Mike and I haven't really posted anything on ginandtacos.com for quite some time. It is not that we don't have anything to say, but…no actually it is mostly because we don't have anything to say.
However, all of that changed this evening when we went to Taco Bell to enjoy several of their new menu entree the "Cheesy Gordita Crunch". For the record, the commericals where the texture of said food item is debated are valid in so much as the texture does tend to change in every example of this Gordita, and often within one sample. More to the point, this fine bit of Mexican food got us thinking about the fact that neither of us intended to vote tomorrow. Its not that we don't care, its just that we both kind of forgot to register.
We felt bad not being involved in the democratic process, so obviously we responded the only way we knew how.
By placing 100 American Dollars into the futures market for 2006 midterm election results via a somewhat shady Irish website. We are at least 85% certain that it was legal.
click the above image to see the full resolution image of Mike and Erik buying a Democratic senate
(technically selling the Republicans keeping control)
It seemed quite obvious to us. Mike is obtaining a Masters degree in Financial Engineering, Ed had already supplied us with a bunch of sure fire "winners" and I- well I decided it was exceptionally amusing and was willing to risk 50 of those American dollars.
So here is how it transpired. After we became 85% certain that this was legal, and there was a good likely hood that we could actually get the money back from the Irish, Mike created a 100 dollar account. It was a good sign when his bank accepted the transfer of money (at least we think it was a good sign). When looking at the site, there are options to buy or sell contracts on pretty much every race, and other various overriding situations (for example: the Democrats taking at least 24.5 seats in the house). If you are buying a contract it means you are purchasing your opinion that the event will happen. If you sell a contract it means you are assuming the event will not happen. The moral is that I could simultaneously buy a contract saying that Rod Blagojevich is going to win the Illinois gubernatorial race and sell contracts saying Judy Baar Topinka will win. Mike and I did not do this. That would have been stupid. I am fairly certain even Judy Baar Topinka's mother knows she is going to lose. Hence, we would make absolutely no money. We needed to find positions that were fairly volatile, and where Ed had picked the winner in his previous post.
As much as Mike and I are proud to be Americans and were taking great pride in doing our civic duty, we also wanted to make a lot of money. The only way to do this was to place sums of money "against the market". We believed we had superior information (Ed's previous post on election results). We were taking obvious cues from Ed's past performance:
Proven Past Winner
So here is what we did:
Ed tells us that the Democrats are going to win between 23 and 25 seats in the House.
So we took a strong position on the Democrats winning 19.5 seats, a weak position on Democrats winning 24.5 seats. And actually sold contracts on the Democrats winning more than 29.5 seats. Essentially we are putting our money on the Democrats taking between 20-30 seats. That's going to be fun to watch.
The market is saying (in a dramatic fashion) that the Democrats are going to hang onto New Jersey. Mike and I trust Ed's opposite analysis of the race and sold contracts to people believing Bob Menendez would win – we invested in the democrats losing. The margin was better than simply investing in Tom Kean.
Ed Believes that Lincoln Chaffee's luck has run out. That was a position we could invest the hell out of. Particularly since most people in the market still thought Mr. Chaffee had a bit of luck.
Here is a really interesting one. Ed proclaimed his gut was in favor of Harold Ford Jr. in Tennessee. I have seen many bottles of Robert Burnet's London Dry Gin processed by Ed's gut. Even though the market is only 15% certain this will happen, we invested in Ed's gut much like his gut invested in many Taco Bell Grande Meals throughout the years.
We invested in Jim Webb in Virginia. We really did not like the political stylings of George "I hate the negros" Allen, and this race was trading at 50-50. Sounded good to us.
Finally, just so that we felt we were doing right by the Democrats we have picked them to win the senate. I know that this is in direct contrast with Ed's opinion, and our pick of Tom Kean in New Jersey, but what the hell. It wasn't a lot of money.
If you are bored with watching traditional exit poll results tomorrow. Take a quick look at some live updating graphs of Mike and My position in the futures market. Bare in mind our position was purchased around 9pm.
Oh, and despite having never watched it and aren't even entirely certain what the format of the show is, we invested money in Joey Lawrence taking it all in Dancing with the Stars.
Here are updating graphs of our official positions: Capitalism at Work!