#9938382)

Anyone else notice the amount of FUD [] concerning the IPO? Google is the first to step in and help the little investor and, all of a sudden, the rich people are funding FUD campaigns so they can get in on the deal.

Re:not working (2, Insightful)

Anonymous Coward | more than 10 years ago | (#9938391)

Its not working though.

Google hasnt really budged on its position, and they still are not worried about the fatcats' FUD. Im not google, nor am I employed there, but I think they want their popularity, usability, and value speak for themselves.

Re:FUD (2, Interesting)

HMA2000 (728266) | more than 10 years ago | (#9938408)

Are you high? Google is not helping the small investor. If they wanted to help the small investor they would not make you buy a minimum of 500 shares at 100+ a pop through their auction method. If anything they are trying to keep the small investor AWAY from the IPO (which may actually be helping them.)

There's lots of reasons for the FUD, mostly because when you're dealing with billions of dollars that may or may not be spent there is a lot of fear, uncertianty and doubt. I'm sorry if this clashes with your Capitalist = Evil mentality.

Re:FUD (5, Informative)

Gigahertz (768208) | more than 10 years ago | (#9938460)

The minimum shares is 5, not 500, so a small investor with a little more than $500 can get in on the IPO.

Very Risky (4, Informative)

clone22 (252516) | more than 10 years ago | (#9938691)

Not that they should. Nothing is known about the direction the stock will take post-IPO. It could easily drop 25-50% in the first few days. The market for technical issues is negative right now.

There are different approaches to timing entry into a stock. Technical analysis [] assumes that all information about a stock is factored into the price. Indicators based on prior price history are used to determine trend. Proponents of the method say the price movement is a manifestation of crowd behavior.

Fundamental analysts [] study the companies financials, such as trends in earnings, price to sales ratio, profit margin, return on equity, etc.

Another approach [] is to find companies that are likely to profit from long term major trends in technology and/or society.

As for the Google IPO, there is no stock history on which to base a technical analysis. One might argue whether the fundamentals make the investment worthwhile, and the third approach takes a very long term view, so there is no good reason to jump on board immediately.

Lastly, if you are considering buying this IPO in speculation of it going up significantly in the next few days, have the mental fortitude to set a stop loss below your entry point and get the hell out if it drops to that point, or you stand to lose a lot of money, fast. This is no market for amateurs.

Speculator vs investor (4, Insightful)

SmallFurryCreature (593017) | more than 10 years ago | (#9938849)

If you are worried about the price in the first few days after the ipo then you are a speculator (read filth) not an investor.

Someone buying 5 shares is not a speculator. That person would be an investor. Investors are intrested in the long term. Hoping that by lending a company a sum of money now that company can use that money to increase its business thereby increase profits and in the future repay the loan with a nice little interest (dividends). True investment is more like a loan that doesn't have to be paid back unless you make a profit.

Speculation is just hoping that someone else will want to buy your shares for more then you have bought them. It has no intrest in the future of the company.

Re:Speculator vs investor (2, Insightful)

clone22 (252516) | more than 10 years ago | (#9939161)

The number of shares one buys has nothing to do with whether one is a speculator or investor. There are people who open forex acounts with $50, believe it or not. But you're right that investors are interested in the long term and speculators are generally interested in short term profits.

However, I'll disagree on your characterization of stock ownership as a loan to the company. You are, in fact, buying a part of the company (a share) when you purchase the stock. The company may or may not choose to distribute future profits as dividends. It may instead reinvest those profits in development of new products and infrastructure in order to increase the value of the company, thus increasing the value of the stock.

Lastly, re your characterization of speculators as filth, speculators are essential to the success of commodity markets. Consider a farmer who must sell his crops to earn sufficient money to feed his family. He may purchase options that give him the right to sell his crop at a price that will enable him to earn a profit, even if the market price of the crop drops due to overproduction (good weather, other farmers growing same crop). Someone must take the other side of that option transaction, and that person is a speculator.

Re:Speculator vs investor (1)

kartiknarayan (15498) | more than 10 years ago | (#9939491)

That's fine - since I'm a non-filthy investor, I'm going to pass up on this IPO, wait until the price crashes to price more justifiable, at a more realistic ratio, and then buy.

If you were to take my recommendation (which you have no reason to), you wouldn't buy GOOG.

My 2 cents.

Re:Speculator vs investor (3, Insightful)

Kevin Stevens (227724) | more than 10 years ago | (#9939649)

If you are worried about the price in the first few days after the ipo then you are a speculator (read filth) not an investor.

I disagree. If you are not worried about the share price a few days after, you are foolish. If you know there is an 80% chance that the stock price is going to be significantly lower three days after you plan to buy it, you buy it three days later at the lower price.

Also, your definitions of investing and shares is far off the mark. A share is a piece of the company. You own that company. There is no loaning involved, you don't sell it back to the company, you sell it to another investor. You invest in a company, hoping that the company increases in value, thus raising the share price, or alternatively remains profitable and stable, thus releasing dividends. Share price appreciation is much more common now as most managers choose to reinvest profits in the business, which makes the company grow, and benefits the managers resumes as they get to lord over a larger empire. Also, most managers primarily have options on stock shares and do not own actual shares, so they again just look to get the quick buck from exercising the option and selling it. It used to be more common that something like a tire company would be content with doing well in the tire business, making nice profits and handing out dividends, mostly due to the fact that there were more family businesses and the managers were family members that held large numbers of shares (for a current example MS w/ Gates and Allen share many characteristics). Now the trend is that the company would instead start expanding into making other rubber widgets or if they are feeling really adventurous just buy or venture into some completely unrelated business. Its not a clear argument as to which method is better, as the shareholders should win with each strategy, though companies with dividends have historically produced higher total returns.

Not as easy as it seems (0)

Anonymous Coward | more than 10 years ago | (#9938923)

It's great that they're trying, but there is still a really big stretch of hurdles for the small investor. An AP reporter tried to do just this, and found out that most of the brokerage firms require a very large (~$50000) initial investment to open an account.
Here's the link. []

Re:FUD (2, Informative)

MulluskO (305219) | more than 10 years ago | (#9938468)

The minimum is 5, ass-hat.

That said, it still isn't for the small investor, IPOs seldom are.

Link to info []

Re:FUD (2, Funny)

Anonymous Coward | more than 10 years ago | (#9938655)

Why not go to the source [] for info.

Re:FUD (1)

throwaway18 (521472) | more than 10 years ago | (#9938488)

f they wanted to help the small investor they would not make you buy a minimum of 500 shares at 100+ a pop through their auction method.
They are not making anyone buy at a paticular price. If the bulk of the bids in the auction are at $50 then the opening price will be $50.
Google's announcement is quite clear that investors can bid above or below their suggested price range.

