July 21, 2004 | St. Petersburg TimesIf the presidential race were a financial market and George W. Bush were a stock, would you buy or sell? Would you be a bull or bear when trading shares in candidate John Kerry? Come Election Day on Nov.2, where would you put your money? It so happens this year's presidential race is the basis of a real electronic futures market. Run by the UNIVERSITY OF IOWA's Henry B. Tippie business school, the futures market really lets investors put their money where their vote is. In the seven weeks since this year's market opened for business, shares in Bush have traded slightly higher than those of Kerry. But the Bush lead has slowly narrowed. Created in 1988, the Iowa Electronic Markets is no mere game. Past predictions in the Iowa market have shown an average error rate of just 1.5 percentage points in the week before each of the past four elections. That's more accurate than the final Gallup polls. University of Iowa economics professor BOB FORSYTHE, a founder of the Iowa Electronic Markets, says swings in the Bush-Kerry futures market are less volatile than in traditional political polls. That's because profit-motivated investors put their own money in Bush or Kerry shares and think twice before buying or selling. Traditional polls tend to show big, positive bounces for presidential candidates during their respective national conventions. "That's not credible," Forsythe says. "Our market tends to be much more stable." The newspaper is based in Florida.
Contact: Robert Forsythe