New position: Simple maths make Bernie a great trade

New position: Simple maths make Bernie a great trade

New Hampshire progress means Sanders’ current odds are all wrong

Two essential components of successful gambling, (trading is a more accurate term), are timing and the ability to do basic maths. Get those two things right and one need not necessarily predict winners.

That is the logic behind my latest position on the U.S. Election, put out on Twitter last night literally seconds after placing the bet.

 

 

 

Here’s the explanation. A generic Democrat candidate is priced at 1.66 (60%) to beat a generic Republican one in November. Realistically, we know this will be either Hillary Clinton or Bernie Sanders. The odds for the Democrat nomination are 1.13 Clinton, 8.6 Sanders.

Therefore their respective odds for the Presidency should be their nomination odds multiplied by whatever their odds would be in an eventual match-up. If the generic 1.66 odds are correct about both candidates, these should be their odds for the presidency:

Clinton: 1.13 x 1.66 = 1.88
Sanders: 8.6 x 1.66 = 14.27

 

On that basis, Sanders was massively overpriced at 24, and still is at 22 this morning. Of course the theory would fall down if Sanders were deemed to be a much weaker General Election candidate, and therefore much bigger than 1.66.

However this is not what the polls tell us. In all the potential head-to-head match-ups, Sanders polls better than Clinton. Against my GOP prediction Ted Cruz, for instance, the RCP average has Clinton 1.8% down, but Sanders 3.3% up.

As for timing, Sanders looks highly likely to shorten in the betting very soon. Following yesterday’s Fox News poll showing him 13% ahead in New Hampshire, he is rated around 60% likely to win next month’s key primary. My estimate is that if he does so, Sanders new odds will be around 5 for the nomination, 9 for the presidency – offering the chance to cash out if this position for a profit.

This doesn’t affect my long-standing prediction that Clinton will eventually become President. What it does is offer the chance to make a quick trading profit, and/or cover all bases.

 

 

 


5 responses to “New position: Simple maths make Bernie a great trade”

  1. Hi Paul,

    Thanks for a great blog, with a lot of insightful comments!

    A question regarding your Cruz position: how worried are you about Trump’s birther attacks? The man has an uncanny ability to set the talking points for the press, and even though scholars seem to agree more or less unanimously that Cruz is indeed eligible, Trump’s strategy is of course to sow the seeds of doubt. And he does it well – after his “maniac” attack backfired with the republican commentators last month, this time he’s attacking by proxy: “a lot of people are asking me”, “Marco has some good points when attacking Cruz”.

    How much damage will Trump be able to deal Cruz through his relentless attacks? It’s worth noting that nobody is attacking Trump, probably for fear of alienating his base.

    Cheers,
    David

    • Hi David, thanks for reading and your comments. We will see! My instinct is that Cruz is smart enough, resilient and prepared to survive these inevitable attacks. This weeks debate will be fascinating. Trump remains vulnerable on so many issues and I wonder whether ultra-Conservative commentators will tolerate him attacking Cruz. Then again, I felt Trump came off badly in all recent debates, yet his poll numbers are resilient.

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