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Misjudging the Oscars
The 'markets' were wrong about the winner; does that say more about futures contracts or Hollywood?

NEW YORK ( - The markets and Oscar don't mix.

Well, they don't mix in two key categories: Best Picture and Best Supporting Actor.

Futures contracts were pointing to a "Brokeback Mountain" Best Picture win on offshore betting Web sites like and, where "investors" put up real money to make such wagers.

The contracts also indicated that Paul Giamatti would edge out George Clooney as Best Supporting Actor. Instead, Clooney walked off with the statuette and "Crash" shattered Best Picture expectations.

That was unfortunate for me since I made my office-pool picks using the futures contracts. I trusted, as we are so often told to do, in the wisdom of markets.

"Last year they were right on nine out of 11 traded categories," said Mike Knesevitch, communications director for Intrade. "They were wrong on Best Picture and Best Director."

Great. Sigh. Where did I go wrong?

Well, according to Knesevitch, a contract has to trade above 70 (out of 100 units) to be a clear indicator. Giamatti was trading just shy of 50 at the weekend, with Clooney a little above 30. So that was still a horse race.

But what about "Brokeback" and "Crash"? The cowboy picture was trading above 70 while the study on racism was only trading around 20. And there were close to 20,000 contracts, so liquidity was decent.

"In this case, you are kind of betting on what the Academy is doing, what Hollywood is thinking, what trends it is thinking about ... I don't know if you can guess at those," observed Knesevitch.

The futures contracts are much better on politics, he said. Indeed, these futures contracts started attracting widespread notice after they started correctly predicting election outcomes.

As an aggregate of the polling information available, it makes sense the political futures contracts are more spot on.

The Oscars, some would argue, is a political event too. Unfortunately, there isn't a lot of polling to let you know what the Tinsel Town elite is thinking. And some would be tempted to say you can't read Hollywood's mind because it has none.

So are the contracts on these type of events any good at all?

"It allows you to take a view on probabilities," said Knesevitch.

Well, that's better than nothing, I guess.

Oh well, so I lost the Oscar pool. Bring on March Madness ...


Allen Wastler is Managing Editor of and appears on CNN's "In the Money." He can be emailed at Top of page

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