Slashdot Mirror
Public Markets For Predicting Google's Market Cap
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."
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.
Life is the leading cause of death in America.
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
Maan
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.
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.
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).
Laboratree - Scientific collaboration based on OpenSocial.
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.
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.
Ask me about my vow of silence!
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.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
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
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?