Political Diversions

I don't believe it is appropriate to use this forum to spread my political beliefs. However, I do follow politics and I wanted to share with you two interesting sites that forecast election results. The first is Nate Silver's FiveThirtyEight.com. The preceding link will take you directly to FiveThirtyEight's latest senate forecast.

FiveThirtyEight.Com

Nate Silver goes far beyond standard polling. His model calculates a weighted polling average based on the recency of the poll, the poll size, and the pollster rating. He also adjusts the polling average for likely voters, the historical "bias" or left/right tendency of the pollster, and the trend. Finally, he includes a number of other fundamental factors to arrive at a probabilistic forecast. Historically, his presidential electoral college and senate forecasts have been remarkably accurate. FiveThirtyEight also covers economics, science, life, and sports.

Iowa Electronic Markets

The second site also provides probabilistic political predictions, but the probabilities are determined by market forces. Traders can choose to buy or sell contracts on aggregate congressional house and senate control outcomes and the market prices can be interpreted as probabilities. The name of the site is Iowa Electronic Markets and their historical results have also been more accurate than many individual polls, primarily because traders are risking real money to defend their expectations.

Conclusion

Obviously elections and election forecasts have market consequences, but the information available at the above sites and the methodology behind the forecasts is fascinating in its own right. If you would like to avoid any surprises in early November, check out both of the above sites regularly over the next few weeks.

Print and Kindle Versions of Brian Johnson's New Book are Now Both Available on Amazon (23 5-Star Reviews)

Option Strategy Risk / Return Ratios: A Revolutionary New Approach to Optimizing, Adjusting, and Trading Any Option Income Strategy

Trader Edge Strategy E-Subscription Now Available: 20% ROR

The Trader Edge Asset Allocation Rotational (AAR) Strategy is a conservative, long-only, asset allocation strategy that rotates monthly among five large asset classes. The AAR strategy has generated approximately 20% annual returns over the combined back and forward test period (1/1/1990 to 7/29/2013).  Please use the above link to learn more about the AAR strategy.

Feedback

Your comments, feedback, and questions are always welcome and appreciated.  Please use the comment section at the bottom of this page or send me an email.

Referrals

If you found the information on www.TraderEdge.Net helpful, please pass along the link to your friends and colleagues or share the link with your social network.

The "Share / Save" button below contains links to all major social networks.  If you do not see your social network listed, use the down-arrow to access the entire list of social networking sites.

Thank you for your support.

Brian Johnson

Copyright 2014 - Trading Insights, LLC - All Rights Reserved.

Share

About Brian Johnson

I have been an investment professional for over 30 years. I worked as a fixed income portfolio manager, personally managing over $13 billion in assets for institutional clients. I was also the President of a financial consulting and software development firm, developing artificial intelligence based forecasting and risk management systems for institutional investment managers. I am now a full-time proprietary trader in options, futures, stocks, and ETFs using both algorithmic and discretionary trading strategies. In addition to my professional investment experience, I designed and taught courses in financial derivatives for both MBA and undergraduate business programs on a part-time basis for a number of years.
This entry was posted in Uncategorized and tagged , , . Bookmark the permalink.

One Response to Political Diversions

  1. Pingback: Probability Parellels | Trader Edge

Leave a Reply

Your email address will not be published. Required fields are marked *