Thursday, January 1, 2009

Happy New Year!

Here is something to ponder in the first quarter of the new year: what is the chance of Bin Laden being captured by March 31? Probably extremely low, but certainly possible given that Bush may want to get him before he leaves office in an attempt to portray himself as a fighter of “tara” (terror to the rest of us). Also, Obama and Biden might get lucky enough to catch Osama Bin Laden early in their term and show how tough they are on terror.

As I write this, on Intrade contracts that pay $10 if Bin Laden is captured or neutralized by March 31 are selling for 50 cents each (5% chance). Ignoring the 5% commission, if you threw $50 at some contracts they would pay $1,000 in the unlikely event that Bin Laden is captured. That doesn’t seem like a good bet, IMHO. But, if the price drops to 10 cents (1% chance) before or shortly after Obama’s inauguration, it might be a good bet to throw a few bucks at some contracts. $25 worth of 10 cent contracts would pay $2,500 if Bin Laden is captured. The odds of capture are slim, but the payoff may be just compensation for the risk involved. The guy can't run forever.

Besides, if your bet does not pay off, you can ask the government for a bailout!!! That strategy has worked for mortgage lenders.

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