Re:FUD (2, Informative)

swordboy (472941) | more than 10 years ago | (#9938494)

If they wanted to help the small investor they would not make you buy a minimum of 500 shares at 100+ a pop through their auction method.

They would go belly up if they didn't do this. This is standard procedure when it comes to an IPO. This is the very reason that Disney stopped allowing tourists to buy a single share of Disney stock while visiting one of the parks. The overhead involved in dealing with this trivial investor was more than it was worth to the investor.

What I am getting at is that the underwriters, who normally get 6-10 percent of the offering for next to NOTHING, have been limited to just 3 percent for the first time ever. This gets rid of the "overhang" that follows an IPO. Take Netgear NASDAQ:NTGR [] for example. The IPO was priced at $14, which was on the cheap side so that the underwriter, Lehman Brothers, could sell off a couple million shares after the fact, making money for (almost) nothing and pressuring the stock into a downward spiral (Netgear recently beat earnings expectations and guided the next quarter much higher only to see their stock jump and then quickly get pushed downward again).

Capitalist is not evil. I've made significant money in the market this year. If you think that a minimum $50k investment to get in on google is not helping the small investor, then you must be high. That is chump change to 95 percent of the small investors out there.

Re:FUD (1)

ArsenneLupin (766289) | more than 10 years ago | (#9938502)

If anything they are trying to keep the small investor AWAY from the IPO (which may actually be helping them.)

You mean, hehe, if it tanks? Indeed, in that case, the small time investors may have been helped by having been kept out ;-)

Seriously, by having a more accurate assessment of value, rather than artificially undervaluing their stock (as would be the case in a classical IPO), they are indeed limiting the probability of a "stellar" IPO, and this is a very real concern.

The Dutch auction format doesn't particularly help the small time investors. Indeed, small time investors like it too if the stock skyrockets after the IPO (even though they profit less than the big guys). The Dutch auction mostly helps the company itself (i.e. google)

Re:FUD (0)

Anonymous Coward | more than 10 years ago | (#9939030)

You don't have to be sorry, but capitalist does equal evil.
I was just thinking about this. When you get right down to it, what really ended the cold war between Russia and the US? Really it was about convenient access to consumer goods. Although the US hates to admit it, Russia did have fundamental democratic institutions that may have worked painfully slowly but that's not really all that different from the US where the few inhabitants of vast stretches of sparsely populated territory get to decide what people in Los Angleles or New York can buy see drink eat or smoke.
So the real issue wasn't the different political situation, the poltical differences were cosmetic the KGB was certainly no worse then the DEA, the real difference was the different economic models and the West was simply better at getting goods to consumers in a way that they wanted them. That meant change was inevitable because the people of the Soviet Union saw that they were getting behind and when the people genuinely unite behind change, it becomes very difficult to stop such changes from happening one way or the other --even in the Soviet Union.
But now we've reached a point where we're starting to tilt back the other way. How far are we in the West from criminalizing common consumer behaviors. The answer is, it has already started. Indeed, we're well into it.
So back to your point, yes Capitalism does equal evil and that dark, evil spirit is recently lifting its veil to reveal its true character.
Thank you for mentioning it.

Re:FUD (0)

Anonymous Coward | more than 10 years ago | (#9938467)

Google makes sure that the money which other IPO styles give to "preferred investors" (through soaring value of low priced IPO shares) will go to themselves instead (adequate or slightly overpriced IPO value). Nowhere in this scheme does the little investor gain anything.

Re:FUD (0)

Anonymous Coward | more than 10 years ago | (#9938498)

it always amazes me when someone addresses FUD with FUD. Google is interested in one thing and that is money, they couldn't give a damn about the little investor as they are just using them to try and hype there price up.

Re:FUD (1)

Ignignokt (803398) | more than 10 years ago | (#9938516)

Google's IPO doesn't help individual investors any more than going the traditional route via distribution through an underwriter. It helps them (Google) get more for the IPO and the bankers less.

The FUD is coming from your direction (4, Insightful)

PrvtBurrito (557287) | more than 10 years ago | (#9938638)

Where on earth are getting "help the little investor"? Google isn't helping the little investor anymore than anyone else is. What you pay for those 5 minimum shares is the market price. That is the same damn price you will pay on etrade the next day. (where you can buy 1 share if you like). And the fact that lots of people share your belief only suggests to me that the price will be inflated because they think they will be "getting a deal." If they wanted to help the little guy (and not themselves) they would offer the shares at the price wall street would've normally paid for them to the investor with a maximum number of shares that can be purchased (like 50). But that is not what they are doing, they are helping themselves, but pocketing the profits wall street usually gets on the road from the IPO price to the market price (which is often, but not always, higher).

Re:FUD (0)

Anonymous Coward | more than 10 years ago | (#9938959)

The 'little' investor has no idea whether 10% of Google will ever be worth 3B$.

So, allowing the little investor buy GOOG shares is only helping him getting rid of his money.

Re:FUD (1)

GoofyBoy (44399) | more than 10 years ago | (#9938967)

Why is this FUD? Is any of this incorrect? Should we just be looking at the glowing articles how at $33 billion Google is underpriced?

Its just an analysis of an stock IPO. Articles are written trashing stocks everyday.

Re:FUD (1)

Chess_the_cat (653159) | more than 10 years ago | (#9938972)

What are you on about? Everything I've read points to big investors being cool on Google's IPO. They know that Google won't be able to sustain a price above $100 for very long so they'd rather wait until the stock price settles so they know what they're getting. Why buy now for $135 when in a week you can buy for $30? The only people going gaga over this are stupid people without any money who think this is their big chance to win the lottery.

i hate... (-1, Flamebait)

Anonymous Coward | more than 10 years ago | (#9938383)

white trash mother fuckers with trucks and straight pipes. they are worse than niggers!

The vultures are circling (1)

Killjoy_NL (719667) | more than 10 years ago | (#9938385)

It seems like everybody will try to make a buck of Google. I just hope that Google won't bomb like so many other companies.

Re:The vultures are circling (1) troll (593289) | more than 10 years ago | (#9938417)

The question is what happens if it does? Does google the company die but the organization(search engine et all) stay? does it all go away? does it get ruined by shady practices like paid placement?

