Note to Republican 2012 presidential hopefuls: Even if your name isn’t Mitt Romney, don’t despair.
At least not yet.
At this point in the election cycle four years ago, John McCain was far from the odds-on favorite to be the GOP nominee.
Not only was he at 14 percent in the Gallup Poll, but on Oct. 24, 2007, the Arizona senator’s contract was selling for only 7.1 cents on the Iowa Electronic Markets‘ Republican convention market. That means traders believed he had only a 7.1 percent probability of winning the Republican nomination.
The IEM is a real money futures market operated by the University of Iowa‘s Tippie College of Business. It gives traders the opportunity to buy and sell contracts based on what they think the outcome of a future event will be. Contracts for the correct outcome pay off at $1. All other contracts pay off at zero. As a result, the price of the contract at any given time is the probability that the traders believe that event will happen. Traders can invest up to $500 in the market.
McCain’s price did not start trending up until the first week of December, and he didn’t become the most probable candidate until his price hit 29.6 cents on Jan. 1, 2008 – two days ahead of Iowa’s first-in-the-nation precinct caucuses. McCain finished fourth in the caucuses with about one-third the support of winner former Arkansas Gov. Mike Huckabee.
Oh yeah, four years ago, the guy who investors thought was most likely to be the nominee was former New York City Mayor Rudy Giuliani. His contract was selling for 40.1 cents.
Today, Romney is the favorite among IEM investors. His contract is selling for 68.4 cents, which means traders believe there’s a 68.4 percent probability that he will win the nomination. Four years ago, Romney’s number was 30.2 cents. He finished second in the caucuses and out of the running for the nomination.
Other contracts selling on the GOP convention market include Rick Perry at 11.5 cents, Michele Bachmann at 3.4 cents and Ron Paul, at 1.4 cents. The markets’ Rest of Field contract, which includes anyone for whom there is no individual contract selling on the market, was selling at 15.5 cents. That would include Herman Cain, who has surged to the top of some Iowa and national polls.
For the latest prices on the GOP Convention market, click here.
Defenders of Freedom: After spending last Saturday shooting pheasants – or at least shooting at pheasants – with western Iowa U.S. Rep. Steve King, former Pennsylvania Sen. Rick Santorum will be back Saturday to defend freedom.
He’ll participate in King’s Defenders of Freedom fundraiser. King is facing a challenge from Democrat Christie Vilsack who has said she will raise $3 million for her first campaign for public office.
Former United Nations Ambassador John Bolton will be the keynote speaker.
Tickets for the Sioux City fundraiser are available by calling 888-722-4704 or by emailing firstname.lastname@example.org.
On the calendar:
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