Wednesday, July 7, 2010

An investment for Robin Hanson

InTrade.com's got a contract on its own existence that last traded at 94.9, redeemable for 100 if InTrade.com is still "open for business" by the end of 2010. (InTrade pages are hard to link to, but you can find it by going to intrade.com, clicking "InTrade.com" under the "The Prediction Markets" heading in the left-hand column, and then clicking on the one contract listed.) Each contract pays out $10 if it's successful and charges $0.10 as commission for in-the-money predictions, meaning that if InTrade's still in business, you paid $9.49 for something that would be worth $9.90, for an annualized return of 9.11%. And with the bid at 90 and the ask at 94.9, there may be room to negotiate. Does Robin Hanson's portfolio average 9.11%, and if not, why hasn't he invested yet?

2 comments:

Phil Birnbaum said...

Why are you assuming a zero probability of losing the investment?

Hubert de Selby said...

Because the investment is inherently worth it for someone interested in promoting futures markets?