SALON

Wednesday, May 3, 2000 4:00 PM UTC

Betting on Hillary

A Web site lets you actually invest in -- and profit off -- the candidates of your choice.

By

Topics: Hillary Rodham Clinton

When New York Mayor Rudy Giuliani announced last week that he had prostate cancer, his political stock dropped. Yes, literally. And yes, people lost real money.

Before Giuliani’s press conference Thursday morning, Rudy stock was trading at 50 cents on the Iowa Electronic Markets, run by the University of Iowa’s Henry B. Tippie College of Business. After his announcement at 10:05 a.m., buyers started selling.

By 10:20 a.m., his price had plummeted to 10 cents — the lowest price possible. By noon, the stock had crept back up to around 30 cents, where it stayed all weekend, and seems to be holding.

The markets started in 1988 as an academic experiment by three Iowa professors who looked at Jesse Jackson’s presidential race in Michigan and realized his primary win had never been predicted in the polls. The trio decided to set up a system that would create a better, more accurate predictive model — and tried to lure people to log on, invest in politicians and maybe make a little money.

It’s certainly an idea that seems inevitable. With corporate money funding politics, why not just turn the races over and let the market decide who will lead? And, of course, what more logical incentive is there to become involved in politics in these boom times than the promise of profiting off of politicians?

The people who run Iowa Electronic Markets even like to boast that they often predict winners — and losers — more accurately than popular opinion polls. In the 1996 presidential election, the markets came within two-tenths of Clinton’s win of the popular vote (Clinton over Dole, 49.24 to 40.71 percent). That was also the year the markets had a record number of investors — 8,000.

That’s not enough people, of course, to create a market big enough to make anyone rich. Each trader is limited to spending $500. But the odds are both obvious and, to the idle political junkie, somewhat attractive. If you bought $500 worth of Hillary stock on Tuesday, when she was trading at 50 cents, you make out with $500 in November when she wins. If you bought stock in Rudy instead (30 cents), you could make $700 if he becomes senator.

The hottest stock this year, of course, already soared and went bust: John McCain. Mitch Wiegner, a trader in Chicago, made about $15 on McCain. “I made it before the South Carolina debacle. A friend is a CNN junkie and he said, ‘Get out,’” says Wiegner. So he sold. Now, he is looking at the Giuliani/Clinton race as a possible investment.

“That one is getting really interesting,” says Wiegner. “I’m going to have to look at it closely.”

Unlike Wall Street, volume is relatively low, allowing a small number of players to manipulate the prices. There’s also no way — yet — to force losers to pay up; traders now only make promises to pay before they get to play.

But that’s likely to change as the market grows. So far this election cycle, almost 6,000 traders have invested $125,000 — placing their money on myriad politicians and races, including George W. Bush, Al Gore, Reform Party candidates and even the 2000 Mexican election. There’s a special market that trades over who will control Congress. (Traders are betting on a Democratic House and a Republican Senate at 51 cents a share.)

George Neumann, a professor of economics at the university and a founder of the markets, says that they can tell that the Web site receives visits almost daily from the White House, as well as from the Clinton and Giuliani campaigns.

Gore spokesman Chris Lehane, who has often said that “some candidates are blue-chip candidates; others are like junk bonds,” should be happy to know that his candidate is 4 cents ahead of Bush as of Tuesday afternoon. But it’s the Senate race in New York that has continued as the most volatile and certainly the most interesting.

Giuliani campaign spokeswoman Juleanna Glover Weiss says, “It’s certainly an entertaining phenomenon to watch. But in term of the viability of candidates, it’s simply a reflection of the conventional wisdom. I think it’s something that’s viewed more out of curiosity than any sort of serious attention.”

Then Weiss asked how Giuliani and the first lady were trading in the markets. When told the current stock quotes, she replied: “Let’s put it this way, there is no studied attention by this campaign to that phenomenon.”

That’s certainly easy to say when your man’s stock is tanking.

And Giuliani’s dive certainly reveals the coldhearted aspect of the market. In fact, the last time the markets saw such a severe dive over a candidate announcement was when it was reported that Bill Bradley had an irregular heartbeat.

“It’s much like what we saw when Bradley announced he had a heart problem,” says Jeanine Pfuntner, operations manager of the Iowa Electronic Markets. At the time, Bradley’s stock fell from 23 cents to 13 cents and, obviously, never really recovered.

Says Pfuntner: “If people think if you are going to die, they don’t want to elect you.”

And they certainly won’t invest in you.

Suzi Parker is an Arkansas writer. More Suzi Parker.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • A missing poster hangs on a tree outside the Cleveland home of Amanda Berry Wednesday. Berry and two other women, Michelle Knight and Gina DeJesus, made a daring escape this week after being held captive for more than a decade.
    Credit: AP/Tony Dejak

  • Elvis Rafael Rodriguez and Emir Yasser Yeje offer their best impression of  Eric B. & Rakim. On Thursday, New York prosecutors identified the pair as members of an international gang that robbed $45 million in a matter of hours by hacking into a database of prepaid debit cards and draining ATM machines around the world.
    Credit: AP

  • New Jersey Gov. Chris Christie walks to a podium during the groundbreaking ceremony for the Technology Enhanced Accelerated Learning Center at Essex County Newark Tech in Newark, N.J., Tuesday. Christie made less flattering headlines this week after undergoing a secret stomach surgery to curb his weight.
    Credit: AP/Julio Cortez

  • Workers stand outside the Tung Hai Sweater Ltd. factory in Dhaka, Bangladesh, Thursday after a fire broke out in its 11-story building. Eight people were killed in the blaze.
    Credit: AP/Ismail Ferdous

  • Workers rescue a woman trapped for 17 days in the rubble of a garment factory building in Saver, Bangladesh, Friday. The building's collapse was the worst industrial disaster in the country's history, killing more than 1,000 people.
    Credit: AP

  • Former South Carolina Gov. Mark Sanford gives his victory speech Tuesday in Mt. Pleasant, S.C., after winning back his old congressional seat in the state's first district.
    Credit: AP/Rainier Ehrhardt

  • Jodi Arias reacts in Maricopa Country Superior Court Wednesday after being found guilty of first-degree murder in the gruesome killing of her one-time boyfriend, Travis Alexander. Arias has subsequently said she wants the death penalty, claiming she'd "prefer to die sooner than later."
    Credit: AP/The Arizona Republic/Rob Schumacher

  • Ariel Castro stands for his mug shot Thursday at the Cuyahoga County Corrections Center, where he is being held on $8 million bail. The former bus driver is accused of imprisoning three young women and beating them repeatedly over a period of 10 years.
    Credit: AP/Cuyahoga County

  • Charles Ramsey addresses the media Monday after helping rescue three women held captive in Cleveland for more than a decade. Ramsey's hero portraiture has been complicated by revelations of his own domestic violence record.
    Credit: AP/The Plain Dealer/Scott Shaw

  • Michael B. Donley, Secretary of the Air Force, testifies during a Senate Appropriations Defense Subcommittee hearing on Capitol Hill Wednesday. The military branch was rocked this week after its chief sexual assault prevention officer was charged with sexual battery.
    Credit: AP/Carolyn Kaster

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations