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# American Capital Agency Corp. Message Board

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• reits_r_us reits_r_us Nov 5, 2012 1:01 AM Flag

## Below book value

Hey Wish,

In a "model" for prediction, the model can be "made" at any time(not necessarily prior to the events it is used to predict).

In this case with CU, there are certain parameters they use to say if X, Y and Z are present and A, B and C are not present, then the outcome of the race favors the incumbent. If X, Y and Z are not present and A, B and C are present then the election favors the opposition to the incumbent.

They then can "Look Back" with their model and apply these parameters to each election and "ask" the question whether the model was accurate in predicting the outcome of that given election when their "predictors" were applied.

Having done that, they can then say their model was accurate or not accurate for a given historical election. This is what they meant by.. "not wrong since 1980" , even though their model was created many years later.

Helps?

DocReits

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• As an addendum...just because the "model" was 100% accurate since 1980, doesn't mean it will be correct for the next 8 elections. This is all based on odds or game theory and it lays the odds heavily in their favor with the 8 consecutive correct predictive history.

This is the same "modeling" myself and others do to look back at the historical record on EX runs. Even though the "model" is correct 80-90% of the time, and in some cases 100% of the time over the last 8 Q runs. I have lost early this year on EVEP as it failed to run in May(the only Q in the last 15Q's it hasn't run).

So I got frustrated because I lost money in May and did not play it during these last two Q's when it ran up 4 dollars to the Aug EX and 3 dollars to this last Friday for its EX tomorrow(Go figure). You have to stay in the game with your model, otherwise you skew results helter/skelter when you have an efficient prediction model.

If someone would take my bet I would bet heavily for CU's candidate using their model(if you'd give me 1/1 odds) ,with its history. Problem is, the bookies would lay down steep odds against my bet if they were inclined to believe CU's model. 1/8 odds means my \$10,000 dollar bet would give me \$1,250 profit, for a win...and a \$10,000 loss if I lose..I don't know if I trust the CU model that much....;-)

DocReits