Re:The vultures are circling (1)

dncsky1530 (711564) | more than 10 years ago | (#9938433)

I really like google, however I would never invest in a company that gains over 90% of its revenue from advertising and a user base that is very unpredictable. If a better search company comes around then users will switch, just like they switched to goole. However what google is trying to do is expand into many more online markets so people come to them for every online service with their powerfull search leading the way. They have great services and are a great company but I can't invest so readily in a young company in a volatile market.

Ironic... (3, Interesting)

xIcemanx (741672) | more than 10 years ago | (#9938396)

that these people are pretty much "gambling" on the stock market, something that is pretty much gambling in and of itself.

It's like gambling on someone else playing the slot machine. o.O O.o What's the point?

Re:Ironic... (1)

tehcyder (746570) | more than 10 years ago | (#9938420)

This gives people a chance to think they are stock market players but without having to bet their houses on it.

Re:Ironic... (3, Informative)

TopShelf (92521) | more than 10 years ago | (#9938456)

Plus, another site that wasn't mentioned, Innovation Futures [] , offers prizes for successful traders. They are currently running some markets related to Google, and a couple months back, I won a Tablet PC [] in another contest run there...

Re:Ironic... (4, Interesting)

maan (21073) | more than 10 years ago | (#9938427)

There's a subtle but interesting difference here, though. Whether the stock market is or isn't gambling is obviously a question in and of itself. But, by "adding a level of indirection", as you might say, you're "gambling" on people's reaction to how the stock will perform.

Same with the slot machine. Indeed, a slot machine is supposed to be (nearly) completely random in its outcome. But how a player behaves at a slot machine is anything but random! So you're not betting on the same thing... It becomes very very interesting ;)


Re:Ironic... (1)

xIcemanx (741672) | more than 10 years ago | (#9938440)

Hmmm..interesting, it'd be more like gambling on someone playing blackjack then.

Re:Ironic... (2, Interesting)

NickFitz (5849) | more than 10 years ago | (#9938527)

I don't know what the law in the States is like, but in the UK, these people [] make out a good case for slot machines being rigged. In brief, they use an emulator [] which will run fruit machine code [] , allowing you to play until you get a gamble, lose, go back to the saved machine state before the gamble, choose the alternative option and... lose again!

Re:Ironic... (4, Informative)

Sancho (17056) | more than 10 years ago | (#9938665)

They're not rigged, they just don't work like everyone thinks they do.

Originally, slot machines had spinning reels with pictures painted on the outside. A winner was determined by whether or not the pictures on the reels lined up (obviously there were internal mechanics to all of it, but that's how they were designed). Pulls were random based upon when the lever was released after the pull. As such, the player had some amount of influence over where the reels stopped, but there was clearly no way to control this influence and so the game was purely luck--no skill involved. The odds were determined by how the reels stop and where.

Later, as electronic slots were developed, things changed. Rather than the player having any influence whatsoever on the slots, a computer chip determined whether the next pull would be a winner before the money was even put into the machine. The reels were then controlled by the computer chip inside the machine, so they showed matching symbols when the machine decided it was a winner, rather than the winner being determined by where the reels stopped. It's a subtle but distinct difference. So now the chip determines randomly whether there's a win. You could emulate this system to an extent, but I'm not sure anyone ever bothered.

Move on to completely computerized machines. Even the reels now are just pictures on a screen, and you can emulate the entire system rather easily. The chip determines whether or not you win (again, before you even put your money in) and then it displays pictures showing you an outcome that matches the predetermined outcome. Statistically, this is no different than the original reels. Logistically, the odds can be changed by the owner, but many places where there is legal gambling require a certain payoff, so it's unlikely that the odds would be lower than the minimum. But a side effect of all of this is precisely what you linked to--in emulation when you can reset the computer to a previous state and pick a different input, the computer necessarily must adjust the displayed output to match the predetermined outcome. It's still random, it's almost certainly legit (with regards to the posted odds), but it LOOKS like cheating if you don't know how the internals work. If the people who had written that webpage had bothered to find the "you will win the next pull" variable, they probably would have found that saving state then, then going back and choosing a different option still would have led to a win.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938729)

1) take those emulators, on a pocket pc, to a pub, frantically try to match it to the state of the real machine (perhaps by putting a few sample spins in, then running the emulator till it matches).

2) predict the next spins.

3) profit!

I used to work in the fruit machine industry. I learnt a lot about real-time C programming, and how corrupt the gaming board was.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9939361)

Fruit machines are not the same as Casino Machines. Casino Machines must be completely random but with a certain payout amount over the life of the machine. Typically the minimum is 80% and the max is 99%.

Fruit Machines are not completely random. They have a maximum loss rate per hour defined by the relevant goverment bodies. If the machine has too many loosing turns an hour it can change a loss into a win. Although this was not how it was done. Usually the machine will increase the bonus won to compensate for the loss rate.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938539)

The indirection is no more about people's reactions than the stock market itself is about people's reactions. The value of the contracts depends on the stock value after the first day of puplic trading (if that day is within certain bounds). Sure, in this value people's reactions will be summed up with external factors, but that's exactly the same feedback loop which is the stock market.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938823)

of course. you can't take a function f(S) and use it to tell you anything more about the expected mean of S than observing S itself will tell you.

but, f(S) has a different distribution of returns to S. so, the new market should contain information about people's expectation of the distribution of S. what information depends on the form of f().

Stock trading is largely parasitic (1)

Morgaine (4316) | more than 10 years ago | (#9939346)

But, by "adding a level of indirection", as you might say, you're "gambling" on people's reaction to how the stock will perform.

Gambling on the random roll of a die or on the semi-predictable reaction of people is still gambling. As long as there is a random element, it's gambling. Take boxing, in which years of preparation of a very accessible human precede the fight, which is far less random than racing horses for example. Yet, nobody is likely to argue that betting on the outcome of a boxing match is not gambling.

In any event, it's all immaterial. The key observation here is that this gambling or non-gambling results in very large financial gains for people who are not contributing to the material wealth of the nation in any way whatsoever, except as consumers. The normal term for organisms that do that is "parasite", and that's what these gamblers or speculators are.

Admittedly, 5% or so of market trading actually loosens up capital which productive companies use to underpin their manufacturing and generate real wealth, and that's good. But the other 95% is purely parasitic.

It would be quite easy to justify even the role of pure unadulterated parasitism by requiring a percentage of trading profits to automatically enter the coffers of the company being traded. That would be anathema though to the traders. The idea that to make money you should actually create something lost its hold in America a long time ago.

Re:Ironic... (1)

lachlan76 (770870) | more than 10 years ago | (#9938429)

What's the price of one of these shares? How much does a share in Google cost?

These are much, much cheaper to get. That would be a fair point.

