Friday, January 16, 2009

Rare Tie in QV Stocks

The QV stocks, asking where in the country residential house prices would fall most, closed today in a rare tie between two binary stocks.

According to QV, residential property prices fell by 8% in both Auckland and Christchurch in the year ended December 2008.

So, for the first time, we had to convert the binary stocks to indexed, then judge Auckland and Christchurch stocks at $0.5000 each. Wellington closed at $0.

These QV contracts are a nice example of what makes prediction markets interesting - at least from my perspective. That perspective is from somebody who doesn't have even the first clue about property values. Running a prediction market contract gives me, and anybody in a similarly ignorant position, to find out from people who actually know about residential property, the best possible view about what is most likely to happen.

These contracts were a first for another reason, which is that they were sponsored by our friends at SuburbWatch. Check them out - if you're interested in timing the market and getting in at the bottom, this site can help.


Ltgorman said...

but did they give anyone insight into the property market? It seems to me Auckland was overvalued from the start. And like a real property market it seemed to operate in a bubble outside of its real value.

Economist said...

Matt, do you want to close the Nov08 building stock? Cheers