I've been following iPredict and opened a small account a few months back: $100. It's pocket money really, but I just wanted to give it a go after observing it for a while.
My $100 was quickly turned into $148. I then gambled a little by putting most of it on one prediction: the OCR to be increased any time before 1 July 2010. But what I did was short sold it - I'm betting against the prediction.
So I was very interested in Thursdsay's OCR announcement because I knew the market would move on that. My basis for initially predicting against the 1 July increase was numerous statements by Dr Bollard that the OCR would not move from 2.5% until "the latter half of 2010", and also the fact that I think that both the world economy and ours are a lot more fragile than most think. I simply can't see any reason to apply any brakes in the next 12 months.
What I initially had to do for my prediction was to figure out the OCR date announcements in 2010 to see what "the latter half of 2010 meant". The OCR dates for 2010 are 28 January, 11 March, 29 April, 10 June and 29 July.
Dr Bollard's "latter half of 2010' meant, to me, that the first movement increse would not occur until at least 29 July, hence I sold the stock. My average price in was 72c. If it went to zero I would pick up a nice little gain.
But at Thursday's announcement, Dr Bollard said this:
If the economy continues to recover, conditions may support beginning to remove monetary stimulus around the middle of 2010. Recent tightening in financial conditions, driven by a higher exchange rate, increased long-term interest rates and a wider gap between the OCR and bank funding costs, reduces the need for more immediate action.The statement in bold had immediate impact on my iPredict stock: it moved North at a rapid rate. My gain is now a loss. The stock is now at 83c.
Here's where you can help. Do I need to cover my position by buying back my borrowed stock? I'm not too concerned about the $ loss as it's rats and mice stuff. But what I am interested in is proving that I am right and the predictors are wrong. Dr Bollard has not been entirely on the button in the past and most economists have also been far too bullish IMHO. My short selling of the stock really means one thing based on Thursday's announcement: will Dr Bollard raise the OCR at his 10 June announcement? In my opinion, his use of the words may and around the middle are still very vague and it's not certain he will. But 83% of the population with this stock on iPredict think I'm wrong. What I think is also important is that Bollard said inflation is running at about 2% for the 12 months so is well within the band.
I'd appreciate your views.