Re:Ironic... (5, Interesting)

TheClarkey (546286) | more than 10 years ago | (#9938445)

The point is quite simple.

Your guess and my guess will probably be different due to different influences.

The theory goes, if you take a large enough sample of opinions from a mixture of sources, tech experts, financial experts, normal people the market prediction (i.e. the average of all the guesses) will be a closer guess than any one single expert.

It isn't like gambling on a slot machine as a slot machine is pretty much a game of chance and odds.

I'd suggest that you might find The Wisdom of Crowds [] by James Surowiecki useful, if your really interested in how these kind of decision markets work.

Re:Ironic... (1)

tezza (539307) | more than 10 years ago | (#9938479)

A lot of markets are not based on random data that you assert. Take Commodities such as Wheat. There the price can be based on such things as the amount of sunshine expected. There are some Commodities' Traders who have live weather feeds to price options.

It's like gambling on someone else playing the slot machine. o.O O.o What's the point?

So to use your example against you, it's like knowing that a slot machine has a higher payoff if the Casino Air Conditioning temperature falls below a certain point, and all the fat people just left the building.

Re:Ironic... (3, Insightful)

mclearn (86140) | more than 10 years ago | (#9938528)

The stock market is not gambling. This is a myth perpetuated by those who do not understand the stock market, capitalism, or gambling. The fundamental aspect of gambling is that it is a zero sum game. You win, someone else had to lose. You lose, someone else takes your money.

The stock market on the other hand, has two things going for it: products (or services) are generated as a direct result of investors buying stock, and more importantly, it is not a zero sum game. If you "win" (ie. make money), it does not necessarily mean that someone else "lost" (lost money). Case in point: person X sells 100 shares of a company at P for a profit. Person Y bought the shares from them (simplified) at P+e (e = commission and/or bid/ask spread, etc.). Down the road, person Y sells their shares for Q>(P+e) and in so doing ALSO makes a profit. No one was on the losing side of this situation.

Of course, there are situations in the market that can result in gambling: people who hold equal, but opposite positions on an instrument (short & long). If the stock goes up, the shorts lose money and the longs win money. If the stock goes down, the longs lose money and the shorts win money. This is one example; others abound, but the case above, still holds.

Repeat after me: the stock market is *not* gambling.

Re:Ironic... (2, Informative)

tehcyder (746570) | more than 10 years ago | (#9938633)

The popular use of the word "gamble" is that you take a risk with your own money in the hope of winning some more. So a normal person would say that investing in the stock market is a gamble, as your investment can go down in value, unlike putting the money in a bank.

Whether there is a technical definition that gambling has to be a zero-sum game or not, the ordinary usage is still valid.

Re:Ironic... (2, Interesting)

Erwos (553607) | more than 10 years ago | (#9939288)

Going a touch OT here, but "unlike putting the money in a bank" is simply not true.

For all the faults our country has, our banking system is wonderfully reliable, regulated pretty intelligently, and is one of the few things that should be that way.

Yet banks _do fail_. That's why they have to be insured by the FDIC. However, you're probably saying "but wait! I've never heard of them failing in the US".

The simple answer is, when your bank goes bankrupt (or is on the way), instead of having the FDIC bail them out, the failing bank's assets are simply sold to another bank, where they (presumably) will be managed better. You, the bank customer, never hear about this except for a notice in the mail talking about how your bank was bought by some other bank, or "merging" with them. The industry knows that FDIC bail-outs look ugly in the paper, and that this is an excellent way to pick up some assets on the cheap.

But, the FDIC _could_ be forced to bail them out - at which point all your funds above $100,000 will be lost. So banks do, in fact, entail a little bit of risk.

However, I just wanted to correct the impression that "putting your money in the bank is totally safe". It's not true, especially if you've got more than hundred grand in there.

But that's a nitpick, and the parent is right in the sense that "a sure thing" is like 99% going to happen, and a gamble is something that's less than some percentage (based on your risk aversion).


Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938695)

Another common-sense answer why the stock-market isn't gambling:
You might buy shares and never sell and still make money. Why?
Answer: dividends. The stock-market isn't a game of musical chairs. The companies in which you buy shares (hopefully) make money and distribute some of that to shareholders through dividends.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938906)

Most companies don't pay dividends. There are some that do - albeit a token amount - but most try to enhance shareholder value by keeping the money in the pockets of the company instead of paying it out.

Re:Ironic... (1)

Khali (526578) | more than 10 years ago | (#9938749)

(...) No one was on the losing side of this situation.

I wonder why that many people keep claiming that "nobody loses money" when they get something of value without paying for it. In the example above, person Y obviously took benefit in the trades for little to no effort. And the final buyer obviously lost money since he/she could have bought the same from X, for less.

Same when you take the train without buying a ticket. You can pretend it didn't cost anyone anything since the train would have been there anyway. Such a poor argument may convince a 8 year old kid maybe. Just because you stole a very small amount of money to a huge number of persons doesn't mean you didn't steal. If nothing else, you stole comfort. Nobody likes travelling in a crowded train.

All these affirmations and theories can be dismissed with a very simple rule. Just wonder what would happen if just anybody was doing the same. Trains wouldn't be there, and stock markets would crash. Oh, wait. It already happened, and more than once.

When the stock markets "win" several percent in value in a single day, don't tell me it represents anything real. That much value wasn't magically created just because trade people gave buy and sell orders. Actually, no value at all was created by these people (nor will ever be). Stock market is all about what people think, what people think other people may or may not think, etc. Unlimited level of indirection is possible, and this explains why stock markets change values that fast and don't represent anything real.

These games (because that's what they are, really) are certainly very, very interesting from a social and psychological points of view. That's a pity that they affect economics (and real life) in the end though, and in large proportions even, since the input is more noise than signal.

Re:Ironic... (1)

kharchenko (303729) | more than 10 years ago | (#9938753)

First of all investors buying stock does not result in products or services generated. It is only if the company is able to sell additional stock and then put it to a good use you might see that happen.
Second, although stock market is not a true "zero sum" game, it's much closer to that then what you've described. In your example the person who bought the shares last payed for the entire game (up to that point), and if the stock tanks he'll be in the loosing position.
Finally, I think the post was drawing parallels between traiditonal gambling and formalized "speculation" on the stock market. I don't see much difference either. Back on the IPO example where one purchases IPO shares with hopes of selling them quickly for a larger amount. Even if this is done based on some nontrivial calculations/knowledge/etc., how's that different from a poker player who's calculated his odds before making his move ?

