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