Please don’t tell this secret to anyone.

If it gets out, I may never win a wager again.

You see, I hang out with a lot of competitive people. It’s the nature of being in and around the financial world.

As a result, any disagreement over a fact or future event quickly devolves into a wager.

And people will tell you, I win...a lot.

It’s not because I’m particularly smart, a better handicapper, or see something others don’t.

It’s because my past experience of being a professional investor (where the majority of your income is from investing and trading), I appreciate and respect one of the most simplest principles that makes forecasting the future far easier than most people ever realize.

The Next U.S. President Is...

This principle is known in economics as price.

In a free market, price is the result of all supply and demand inputs.

If price is too high, quantity demanded will be too low.

If price is too low, quantity demanded will be too high.

Prices are why grocery stores are mailing out flyers to it’s customers offering deals on products they want here in the U.S. and why Venezuela’s store shelves are empty.

Price is also wildly important in betting markets too.

Take the Super Bowl.

It’s probably the most wagered on game in the world. Last year’s drew $4.2 billion in wagers.

The prices in sports betting the “line” (how much you’ll make on a given $100 bet) and the “spread” (how much the point differential to attract ample bets to both sides).

The lines and spreads are set initially by a group of betting experts.

Then, after they open, they’re sent into the free market.

If one side of the bet is getting too much money, the line and spread will move away from it to make the trade more attractive to the other side.

It’s something few people know. But it’s true. Betting lines are set by the market.

That’s where the presidential election comes in.

It’s illegal to bet on it in the U.S. It’s fair game in Europe though.

The odds are pretty straightforward.

According to European betting firms aggregator site, there’s a huge gap in odds.

The best odds on Clinton are currently 4/9.

That means a $100 bet on Clinton would pay off $44 plus your initial wager amount of $100 (total of $144).

Trump, on the other hand, is looking at best odds of 5/2.

That means a $100 wager on Trump would pay off $150 plus your initial wager of $100 (total of $250).

I, For One, Welcome Our New...

Clinton is a heavy favorite.

As it stands, she’s twice as likely to win the presidency than the Golden State Warriors are to win the NBA championship.

Again, that’s not according to public polling which, at this stage of the election, is used more to guide public opinion than to track it.

It’s not according to some pundit on TV who's usually connected to the candidate (or paid by them...or got a cushy, over-paid TV punditry because of them).

It’s not according to demographic, historical, and statistical analysis.

It’s according to market forces with real people putting real money on the line and the price signals resulting from them.

If you believe in free markets, the market says you should start preparing for a President Clinton.

1 Comment

  1. I wonder if the author realizes that underdogs occasionally win I wonder how many Geniuses that bet on Ted Cruz the favorite are celebrating these days

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