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938766)

The stock market is gambling from the user's perspective. The difference is only from the market perspective, that the money effectively modifies the value of the company.

As an investor it makes no financial difference to me whether I actually buy the stock, or place a bet on the value of the stock which a gambling provider who matches the payout and comission rates of a stock broker.

However, insurance is *much more* like gambling. If I take out theft insurance on an item, I am in every respect placing a bet against it being stolen.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938889)

No, in every respect you are placing a bet that it WILL be stolen. You get a payout when it is stolen, not when it's not.

Re:Ironic... (1)

danila (69889) | more than 10 years ago | (#9938808)

Holding shares (bonds) is not a zero-sum game. Trading shares, on the other hand, is zero-sum. Everything that you gain by buying a stock, the seller loses. Ergo, the stock market is gambling.

Re:Ironic... (1)

mclearn (86140) | more than 10 years ago | (#9938877)

There's a response attached to the parent that describes a situation I forgot to include: dividends pay out regardless of whether you sell.

Re:Ironic... (1)

baadfood (690464) | more than 10 years ago | (#9938824)

And how is that NOT a zero sum game? The 3rd person, who purchased the stocks at Q is, in your example, the looser. If you ignore the long term players - the people looking to gain (or lose) actual stockholder voting power, and/or hoping to collect on dividend payouts, the rest of the market is both zero sum, and gambling.

Re:Ironic... (1)

hey (83763) | more than 10 years ago | (#9939012)

> Repeat after me: the stock market is *not* gambling.

You made your point but why do have to repeat something after you!?

Keep Repeating... (0)

Anonymous Coward | more than 10 years ago | (#9939558)

Its sort of old school commie style rhetoric, isn't it? Just replace "The State" with "the Market"

Re:Ironic... and misleading (5, Insightful)

zogger (617870) | more than 10 years ago | (#9939015)

Simple math, it doesn't take a professional. You seemed to have forgottej to mention that your "winner" person Y had to have someone brand new enter new REAL cash into the market in order for Y to "cash out". That real cash did not come from the market as it stood a second before the cashout, it had to come from outside the market and be introduced into it for the cashout to take place (very broadly speaking but it's true). You forgot that in your details. It's pyramidal, real cash has to be constantly pumped in to it above and beyond the tangible accumulated wealth produced by the goods represented by the actual corporations Service money is a dilution of wealth in the aggregate, hence the name "service". Wealth is a function of ownership of the land, what can be grown or extracted in some manner or form from the land, or what can be manufactured from any combination of the last two. Everything else is a dilution and constitutes wealth production re-arrangement, not wealth production.. If the market wasn't pyramidal, theoretically you could freeze the market one day, at whatever bid price was current,and everyone could do this "cashout" thing, and that's not possible, is it? In fact it might be *at best* a few pennies on the buck in reality, isn't it, right now?

If what you said was true, the crash of 29-34 would have resulted in "all winners", there wouldn't have been a crash at all, we would have had a perpetual boom cycle. We didn't,did we?

Here's the proof. When I was a kid, you could literally go into the five and dime (a lot of people have never even seen such a store, I think they are rare now) and buy a nice bundle of real old great depression era stocks as a novelty for one dime, less than a penny apiece. Very pretty, all curleycue scrolled edges, very impressive looking. They probably represented quite a lot of lost money for a lot of investors. They actually did gamble and lose, millions of them, there were only a few big winners.

No, I won't repeat what you said,because it's not true, I'll say it's an elaborate ponzi scheme that only exists by inducing new suckers into it every friday afternoon. It's not much different from a huge MLM where you have to get people "under you" to actually support you so you don't have to actually produce any true wealth, with the difference being there are much less real products involved than most MLMs which are scussy enough as they are. Theoretical paper contracts as in the article are not much in the way of a real tangible product, they do nothing to help the over all economy, all they do is re-arrange what wealth exists, they produce *nothing*, and the only what it is possible is by shilling newsuckers into it all the time.

Originally how it was set up it was much closer to being a real "investment", with more at least semi honest quantifiable risk data to use for your assessment if you should invest or not. It is not that way now, or are you forgetting the recent dot bomb phenomenon?

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9939020)

Case in point: person X sells 100 shares of a company at P for a profit. Person Y bought the shares from them (simplified) at P+e (e = commission and/or bid/ask spread, etc.). Down the road, person Y sells their shares for Q>(P+e) and in so doing ALSO makes a profit

How do you define the end of the game? This is very important in realising that Share Trading alone is ultimately zero-sum. If game start is defined as when a business lists, and it's pre-list price is $0 a share, and game end is defined as when a business de-lists and post-list price is $0 a share.

Ignoring Stockbrockers fees which would make the game negative-sum, or dividends which make the game positive-sum.

Like people complaining about the huge amount of money lost in the dot-com bust, without considering that it is precisely the amount earned in the boom. For each dollar lost, someone made a dollar. Dollars lost counting only as the price the shares fell from the buying price, not potential selling price.

Making sense? Probably not.

Stock markets and gambling (1)

ThinWhiteDuke (464916) | more than 10 years ago | (#9939027)

I humbly beg to disagree :

products (or services) are generated as a direct result of investors buying stock

This is only true at the IPO or when any newly created stock is issued on the market. After the stock is issued, the company doesn't see a dime on transactions between investors. I'm too lazy to search for it but it once read that the money actually raised on stock market represented a tiny fraction of the transactions volume (far less than 1%). In other words, when 1 billion is exchanged on the market, only less than 10 millions actually go to companies. Of course, these exchanges are supposed to provide the liquidity that the initial investors relied on when they made their initial investment (still with me). Yet, this is debatable and saying that products are developped as a direct result of investors buying stock is abusive.

and more importantly, it is not a zero sum game

I call logical fallacy here. You're considering the stock transaction together with the company's value creation to determine the sum of the game. The stock transaction itself is in effect a zero-sum game (actually a negative-sum game because of brokers' fees and other transactions costs). In your exemple, the fact that person Y makes a profit has nothing to do with the transaction itself. If the transaction had not taken place, that profit would still had been there, but for person X, the original owner of the stock. The transaction has only transferred value from person X to person Y, no value has been created by the transaction.

There's also one very important thing you did not mention in your post. That is information asymmetry. In most cases, an individual investor knows far less than banks professionals about what makes the value of a given stock. Taking Google for example, any /.er knows about their technology and business. We believe that Google has a solid business that will continue to grow profitably. Great! Even if we're right on this, will Google grow enough to justify the 30Bn valuation? The answer is : we don't have a clue.

Repeat after me: the stock market is *not* gambling.

