Sunday, February 8, 2009

Iowa Electronic Market - Legalized Internet Gambling

The Iowa Electronic Markets are operated by the University of Iowa. The markets are small-scale, real-money futures markets where contract payoffs depend on economic and political events such as elections.

I began "betting" on the future federal funds target rate January 2005. One is allowed to buy in at $500 increments. I bought in at $250. Now I have only about $50 left. I lost about $50 on Hillary Clinton in 2008. Before that I lost a lot thinking that the fed would stop raising rates in 2006. It turns out now that they probably shouldn't have raised rates so high.

I haven't been real active in the this past year, but I'm determined to win my money back or loose it all and then retire. Here is what I have learned.

1 - Never bet on the long shots. This includes anything priced at 10 cents or less. Everyone wants to be the person who pays 5 cents to win a dollar. These long shots never come work out.
2 - Money is made by buying in once the market has discounted the remote possibilities. This means that money is made slowly over time.
3 - Don't let your emotions affect your bet. One is betting what the federal reserve is going to do, not what they should do.
4 - Have fun. I enjoyed trying to make a profit and I learned a little.

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