… As history has repeatedly demonstrated; bubbles, crashes, manias and panics are inextricably part of the fabric of financial markets. It would be unreasonable to suppose the same cannot take place in prediction markets. The implication is clear and profound; conflating the market’s estimate of reality with reality itself can be a dangerous mistake.
One of the most heavily traded and popularly observed prediction markets at the moment is the market for the Republican nominee for President. Currently, it is discounting a probability of 79% that Donald Trump will win the nomination. …
As a trader, it strikes me as far too high given the multiple possible paths this process could take in coming weeks. Perhaps most importantly, as a reaction to Trump’s perceived probability of nomination going so high, the focus of a Republican Party (that clearly would rather someone else be the nominee) will only increase in intensity. CONT.
PredictWise