How do you define gambling? For me, it's a money transaction which is useless, random and zero-sum. I have explained why I think buying on the stock market is 99%+ useless and it's also very close to random for an individual investor. If you take into account the transactions fees, it looks very similar to slot machines with their 95% redistribution rates. But you also have to consider the information asymmetry.

The bottom line is: for an individual investor, buying on the stock market is VERY similar to playing a rigged slot machine.

Re:Ironic... (1)

Valar (167606) | more than 10 years ago | (#9939305)

It also is obviously not random, but instead based on group psychology. If a company exceeds expectations for a quarter, prices will go up. If a company doesn't meet expectations, prices go down. The more good press they get, the more prices go up. The more bad press they get (in general), prices go down (though if it falls enough that the stock is considered a 'bargin' people will jump on it again, driving the price up [similarly if it becomes obvious that the company will still turn a profit after the 'bad news' is over]). There are a lot of factors, but all in all it comes down to a simple principle: have something someone else wants, when they want it and you stand to make money.

Re:Ironic... (1)

duggy_92127 (165859) | more than 10 years ago | (#9939390)

Repeat after me: the stock market is *not* gambling.

I see what you're saying, but I'm sorry, to most people it is gambling. The vast majority of personal investors don't know the first thing about how to evaluate a company and therefore determine if the stock price is high/low and likely to fall/rise. These people listen to the "experts" on the news and/or their friends and simply buy what "looks good" to them, on the hopes that the stock price will rise.

This is effectively gambling. They throw $1000 at something and hope that they'll make some money. As far as they're concerned, there's an equal chance of it going up or down. They simply don't know if they're going to "win" or not.

Now, you may know something about investing and how to read a balance sheet, as I do, so to us it's not gambling; we can be fairly sure (although never certain) that if we buy a stake in a strong company we're unlikely to lose much, or if we short one that's obviously financially unstable we're fairly likely to "win". That's not gambling, that's taking educated risks based on solid information.

Most people don't do anything near that. They are gambling.


It's gambling (0)

Anonymous Coward | more than 10 years ago | (#9939399)

Repeat after me: the stock market is *not* gambling.

The outcome is unpredictable in part, like in boxing, and you are betting on the outcome. That's called gambling.

Re:Ironic... (1)

razmaspaz (568034) | more than 10 years ago | (#9939509)

The stock market is absolutely a zero sum game. Most of the money "invested" in the market doesn't exist. If everyone in the market decided that they wanted their money today, there would be almost no money in the market. In fact it is reasonable to assume that the sum total of all the money actually "in" the stock market is zero. And that if every single person in the stock market asked for their money back today there would be NO money to give them. Stocks only have value as far as someone is willing to give money for them. If NOBODY wants to buy stocks then stocks are worth $0. So the stock market is a zero sum game. It just doesn't look like one because there is always a buyer who sees greater value in the future than what he/she can purchase a share of stock for today.

This is not to say that the market is a bad place to have your money. It is also reasonable to assume (given historic performance) that the stock market's perceived value will continue to go up. Thus a single investor can make money by buying in now and giving his share to someone else later on. However that investor is dependent on others keeping their investments in the market. Of course if you want something to fall back on in a crisis, ther stock market is not it. Consider trying to trade a share of stock in GE for food and shelter during WW3. Good luck. now consider a gold brick or gasoline...much better because it is actually a tangible good.

This is obviously a more complex subject than I am capable of explaining fully, but you can see that stock has value because people have confidence that more people will continue to invest in it. When it comes down to it, the stock market is one big pyramid scheme. I buy something with a limited supply, then I try to convince others they should buy it too, which drives up the price so I can sell it for a tidy profit. This continues to work as long as the guy I sold it to convinces more people to join in. It seems that eventually we would run out of money, but all I have to do is sell my stock to someone else and go buy more stock. The guy I bought stock from can go buy more stock with that money, and so on... (essentially velocity of money and multiplier effect) it continues to grow...until we all want it back. Then we get a dot com bubble bursting.

Re:Ironic... (1)

Ignignot (782335) | more than 10 years ago | (#9938532)

that these people are pretty much "gambling" on the stock market, something that is pretty much gambling in and of itself.

This is entirely incorrect. They are creating a futures market for Google before the underlying (Google stock) can be bought or sold. This is extremely useful to investors who want to pin down a price for Google's IPO. For example, let's pretend that I'm a medium sized speculator. From looking at all sorts of data and building my own model, I think that Google's IPO is going to be overpriced. I could simply sell call options on Google (a call option is a contract that allows someone to buy a stock at an agreed upon price). If I sold a call option, then I get money right away, and someone else has the ability to force me to buy Google shares at the current market price and then sell the shares to whoever owns the contract at the agreed upon price. This means that if the stock price for Google goes through the roof, I can get screwed big time. Here's where the futures market comes in - I buy some contracts in this pre-IPO market and now, if the price for Google goes up, so does my futures contract, so I'm in the clear.

It's like gambling on someone else playing the slot machine. o.O O.o What's the point?

Contrary to many people's beliefs, the stock market is not gambling. It can be gambling if an investor has no idea what he or she is doing. Every once in awhile the stock market becomes very popular and people who have no clue start throwing their money into it, hoping to hit it big. Maybe a few of them do. But all of the experienced traders should be able to shear most of the new flock of sheep. The stock market is not a zero sum game, but you can make a lot of money by taking money away from stupid people.

My examples are a little simplistic, but hopefully you have a small idea of what's going on in the stock market now.

Re:Ironic... (-1)

Anonymous Coward | more than 10 years ago | (#9938570)

Yes, I put two <i> tags. Sorry.

Re:Ironic... (1)

ortholattice (175065) | more than 10 years ago | (#9938639)

While I think Google is a great company, if you are thinking of investing you should really look very carefully at what is happening to your money. Please read my earlier [] posts [] on this.

For each $100 you invest in Google stock, only $5 to $10 directly benefits the actual company Google itself (from your point of view, looking at your percentage of ownership in the company). The rest is in effect a commission that goes to the officers and directors. In effect 90% of your money goes to them! The (now public) company Google is in effect paying them, via stock, multibillion dollar bonuses, which is far, far greater than the "normal" compensation of executives of public corporations. Google will have to increase its assets by 10 to 20 times before you will break even, much less get a positive return on investment. You'll get better odds and a much lower "house take" in Las Vegas.

This is not to say that their greed is right or wrong. But I think you should be very aware of this before actually plunking down your hard-earned money.

