Wednesday, November 08, 2006

Democrats' Senate odds were a wild ride

I like to bet (only small amounts, Ma, I promise!) on , which offers contracts based on future events in sports, politics and much else. (I currently have Hillary, Giuliani and McCain shorted, but I have no idea who to invest in for 2008.)

Last night I turned day-trader (night-trader?) and shuffled shares around as conflicting reports came in on the unpredictable Senate races in Virginia and Missouri (Montana looked a lot closer last night than it does today). I pulled a Pete Rose and bet against the Democrats' taking the Senate, calling it a hedge against disappointment. But it felt great to watch my money disappear as the Dems' chances went from distant hope to confident victory in the space of just an hour or two.

Below is a chart that gives a sense of what a roller-coaster ride the Dems' Senate outlook has been in the last 24 hours.

(Key: the numbers on the y-axis correspond to the percent probability that the Democrats will take both the House and the Senate. Joe Lieberman and Bernie Saunders are counted as Democrats. The low for the period was 5%; the high for the day was 96%.)

The turnaround began when exit poll leaks and pessimistic reports from inside the Jim Talent campaign suggested that though McCaskill was down in the ongoing vote count, several heavily pro-Democrat districts including much of St. Louis had yet to report; meanwhile, it became clear that the Virginia race was headed for a recount. When both Jim Webb and Claire McCaskill's counts put them in the lead, the stock shot up.