Trading Among Farmers plan will go ahead - iPredict

Sir Henry van der Heyden

iPredict traders think the Trading Among Farmers proposal will be approved by Fonterra shareholders without any changes.

The giant dairy co-operative's board will present the proposal this week.

Early trading suggests there is a 65% chance of approval of the scheme, which would allow farmers to trade shares among themselves instead of with Fonterra.

Traders are also giving Colin Armer - Fonterra's supplier relations committee chairman - a 45% chance of taking over from Sir Henry van der Heyden as board chairman later this year.

Other iPredict stocks forecast a 53% chance Fonterra's final payout of milk-solids before retentions for 2011-12 will be more than $6.50, with a 26% chance it will be over $6.56.

Fonterra has forecast a payout of $6.45-$6.55 for 2011-12.  

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I predict is open to market manipulation . Certain fonterra directors will be playing that market to advantage their own,personal interests,to be sure.

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Spot on....The only winners in this share trading game will be the big players...

Sadly, just like currency trading, share prices can be manipulated by relatively small exposure...

Its a game on insider trading. The greedy few, who have the benefit of knowing more than the wider hook or crook...

Farmers should vote for their future, rather than expose themselves open themselves up to market manipulation...

Co-ops are the best form of ownership. Foodstuffs is one of the best examples of this. Vote down the greedy traitors that have promoted this share scheme.

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The whole point of iPredict is to surface information by 'manipulation' of the market based upon information known to insiders! The problem is, you can't manipulate iPredict without losing yourself!

Assume the 'real' preference of farmers is 40% want TAF and 60% don't. iPredict pays me $1 for every share I have if the event comes to pass (farmers approving TAF). Assume the iPredict price is initially 40c (reflecting the true state). Assume also I know that this is the case, but want to 'manipulate the market' by creating a false impression that the real value is 60%. I pay 60c for a share (to push the price up). And everyone who owns a share who really knows that the true value is 40c will want me to buy their shares (for which they will make a profit - as they know I must be either a gullble fool or a deceitful trader to be buying at a price that does not refelct teh reality they know).
But remember when the vote comes, and the true number is 40%, then I get paid nothing as iP pays only if the event is 'proven 'true' (I've wasted all the money I spent buyng shares).

If I don't buy the shares offered to me at (initially) 60c by the other owners (because I'm a deceitful trader who wants to minimise my losses and know I'll be in for a pasting if I do buy them), then future trades of the remaining shares amongsd honest brokers (and arbtrageurs) will take the price back to its true equilibrium. If I wish to maintain the facade that the true value is not what is actually is, then I must buy the shares offered to me (at increasingly higher prices, as the owners know that I am a crook and would not sell at 60c if they thought they could get more from me), until I own them all and the price of the last one is $1 (so I waste even more money when the truth comes out). But as soon as the bias in trading and share ownership becomes known to iPredict, the alarm bellls go off and the hous of cards tumbles. Management will close down trade in the stock , and punish me severely breaking market rules by trying to manipulate the price (and be seen to be doing so, in order to maintain the credibiliy of their information market thereby dissuading other malfeasants).

In truth, Fonterra shareholders and managers have far more important things to deal with than manipulating the iPredict price - except for the few 'insiders' who can poentially make a small amount of pin money out of their information about what really is the preference of farmers. Such markets are thus far more successful in weeding out the real state of affairs than 'opinion polls', where there are no punishments for lying and hence no real incentives to tell the truth either.

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