Re:Ironic... (0)

Anonymous Coward | more than 10 years ago | (#9938955)

let's take GOOGLE_WTA. These are a series of top-hat functions, with ranges defined by 2 strikes X1 and X2. the contracts cover a range of possibilities.

the relative prices of these contracts depends on the market player's estimates of the distribution of Google's cap. they are volatility trades, like the options market. you cannot use them to better your expected outcome (in an efficient market) but you can use them to alter the distribution of your gains/losses.

Re:Ironic... (1)

evronm (530821) | more than 10 years ago | (#9939258)

It's like gambling on someone else playing the slot machine. o.O O.o What's the point?

I wish it was like that. If you could gamble on someone else playing slots, all you'd have to do is bet against them, and you'd win most of the time.

Interesting Idea (3, Interesting)

lachlan76 (770870) | more than 10 years ago | (#9938422)

It's an interesting idea of how to make predictions, because after all, like in real life, a lot of people will vote for someone/not at all because they think everyone else has.

Kind of like one of those equations in Neural nets. I can't remember it exactly, I think it was something like 1/(e^(-t)*log(t)) that causes more change when the votes are close, and less when it's near the extremes, since with a very high/low buying price, you change people's confidence in that decision.

I always thought it would be interesting to try it on /., with an uncapped mod limit, but there is a big change around the 2-3 area, but when you get to -1/5, each moderation becomes less of a change. Not really practical though. Wouldn't want to hurt /. servers.

Re:Interesting Idea (0)

Anonymous Coward | more than 10 years ago | (#9938453)

In regard to the neural networks, I assume you're talking about the logistic curve that tends to level out as neuron firings near the extremes?

Re:Interesting Idea (2, Informative)

lachlan76 (770870) | more than 10 years ago | (#9938495)

This is what I meant []

Re:Interesting Idea (2, Interesting)

ArsenneLupin (766289) | more than 10 years ago | (#9938577)

It's an interesting idea, but what would happen if Google cancels its IPO at the last moment? Lots of companies have cancelled/postponed their IPO, if they have felt that the economic climate was not quite right (Telefonica?). In that case, who will win the GOOGLE_LIN / GOOGLE_WTA markets?

The same question obviously applies to other similar secondary markets as well ;-)

Re:Interesting Idea (0)

Anonymous Coward | more than 10 years ago | (#9938663)

Reading the article would have answered your questions. You can bet on an IPO before March 31st, 2005, or an IPO not before that date, each with the maximum payout value of $1 (and $0 when the IPO is on the wrong side of that date, with no IPO being the same as an IPO after that date).

Remember terrorism futures? (2, Interesting)

shoppa (464619) | more than 10 years ago | (#9938439)

Remember DARPA's terrorism futures? [] . This can get controversial sometimes. Actually, it's probably good when it's controversial... putting things into dollars gets around all the policitical hyperbole.

Disclaimers: My PhD advisor was a member of JASON and one of my girlfriends in college was there at the very beginning of the Iowa Electronic Market.

public forum to predict corepirate nazi behaviours (-1, Troll)

Anonymous Coward | more than 10 years ago | (#9938448)

from the stuff_that_matters_now_instead_shillerIE

who cares about some phonIE monIE stock markup FraUD execrable headgear, when these foulcurrs are trying to steal (that's NO monIE/shares/future/etc...) .com(s) ( from some disabled person(s). phewww

the 'prediction' on that c(r)ap is: lookout bullow.

all is not lost.

consult with/trust in yOUR creators.... no need to 'predict' anything. see you there?

Stranded in IEM (2, Informative)

grunt107 (739510) | more than 10 years ago | (#9938457)

In early June, Bush enjoyed a commanding lead over Kerry. Since then, Bush's shares have dipped 7 percent, from 55 cents to 51 cents on Tuesday afternoon. Over the same period, Kerry's shares have appreciated 7 percent, from 45.5 cents to 49 cents.

So who has the controlling shares for each candidate?

Re:Stranded in IEM (1, Funny)

The-Bus (138060) | more than 10 years ago | (#9938542)

I like how Google is approximately 200 times better than even the President.

(Sorry I have to do this, but it's a joke!)

I mean, Google found 1,330,000 links to WMD and Bush found like 10, but they were all 404s.

Re:Stranded in IEM (1)

lachlan76 (770870) | more than 10 years ago | (#9938544)

Who cares, I just bought 51% of both candidates. Which means I am now President. Bow before me!

Re:Stranded in IEM (3, Funny)

Placido (209939) | more than 10 years ago | (#9938588)

So who has the controlling shares for each candidate?


don't forget about the other markets (1)

rnd() (118781) | more than 10 years ago | (#9938521)

There are some other electronic markets My favorite are and, both of which trade a variety of political and econonomic futures contracts.

I'm currently wagering that the google IPO will not reach $105.

that's you ediot (-1, Flamebait)

Anonymous Coward | more than 10 years ago | (#9938545)

icann see why they'd want that won? but stealing is NEVER a good policy.

yet another self-correction by the pateNTdead eyecon0meter kode.

this stuff is unbreakable, & wwworks on several (more than 3) dimensions.

everybody/thing contains 'scripting errors'. that's no shame. trying to pretend it ain't so, can be fatal. see you there?

$30 BILLION?! (5, Insightful)

EmagGeek (574360) | more than 10 years ago | (#9938550)

Hello people... this is not 1999. We're talking about a company whose only product is online advertising - subtle online advertising at that. You're talking about an Internet search engine having a larger market cap than a lot of Dow30 components who actually have shipping product. What makes google so valuable? What is google going to do for money (besides take it from investors) the next time the Internet advertising market evaporates? What dependencies has google created that will keep revenue flowing? How has google diversified to guard against volatility in the Internet markets?

It's time to start thinknig RATIONALLY about google. Everyone has become so enamored with google that they are overlooking the somewhat minor point that they have zero fundamentals.

Re:$30 BILLION?! (1, Interesting)

Anonymous Coward | more than 10 years ago | (#9938591)

If you get a chance, stop by and see what powers their search engine. Google does other things besides hanging out at They license their search technology to other companies. Hence.. A PRODUCT is shipped.

Re:$30 BILLION?! (1)

EmagGeek (574360) | more than 10 years ago | (#9938704)

Right, and the revenue that pays for that licensing technology comes from where? Internet advertising... and the other things that yahoo might do that generate revenue - all of which depend on the survival of the internet market. You bring up a point that makes the picture doubly worse - if the Internet markets go bust again, not only does google lose revenue, but googles customers also lose revenue and may not be able or willing to continue to pay google. The whole point of diversification is to get into opposing or dependent markets as a hedge against the failure of one market or the other.

