NBC News' Tim Russert isn't the only one selling Hillary Clinton short today: In the wake of the North Carolina and Indiana primaries, her shares on the Iowa Electronic Markets have fallen to the lowest point ever. The market lets online investors put real money down on the candidates' prospects, as a science experiment on the "wisdom of crowds." The shares are worth $1 each if the investor's candidate wins the nomination, but they're worthless if the candidate loses.
Today, Clinton's shares for the Democratic nomination were trading at less than 10 cents on the IEM - and the situation was pretty much the same at the InTrade prediction market.
Looking back at the charts, it turns out that the prediction markets didn't stray all that far from the conventional wisdom, but avoided wild swings on a week-by-week basis.
For example, Clinton's win in last month's Pennsylvania primary, coupled with Barack Obama's pastor problem, might have given the impression that the momentum was swinging her way. Those reversals had little effect on the market, however. Sure, there was a slip in Obama's value and an uptick for Clinton, but nothing like the chart-crossing game-changers seen in the early phases of the primary campaign.
Even today's sharp erosion in Clinton's share price brings the level just a few cents below where it was in early March (12.6 cents) and early April (12.4 cents). She bounced back from those lows - and there's always the chance the stock could take another upturn, despite what Tim Russert says. But few investors agreed with Clinton that her narrow Indiana win represented a "tie-breaker." In fact, the market's verdict is that Tuesday's results represented enough of a setback in her political fortunes to justify dumping her stock.
Obama's stock, meanwhile is trading around historic highs: Before today, the high-water mark was 85.9 cents on March 1, and today's prices are edging above that level. If you had bought Obama shares on Jan. 9, the day after the New Hampshire primary - when I wrote the item "Buy Obama, Sell Clinton?" - you would have more than doubled your money by now.
What does Obama's rise and Clinton's slide portend for the bigger contest ahead, against Republican John McCain? Justin Wolfers, an economist at the University of Pennsylvania's Wharton School, notes in his Wall Street Journal column that the market for the November general election has been stable - with the Democrats' shares bringing a higher price than the GOP shares, at 56 cents vs. 45 cents:
"As Sen. Clinton's chances of becoming the Democratic nominee plummeted, and Sen. Obama's soared, the chances of the ultimate Democrat candidate winning the general election remained unchanged. Taken together these two facts yield the interesting implication that perhaps there is not much difference in the electability of Sen. Obama and Sen. Clinton.
"Looking forward to November, an Obama-McCain race seems increasingly likely. And Sen. Obama is the early betting favorite."
Wolfers also delves into the intriguing fluctuations in prices during Tuesday night's long, drawn-out vote count - which leads me to wonder whether the election-night pundits should be reporting on the prediction markets while they wait for a winner to be announced.
Should we be hearing more about the prediction markets on the election-night broadcasts going forward - or would that merely prove that political reporting has turned into a kind of horse-race handicapping? Feel free to add your comments below.