For example, one of my holdings is a diversified manufacturing company that makes aircraft nav systems and also security and monitoring products. Two separate businesses within that conglomerate. So, after 9/11, the aircraft industry went to shit, but the security and monitoring industry went to the moon. That company's stock went up from 25 to 40 in the year immediately following 9/11.

Point is, Google has no product that isn't dependent upon the Internet, and no business that will do better if the Internet markets do poorly. Google is a single-market, niche company that is not diversified and is extremely vulnerable to the next internet bust.

Re:$30 BILLION?! (1)

t_allardyce (48447) | more than 10 years ago | (#9938634)

Google has for many the only respected advertising model on the internet. In my entire life i have only ever clicked on google ads. They're pretty noticable too especially when you start talkin crazy ass hoe y'all in some gmail and the suggested ad comes up as poof daddy. Google is also the most visited site in the world - thats gotta be worth something? Did i mention they sell page ranks? Also gmail is gonna take off in a big way, people are going to get sick of hotmail, its slow, clunky, and has a poor interface and no space - with millions of people already just begging for a gmail account hey are gonna need shit loads of storage space - they're gonna have to make that pay off somehow? google are building a little empire to take over the internet service by service, and we love it!

Re:$30 BILLION?! (1)

tuomasr (721846) | more than 10 years ago | (#9938670)

Actually advertising is not Google's only product. Google also sells services based on its search technology [] to companies.

On their website you can find a some of their customers [] and there are pretty big players in that list.

Re:$30 BILLION?! (1, Interesting)

Anonymous Coward | more than 10 years ago | (#9938895)

But the point isn't how many services they offer that make money.

A companies value is based at least partially on how many real-world assets they posses (ie server farms), and how much profit potential they have.

Compare and contrast assets and profits and "company value" on fortune 500 companies.

Then do the same thing on dotcoms from 5 years back, and then on google.

Irrational Exuberance is the term Alan Greenspan used.

Re:$30 BILLION?! (0)

beattie (594287) | more than 10 years ago | (#9938672)

Google does more than selling advertising. They sell search technology to companies for internal search sites among other things.

The problem with shipping products (2, Interesting)

SmallFurryCreature (593017) | more than 10 years ago | (#9938918)

You mention real companies. But real companies are settled. The margins are becoming so tiny as to be almost non-existent. Supermarkets make fractions of a cent on certain products. The most striking is that there is more profit margin on the packing material of harddisks then on the platters.

Shipping, storage, handling, packaging all costs heaps and heaps of money and there really are no more ways to save. But what if you don't need any of that? Google doesn't have to deal with dockworkers strikes, faulty ingredients, recalls, fluctuating material prices, outlawing of certain materials. Nothing. Just make a product and sell sell sell.

Airline companies are going bankrupt while doing real things as you would put it. A single accident killed the concorde, rising oilprices are making airline companies grown and victims of "accidents" are starting to demand massive damages as they learn the accidents happen because of cut downs in maintenance.

So where do you put your money? In clean simple google? Or one of the messy real industries?

The only problem with buying google shares is that is to late. Best time to invest is at the start. Not when the company is already long established.

My how times change... (1)

will_die (586523) | more than 10 years ago | (#9938626)

Here [] a similar program is considered something that would never work.
Yet the messages on this topic consider it system for accuratly predicting how things will go.

Re:My how times change... (2, Insightful)

stromthurman (588355) | more than 10 years ago | (#9938850)

You make a very valid point, the two ideas are in fact one in the same.

I really thought DARPA's PAM project was a novel and perhaps useful tool. However, I think the acceptance of this idea, yet the rejection of PAM comes down to a few key points:
  • In this case, we're using a market to predict the behavior of investors in a different market (ultimately attempting to predict how the *parent* market behaves, if you'll permit such bastardized terminology.) This idea does not seem terribly radical to most people, maybe a little odd, but not radically different.
  • PAM would have used a market to predict events most people consider unsavoury, this doesn't sit well with some people (gambling on terrorism is evil, etc. etc.)
  • DARPA may have proposed PAM too soon. The terrorist attacks were/are still to close at hand, the War in Iraq, the threat of another attack in the near future, etc. Perhaps if they had waited longer before proposing the idea, it wouldn't have met with such bad press. [Pure conjecture]
  • Many people do not understand how markets work. They have a general misunderstanding of it, perhaps even a fear of it. No matter how strong the evidence is supporting the idea that such markets can (sometimes/often?) predict future events, those who don't understand markets will probably tend to be against the idea. If the idea had been shared with fewer people, and then slowly explained to others, perhaps it would have been successful. [Again, pure conjecture]

Ultimately, I would have liked to see the DARPA project take off, and maybe one day down the road, we will see it rehashed. I feel it certainly provides a better warning system than an arbitrary color coding system that never seems to dip far below "Panic Struck Plaid" these days.

Technology Review also has Google futures trading (4, Informative)

Anonymous Coward | more than 10 years ago | (#9938857)

MIT Technology Review's futures trading marketplace, Innovation Futures [] , has a comparable Google IPO Watch [] , predicting when Google will go public [] , what its market cap will be [] , and how that will compare to Yahoo!'s market cap [] . Traders on Innovation Futures are also predicting a cap of $30-35B, but it is by no means a majority. A significant number are still holding on to $25-30B. The site also has a number of other markets dealing with VC and IPOs, Economy and Growth [] , and trends in technology

GOOG is s scam (1, Troll)

ballpoint (192660) | more than 10 years ago | (#9938863)

They are trying to sell a non-controlling 10% of their business for 3B$ while they have given away the same amount, AND 'FORGOT' THAT THEY DID.

Playing fast and loose with other peoples money is a recipe for disaster. Anyone buying GOOG shares should know that his money goes directly into unclean hands.

I'm wondering how many will get burned on this scam.

How much you may appreciate Google's search service now, this is a different ball game and as an outsider you have no idea how it's played. Stay away. My uninvested 2ct.

Background check required? (1)

white russian (773238) | more than 10 years ago | (#9938946)

So when someone places a large bet on the next terrorist attack (or terror alert level rising) is a background check required?

A market liket that sounds like a good idea, but insider trading could become a widespread problem ;)

US election prediction market (3, Informative)

e-gold (36755) | more than 10 years ago | (#9939154)

Ladbroke's sportsbook [] . (I always hit this one and ignore the Gallup/Roper bullcrap!)

Rename the company... (1)

DaLaRa (656494) | more than 10 years ago | (#9939528)

So after the company and all the money invested in it goes down the drain they'll rename the company "Gurgle"...
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